PANGEA3 LLC

Craig Ball wrote a terrific blog piece on June 6th about the Victor Stanley Inc. v. Creative Pipe Inc. decision from the Eastern District of Maryland. Magistrate Judge Paul Grimm found that the defendants waived the attorney-client privilege for 165 “inadvertently” produced documents because they relied on keyword searches and a review of document title pages as their privilege review. Furthermore, the defendents failed to get a clawback agreement with opposing counsel before producing the documents. Unfortunately, Creative Pipe was unable to rationalize to the Court why they believed keyword and document title searches were sufficient methods to meet their professional responsibilities. As a result, Creative Pipe became yet another party injured by insufficient preparation by failing to concentrate on document review workflow and processes.

Craig’s blog focuses on the need for better keyword search techniques and he provides valuable lessons (reminders?) for all practitioners – “Get expert help, Collaborate on search methods, Test your searches, Check the discard pile, and Get that clawback agreement.”

But I believe that process is just as important as keyword search effectivness in this case. It’s not enough to know your methods work, you have to be able prove it too.

Ensuring that your document review workflow and processes are effective is critical to any document review Quality Assurance process, whether at the outset of a review when culling non-responsive documents from a document collection or when identifying privileged documents. In each case, you should test the accuracy of your search strategy by checking for false positives and for false negatives. Perfection isn’t required nor should it be the goal. But Courts will expect attorneys to take some reasonable steps to assure themselves that what they’re doing actually has some reasonable connection to what is expected. Don’t just take my word for it:

“Defendants do not assert that any sampling was done of the text searchable ESI files that were determined not to contain privileged information on the basis of the keyword search to see if the search results were reliable. Common sense suggests that even a properly designed and executed keyword search may prove to be over-inclusive or under-inclusive, resulting in the identification of documents as privileged which are not, and non-privileged which, in fact, are. The only prudent way to test the reliability of the keyword search is to perform some appropriate sampling of the documents determined to be privileged and those determined not to be in order to arrive at a comfort level that the categories are neither overinclusive nor under-inclusive. There is no evidence on the record that the Defendants did so in this case.” Mem at 11-12.

The irony of is case is that Magistrate Judge Grimm suggested that the majority of the documents were not in fact privileged anyway! Thus another important lesson learned from Victor Stanley is the importance of memorializing your keyword strategies and documenting the execution your strategies. So when it is time to provide that affidavit, you’ll have everything you’ll need and you can avoid having to read something like this:

“Defendants are regrettably vague in their description of the seventy keywords used for the text-searchable ESI privilege review, how they were developed, how the search was conducted, and what quality controls were employed to assess their reliability and accuracy. While it is known that M. Pappas (a party) and Mohr and Schmid (attorneys) selected the keywords, nothing is known from the affidavits provided to the court regarding their qualifications for designing a search and information retrieval strategy that could be expected to produce an effective and reliable privilege review.” Mem. At 11.

As Craig Ball notes, “[a]voiding privilege waiver is a powerful incentive to” follow this advice.

I’ve always expected challenges to the legality of offshore legal process outsourcing, but a growing number of state and local bar association opinions (four as of this writing) have largely negated unauthorized practice of law challenges. Now comes a challenge from a Maryland law firm that lacks in legal substance and compliance with the Federal Rules of Civil Procedure, common law pleading requirements and the federal jurisdictional statutes.

Apparently motivated by a cold email solicitation from an India-based LPO provider, the law firm of Newman McIntosh & Hennessey, LLP became so concerned about protecting their clients’ Fourth Amendment rights that it filed complaints with both the Maryland and Washington, D.C. Bar Associations, and commenced an action against the LPO industry and President Bush in the D.C. District Court. Assumingly out of grave concern that it is unable to take steps to protect its clients’ confidential information, Newman McIntosh & Hennessey wants the federal courts and the D.C. and Maryland Bar Associations to give it blanket protections against the purportedly tangled web of offshore legal process outsourcing and electronic surveillance.

The whole thing is absurd but it’s received so much attention that it requires a cogent response.

Newman McIntosh & Hennessey’s Fourth Amendment argument is clever but specious because it relies on a faulty premise: that the Fourth Amendment does not apply to communications between a delegating U.S. attorney and an offshore LPO, and that the NSA will inevitably intercept the attorney’s transmission of clients’ documents to the offshore LPO without any recourse for the firm’s client. That proposition falls on its face. Surely, the complaint isn’t that the NSA can lawfully intercept a communication or electronic transmission from a U.S.-based attorney to an LPO – in essence spying on a U.S. citizen or entity – without complying with the Fourth Amendment, the Foreign Intelligence Surveillance Act and other applicable statutes?

Practically speaking, I cannot think of a situation in offshore legal process outsourcing where the NSA could intercept the transmission of documents between two foreign nationals sitting at two international points (and outside the jurisdiction of the Fourth Amendment and FISA). Ninety percent of Pangea3’s work is completed remotely, with attorneys in India accessing databases hosted in the United States. For example, if a document review is hosted in the U.S., then every electronic transmission has a jurisdictional basis in the U.S. and the privacy of the data is protected by the Fourth Amendment. As a result, the NSA cannot intercept any such electronic transmission without good cause. Conversely, if the review takes place completely offshore, then any communications with counsel would necessarily involve a U.S.-based attorney (or agent thereof) and again the Fourth Amendment protects such communications.

But let’s assume for the purposes of this discussion that the NSA is intercepting all offshore communications, including privileged communications (of course the consequences of that scenario are astounding), as I understand it, Newman McIntosh & Hennessey is claiming that the attorney-client privilege would be waived because a party transmitting otherwise-privileged communications overseas would know that the government (in this case, a non-privileged party) will see it, and therefore has not taken the requisite steps to protect the privilege. Even if this unlikely scenario were to occur, the Omnibus Crime Control and Safe Streets Act of 1968 would protect the information. Among other things, the OCCSS Act preserves the privileged character of all otherwise-privileged electronic communications that the federal government intercepts. You’ll find the relevant section of the OCCSS Act at 18 U.S.C. s. 2517(4)(”No otherwise privileged wire, oral, or electronic communication intercepted in accordance with, or in violation of, the provisions of [Chapter 119. Wire and Electronic Communications Interception and Interception of Oral Communications] shall lose its privileged character.”).

Moreover, as the American Law Institute has recognized, “[m]odern American authority generally does not insist that the client be able to exclude all possibility that eavesdroppers will overhear the communication.” Restatement (Third) of Law Governing Law §71 (2000) comment citing generally C. Wolfram, Modern Legal Ethics §6.3.7, at 264-65 (1986) “Confidentiality is a practical requirement. Exigent circumstances may require communications under conditions where ordinary precautions for confidentiality are impossible. The privilege applies if the communicating person has taken reasonable precautions in the circumstances.”

Accordingly, an attorney who transmits or receives an otherwise privileged communication internationally does not and will not waive any existing privilege so long as the attorney takes reasonable steps to preserve the privilege. Even if the NSA intercepted the communication, the privileged character of the information is retained.

Ironically, I’m not certain what Newman McIntosh & Hennessey believes to be the greater threat. Is it the NSA’s alleged interception of every electronic communication via the purported ECHELON program, or offshore legal process outsourcing? I’d like to think that it is the former and not offshore legal process outsourcing in and of itself. Ironically, the firm doesn’t ascribe any fault to LPOs such as Pangea3. The complaint does not allege that LPO providers are not capable, nor is it concerned that an LPO provider cannot assist the firm in carrying out its professional responsibilities to the firm’s clients.

Instead, the LPO provider’s apparent greatest fault is only that it is a foreign national (albeit one that is seeking to assist with U.S. litigation matters) and the NSA’s computers sit between the provider and its U.S.-based client. However, judging by the vitriolic postings I’ve read on some of the blogs since this complaint was filed, I’d say that Newman McIntosh & Hennessey is feeding upon a misplaced hostility towards offshore legal process outsourcing that simply ignores the plain facts and established applicable law.

Pangea3 is addicted to information. For several years now, we’ve had a myriad of RSS feeds, blog subscriptions, Google alerts, etc. – the obvious intent of which are to keep us current on relevant happenings & developments with our clients and within the legal marketplace. Over the last 6 months or so, the volume of LPO-related (or legal outsourcing if you prefer) information has increased exponentially, and it is more than just my fellow industry leaders blogging, issuing press releases and having conference presentations uploaded to the web. Mainstream media and leading legal periodicals are discussing the LPO industry with breathtaking regularity, which is a fantastic indication of acceptance within the legal community. It’s indeed an exciting time, but that’s not my main point.

The main point of this post is how our industry is being represented within the mainstream media. It’s not as rosy a world as we’d hope. Take, for example, a new recurring column in the ACC Docket (the monthly magazine of the Association of Corporate Counsel (“ACC”), to which all 20,000 + ACC members are automatically subscribed) entitled “Outsource Resource.” The author of the column is Kenneth Cutshaw, General Counsel of Cajun Operating Company (d/b/a Church’s Chicken, a successful U.S. fast-food chain). I’ve read both of Mr. Cutshaw’s columns and have been very pleased with his insightful and thorough explanation and endorsement of the LPO industry. In both pieces, he goes into significant detail of how he, as the G.C. of Cajun Operating Company, came to realize the value of outsourcing some of his contract drafting work to an LPO based in Gurgaon, India. His satisfaction with the work product is the theme of both articles, and his endorsement of the LPO industry is made clear in phrases such as “state-of-the-art” and “efficient and capable providers.” On the surface, this recurring column and the glowing reviews from a General Counsel of a large U.S. company are perfect, visible endorsements for the entire LPO industry.

Unfortunately, all is not what it seems with Mr. Cutshaw. My colleagues and I happen to have crossed paths with Mr. Cutshaw on more than one occasion at events featuring discussions about LPO. It was during one of those events that we came to learn (from an unrelated party) that Mr. Cutshaw is actually on the leadership team of Kochhar LexServe, a Gurgaon, India-based LPO. Neither of his articles in the ACC Docket mention this fact. Mr. Cutshaw is simply credited as “the executive vice president and general counsel of Cajun Operating Company d/b/a Church’s Chicken located in Atlanta, Ga.,” and within his articles he repeatedly includes himself within the “brotherhood” of in-house counsel. Not once in either article does Mr. Cutshaw make reference to an affiliation with any LPO.

Now, in order to stress my main point, please take a moment to think about this situation.

The LPO industry has been accepted within the legal community to the point where a publication no less prestigious than the ACC Docket includes a regular column on the industry. Let’s call that one HUGE step forward for LPO. Then, there’s our protagonist, Mr. Cutshaw, G.C. of a large, well-known restaurant chain. Let’s cut to the chase and call his overzealous promotion of an industry in which he has a clear, but undisclosed personal interest at least one HUGE step backward for LPO.

So to my point: the LPO industry has matured and evolved an incredible amount since I joined Pangea3 two years ago. This is due in large part to the hard work and dedication of my colleagues at Pangea3, our peers within the other leading LPOs and – most importantly – our incredibly skilled and dedicated attorneys, engineers and other professionals in India. But, when I see situations like Mr. Cutshaw’s veiled promotion of his personal LPO interests in the ACC Docket, it reminds me that there are still some elements within our industry that have the potential to discredit all of us.

Going forward, I can only hope that market forces (led by our sophisticated clients and peer LPO providers) will educate, or weed out and silence, those entities and individuals who seek to misuse the media’s interest in the LPO industry for their own personal gains.