The Family Business: You Missed One

After the death of the family patriarch, the children decided to sell the company they inherited rather than run it themselves. Eventually, they sold the business to a venture capital company.

After a few months, the buyer claimed that they had been defrauded. They argued that the financial health of the company had been misrepresented and that the physical holdings had not been properly presented.

The family felt certain that they had indeed provided accurate descriptions of the finances and property.

We were appointed by the court to review the company's computers for evidence related to these claims. In e-discovery cases, we often find that we can save clients time and money by using a single e-discovery service provider who produces materials responsive to both parties.

We examined email on 3 servers and 26 laptop and desktop computers. Those emails dated before the date of the sale went to the defendant and those on and after the date of sale went to the plaintiff.

We produced several thousand emails. We found one email that made it clear the plaintiff did know the full financial status, which was indeed different than the status reported. That email was copied to others in the company and was replied to, but the copied and forwarded emails did not appear in the mail boxes of those recipients.

We searched the relevant computers and servers for fragments of, or references to, the email in question. Surprisingly we did not find any traces, as we expected to. Given that known emails were missing and that there was no trace of the email on machines where it should have been, it was clear that some parties had undertaken a rather massive effort to delete all the emails relevant to this matter. Unfortunately for the plaintiff, they missed one of them.

Electronically Stored Information, ESI and e-discovery

In light of the 2006 amendments to the Federal Rules of Civil Procedure, discovery of Electronically Stored Information ("ESI") (also called e-discovery) has become one of the most critical, and certainly one of the most costly challenges faced by litigants and their counsel. Trial attorneys understand that they must now take a far more proactive approach to helping their clients identify and secure ESI, and must do so at the earliest stages of a case.

Quite apart from litigation and the challenges faced by trial attorneys, businesses - particularly those faced with SEC and other regulatory compliance challenges - may have to make substantive changes in their record keeping, policy making, and document management.

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