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Delaware Chancery Court Sanctions Counsel for Violating Ethical Duty to Maintain Technological Competence

Posted on January 17th, 2015

In our last post, we reviewed an eDiscovery dispute in the class action litigation James et al. v. National Finance LLC, C.A. No. 8931-VCL (Del. Ch. Dec. 5, 2014) where Defendant failed to comply with the Delaware Court of Chancery’s order that Defendant provide Plaintiffs with an affidavit from its ediscovery vendor regarding its discovery practices as well as a revised spreadsheet identifying APRs at issue in the litigation.

Plaintiffs moved for sanctions by default judgment or, in the alternative, that Defendant’s failures be deemed admissions that certain entries on the spreadsheet had violated the Truth in Lending Act.  At the hearing on the motion, Defendant’s counsel stated: “”I have to confess to this Court, I am not computer literate. I have not found presence in the cybernetic revolution. I need a secretary to help me turn on the computer. This was out of my bailiwick.”

The court responded by citing the amended Comment 8 to Rule 1.1 of the Delaware Lawyers’ Rules of Professional Conduct, which states, “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology…” The court also referenced the fact that rule parallels both the Rules of Professional Conduct in Pennsylvania (the attorney’s home state; he was admitted pro hac vice in Delaware) and the Model Rules of Professional Conduct.

The court also quoted the following: “[D]eliberate ignorance of technology is inexcusable . . . . [I]f a lawyer cannot master the technology suitable for that lawyer’s practice, the lawyer should either hire tech-savvy lawyers tasked with responsibility to keep current, or hire an outside technology consultant who understands the practice of law and associated ethical constraints.” Judith L. Maute, Facing 21st Century Realities, 32 Miss. C. L. Rev. 345, 369 (2013).

The court found Defendant’s actions to be willful and part of a greater pattern of misconduct, but noted that it should use an entry of default judgment only where a lesser sanction could not remedy the problem. The court agreed with Plaintiffs’ alternative suggestion that certain entries on the spreadsheet be deemed admissions of the Truth in Lending Act, and ordered that both Defendant and Defendant’s counsel pay Plaintiffs’ attorney fees under FRCP 37(b)(2).

ILS – Plaintiff Electronic Discovery Experts

Did you know? The State Bar of California has reopened public comments until April 9, 2015 on the critically important Formal Interim Order 11-0004 regarding eDiscovery, ESI and ethical duties.

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