Voice of the Global In-House Bar

Sanctions for everyone? If one district court opinion stands, maybe.

Raise your hand if this is how your company runs its legal department:

All in-house lawyers who might attend trials must have a thorough and precise knowledge of each and every one of the tens of thousands of documents that might have been produced in a case, or even considered for production. (Those lawyers also presumably have perfect vision, since they might well be sitting in the public seats, away from the counsels’ tables.)  No matter how exorbitantly expensive, they must assist in litigation, no matter what other responsibilities or training they have. They must help to prepare witnesses for deposition and trial. No managers of legal departments may assign other lawyers to specialize, for fear of compartmentalizing them. No matter how large the company or its law department, the head of litigation (no doubt, the company must appoint a head of litigation) will keep all outside trial lawyers informed of the activities of any other lawyer who is working for the company on any issue. Even if those projects are irrelevant or privileged, opposing counsel might want to know about them, which apparently makes them fair game. And, if any in-house lawyers ever fail to achieve perfection, they must have done so on purpose.

What’s that? No takers? Of course not. But that’s effectively how one federal district court imagines that in-house legal departments should run. Worse, the court sanctioned a company when its legal department didn’t live up to that impossible standard. And then the court criticized the lawyers in the company’s legal department generally, and called out one senior lawyer by name.

If this precedent stands, who knows – maybe you or your company could get sanctioned for no valid reason. That would be absurd and worse.

To protest, and also to try to set things right on appeal, ACC today filed an amicus brief in the U.S. Court of Appeals for the 11th Circuit. In the brief, we explain that in-house legal departments come in all shapes and sizes, and there’s no single “best structure” for how to set things up. That’s just as true for litigation cases as for any other legal matter. While some in-house counsel on occasion will do all the document review and production themselves, more often they work with outside vendors, outside counsel, or both.

We also emphasize that Federal Rule of Civil Procedure 37 — which served as the basis for the sanction — isn’t meant to force legal departments to restructure themselves to meet the standard that the district court conjured up. To the contrary, the Federal Rules call for discovery to be inexpensive, and for lawyers to do a reasonable job rather than a perfect one. The sanction is especially problematic because the court did not punish any individual attorney, even though it still criticized their work. In other words, the individuals whose reputations were stained have no means to vindicate themselves if the 11th Circuit refuses to overturn the sanction.

The case in the 11th Circuit is Coquina Investments v. TD Bank, N.A., Nos. 12-11161 & 12-15457. The sanctions that the district court imposed are here. And ACC’s amicus brief is here (it seems to look best in Adobe Reader). We’ll keep you posted on the case as it develops.

Evan Schultz

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