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How E-Mail Is Revolutionizing Litigation -- and What You Should Be Doing About It



In litigation, the truth does not always matter. What does matter is the persuasiveness of the evidence. All other things being equal, if your adversary's testimony seems more credible to the judge or jury than your testimony, your adversary will likely win, no matter who's telling the truth.

In a typical case, Widget buyer Mr. Jones testifies that Mr. Smith, the Widgets Corp. sales manager, told him that if he put his order in now, the price would be discounted by 10 percent. Mr. Smith, on the other hand, testifies that was not the deal at all. Rather, he says, it was agreed that the discount was to kick in only if Mr. Jones ordered at least one million widgets, which never happened. $300,000 is in question. Which side do you find in favor of, and on what basis?

Assuming that neither party has been caught in a lie or contradiction, there is no rational basis on which to pick one side over the other. Having little choice, jurors are likely to pick the witness who seems most credible -- that witness who made better eye contact, seemed least hesitant, and so on. But the fact is that some people are better speakers -- more relaxed -- and make better witnesses than others, none of which has anything to do with who is telling the truth. Isn't evaluating witnesses based on their appearance tantamount to judging a book by its cover?

Let's add something more to the mix: In conformance with his standard practice, suppose Mr. Jones produces a memo he sent to his boss on the same day he met with Mr. Smith: "Deal made for 500,000 widgets, price discounted 10 percent per sales manager Smith." And suppose Mr. Smith has no documentation of any kind to support his version of the facts.

Now there is a real reason to pick one witness over another. When faced with two credible witnesses whose recollections are at odds, judges and juries are most likely to choose the witness who has corroborating documentation to support the story. In the "my word against your word" battle that characterizes so much business litigation, documents are the weapons of mass destruction.

THE PERILS OF UNINTENTIONAL DOCUMENTATION

In the not too distant past, the only way business people could communicate in a real time, convenient and spontaneous way was through face-to-face meetings and telephone conversations. When the all-too-common dispute arose as to who said what to whom, the traditional "my word against your word" battle would play itself out as in the example above.

Fast-forward to the 21st century, where e-mail -- easy, instant, and universally accepted -- has become virtually the default mode of communication.

Old way: The buyer and the seller make a deal over the phone.

New way: The buyer and the seller exchange a series of e-mails.

What was once an unverifiable conversation is now a transaction set forth in print. As a result, the "my word against your word" conundrum becomes more of a contest between e-mails, as opposed to a competition between the memories of testifying witnesses.

This new reality includes both good news and bad news.

The good news is that an e-mail that accurately corroborates your version of the facts can be of supreme, strategic importance. The bad news is that most people do not anticipate that their e-mails may end up as an exhibit in a courtroom, where each page will be projected on a large screen and parsed for meaning and intent. Often as a result, little care is taken in wording e-mails, leaving the author with an unconvincing -- and potentially devastating -- "I know that's what I said but that's not what I meant" explanation. E-mail authors often find themselves in the position of having unintentionally documented the other side's case.

For instance, in the U.S. versus Microsoft antitrust proceeding, a key contention was that Microsoft was conspiring against Sun Microsystems. An internal Bill Gates e-mail surfaced in which he asks: "Do we have a clear plan on what we want Apple to do to undermine Sun?" A Microsoft executive e-mailed Gates with a strategy to force Apple to do Microsoft's bidding by threatening that, otherwise, Microsoft "will do a great deal of harm to Apple immediately." There were, of course, excuses and explanations, but the damage to Microsoft's defense in the case had been done.

Just as dangerous, there is a strange, psychological aspect to e-mail: Business people seem to believe that they have to be much more careful about what they say in a printed memo or a letter than they do in an e-mail. It is as if they view hard-copy documents as having a permanent existence, while viewing e-mails as if they exist only in some evanescent form, like notes written in disappearing ink. Indeed, the opposite is true.

In addition to the obvious fact that e-mails can easily be printed and filed, specific e-mails are much easier than memos or letters to find. And the ease with which e-mails can be forwarded to a geometrically increasing array of recipients increases the odds of an e-mail being where an investigator might be looking.

Executives at the highest levels seem beset by this "it's just an e-mail, I can say whatever I want" malady. As has been well publicized, former Boeing CEO Harry Stonecipher recently sent "love letter" e-mails to a female executive through the Boeing e-mail system, which were ultimately forwarded to the board, resulting in his dismissal.

It is hard to imagine him deciding to risk expressing the same sentiments in a memo. Enron executives sent copious, incriminatory e-mails referring to meetings that Enron executives later claimed they never had; meetings in which plans to exercise political influence were discussed, and ruminating on how to derail pending and expected investigations -- blithely but inexplicably presuming that the e-mails would never be discovered and publicized.

The extent to which major, commercial proceedings are routinely turned one way or another based on e-mails that are either poorly phrased, or never should have been sent in the first place, can be startling.

For example: A food service company contracted to provide all meals at 48 nursing homes. Ultimately, the food service company claimed that it was underpaid over $2 million, and sued in federal court. The president of the nursing home company claimed that the food service company had made certain oral cost guaranties that were not honored, thereby justifying the underpayments. A detailed review of the nursing home company's internal e-mails, however, revealed that its executives had "privately" expressed substantial doubt about the supposed oral guaranties. The e-mails were stressed to the jury, which awarded the food service company $2.5 million.

New York Attorney General Eliot Spitzer claimed that various stock brokerage firms had convinced investors to buy stocks based on phony research. The key evidence: Spitzer's staff found internal e-mails at the stock brokerage firms in which research analysts denigrated stocks that were, at the same time, being pushed by brokers.

In June 2002, the Arthur Andersen accounting firm was convicted of obstructing the Securities and Exchange Commission's investigation into the collapse of Enron. Among the pieces of evidence that jurors found most incriminating was an e-mail by Andersen's in-house counsel instructing an Andersen partner to remove incriminating language from an internal Andersen memo.

SO WHAT DO YOU DO?

Training, training, training. Once an e-mail is created and sent, you cannot un-create it, anymore than you can unring a bell. You need to stop incriminating e-mails before they are sent by sensitizing personnel to the damage that ill-conceived and poorly worded e-mails can do. Particular care must be taken to eliminate the e-mail messages with language that suggests "we may be wrong but let's do this anyway," and the "let's make sure we don't tell them about it" variety of e-mails that continue to arise in major cases throughout the country.

The training needs to go beyond what not to do, and include prescribed methods to create e-mails that can corroborate a company's position in the event of a subsequent dispute or problem. Although it is useful to stress the dangers of using loose language (and, for that matter, the dangers of failing to even attempt to document key deal points), to be really useful the training must also include easy-to-use, pro-active techniques that personnel can use to ensure that e-mails work in their favor. For instance, create a checklist of the issues that most frequently lead to disputes in your business (delivery dates, discounts, performance specs, whatever), provide form language that managers can use in their e-mails to nail down each point, and train them on the best ways to do it.

Designated supervisory personnel must regularly monitor e-mails, using sampling and/or word-search techniques (depending on the nature of the business). This enables a company to spot potential problems and identify the need for additional training or other remedial measures.

Routinely deleting e-mails is not the answer. A wholesale e-mail deletion policy can result in the elimination of not only the bad evidence, but also the good evidence -- the e-mails you may need to prove your case. But aside from that, there are legal implications to the destruction of documents, including e-mails. Statutes like Sarbanes-Oxley impose certain document-retention requirements. Other laws, some with criminal implications, can result in severe punishment for the destruction of evidentiary materials, particularly when there is reason to know that there may be a claim or dispute forthcoming to which the destroyed materials would be relevant. Consult counsel.

In the litigation process we use to divine right from wrong, e-mails play a key and ever-increasing role -- often in contexts where there are millions of dollars and careers at stake. Well-managed companies need to recognize and plan for that reality. The inevitable alternative will be the supreme frustration of knowing you are right, and not being able to prove it.

Michael G. Trachtman is a partner in Powell, Trachtman, Logan, Carrle & Lombardo, P.C., a law firm with offices in Pennsylvania and New Jersey.

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