August 07, 2018 Top Story

Alleged Failure to Monitor Discovery Leads to Malpractice Suit

Law firm unable to shake malpractice claim for not preventing spoliation

Onika K. Williams

An attorney’s failure to institute a litigation hold or monitor a client’s compliance with that hold may constitute malpractice, according to at least one federal district court.

The judgment against the company was a sanction for deliberately destroying the website design

The judgment against the company was a sanction for deliberately destroying the website design


In  Industrial Quick Search, Inc. v. Miller, Rosado & Algois, LLP, the U.S. District Court for the Southern District of New York rejected a law firm’s defense against claims that its lawyers were not involved enough in the discovery process; the court thus found the firm liable for $2.5 million in damages related to spoliation sanctions levied on a former client. ABA Section of Litigation leaders see the case as a reminder of the importance of determining a client’s understanding of the discovery process and preservation obligations.

Default Judgment Leads to Malpractice Suit

The conflict in Industrial Quick Search began when a court entered a default judgment against Industrial Quick Search (IQS), finding that IQS had misappropriated and plagiarized copyrighted materials from another company, Thomas Publishing, to create a web-based directory. The judgment was a sanction for deliberately destroying documents central to the website’s design. As a result, IQS paid Thomas Publishing $2.5 million to settle the dispute. IQS then brought a malpractice suit against its attorneys in the U.S. District Court for the Southern District of New York, asserting that but for its attorneys’ negligence, the default judgment would have not been entered and IQS would not have had to settle the underlying suit.

Both parties sought summary judgment. The court denied IQS’s motion in its entirety. It granted portions of the defendants’ cross motion, limiting the scope of IQS’s claims, but upheld IQS’s malpractice claim regarding failure to issue a litigation hold and failure to properly oversee the discovery process. Defendants then moved for reconsideration of this order, which the court denied.

Counsel’s Alleged Failure to Provide Discovery Advice

QS alleged its former law firm was negligent because it failed to issue a litigation hold and failed to properly oversee IQS’s compliance with its discovery obligations. IQS contended that it repeatedly requested legal advice from its then-counsel about how to prepare and respond to discovery requests in the copyright infringement suit. According to IQS, its lawyers did not provide the requested advice because they were working on another legal matter. IQS also claimed that its former counsel did not establish standard document production procedures such as discovery logs or Bates stamping. As a result, IQS, in the absence of its then-counsel, served approximately 30,000 un-inventoried documents on Thomas Publishing.

Additionally, IQS removed files it believed were not responsive to the discovery requests and destroyed them prior to production. Many of these documents had responsive information on one side, but had been reused for printing on the other side and consequently contained personal, financial, and other confidential information. Rather than redacting the confidential information, IQS removed and destroyed the entire documents. IQS claims it sent an inquiry to its then-counsel about whether the destruction of documents was proper, but did not receive any response.

Thomas Publishing learned of the spoliation issue during depositions and sought recourse with the court, which after a hearing determined IQS had intentionally destroyed documents at issue and that the destroyed documents were likely critical to determining the scope of IQS’s copyright infringement. As a result, default judgment against IQS was appropriate.

Failure to Properly Advise Regarding Discovery May Constitute Malpractice

The former law firm argued that: (1) it was not negligent because it had no duty to advise IQS of their obligation to preserve documents; and (2) even though it had no duty to advise IQS to preserve documents, it issued an “oral litigation hold” at the parties’ initial meeting during the copyright action. IQS denies an oral hold was ever issued.

The court sided with IQS, holding that although counsel is not always responsible for a client’s destruction of documents, it does have an obligation to take reasonable steps to ensure the client preserves relevant information. The court denied both parties’ summary judgment motions regarding the litigation hold and discovery oversight, and subsequently rejected the defendants’ motion for reconsideration of that order. As a result, the defendant attorneys were still subject to liability for failing to issue a proper litigation hold and failing to properly oversee the discovery process, including document retention and production by IQS.

Best Practices to Avoid Discovery-Related Malpractice Claims

Section of Litigation leaders agree that written attorney-client communication regarding discovery obligations is important. A “best practice would be to communicate in writing with client concerning litigation holds, scope of holds, document retention policies and ongoing ‘supervision’ of discovery process internally with client(s),” advises Robert J. Will, St. Louis, MO, cochair of the Section’s Pretrial Practice & Discovery Committee.

“Today, many law firms offer standard litigation hold letters that can be modified for use by clients to ensure compliance with the rules and decisions applicable in both state and federal courts,” adds Kenneth M. Klemm, New Orleans, LA, who also serves as cochair of the Section’s Pretrial Practice & Discovery Committee. “[F]or a client not familiar with the litigation process, it becomes even more important to be clear in the advice given to a client about the duty to preserve information and about responding to discovery requests,” warns Klemm. In fact, written documentation of discovery advice in this case could have changed the outcome of Industrial Quick Search, he posits.

Will agrees. “Had there been written documentation of what the defendants described as an ‘oral litigation hold’ communication referenced in the case, there might have been no disputed material fact issue precluding summary judgment in favor of the lawyer/law firm defendants on liability,” he observes.


Onika K. Williams is an associate editor for Litigation News.

Hashtags: #discovery, #destruction, #evidence #malpractice

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