SUSTAINING TECHNOLOGICALCHANGESFOR INSURANCE LAW PRACTICE
The legal profession the law-biz has become computerized; this transformation is permanent: thetransformation will continue without stop for decades to come (at the very least); in fact, the degree of change may be even larger in the coming decades.
So, what are some a few–of its major changes that have started. Keep in mind: some of the already occurring changes are larger and harder to deal with than others.
Technological innovation and spread has had and is having two types of serious impacts on the legalprofession and therefore on insurance lawyer. Richard Susskind calls one of them sustaining technological change. He calls the other disruptive technological change. Very roughly a sustaining change is a substantial change but one that isn’t revolutionary and does not turn an existing system into unrecognizable chaos. A disruptive technological change the opposite. I willtalk about the former in this essay, and the latter in another, later post. It will be more explicitly about the views of Richard Susskind.
New Training Required. When I started out, right after subrogation boot campfrom Professor Jerome Gette, I passed on with Richard Arnold to property damage cases involving black liquor recovery boilers. I studied for awhile. A German engineer was hired for me; he taught me how lots of things, e.g., how BLRBs worked, and he (or somebody beneath him) taught me how to read design documents and weld so I could depose opposing experts, and his ilk Its a new world now, and I suspect that that kind of rough-and-ready training basically built on nothing–has, died and departed eons ago, measured by Palo Alto standards of temporality.
For example, in September 29,2016, the Florida Supreme Court ordered that required CLE combinations includea course of high tech stuff. New language in the Florida Ethical Rules will add language providing that competent representation may involve a lawyers association with, or retention of, a non-lawyer advisor with established technological competence in the relevant field. By itself this does not strike me as a very big deal, except that is expand lawyer discretion when it comes to disclosures of confidential information. (Advice: Get client consent.) But thats not evenhalf of the story. In addition, said the Court,
[c]ompetent representation may also entail safeguarding confidential information related to the representation,including electronic transmissions and communications. Additionally, we add language to the comment providing that, in order to maintain the requisite knowledge and skill, lawyer should engage in continuing study and education,including an understanding of the risks and benefits associated with the use of technology.
The explicit language of this order pertains to the protection of electronic data with belongs to the client but which the lawyer/law firm possesses. But the implications are much broader. The requirement as to lawyer knowledge is driven up. The ability of the lawyer to turn over file-guarding work to another is restricted. And computer competence is presumed.
Notice that the additionalCLE course is a mere minimum. Notice, inaddition, that in various ways other states are similarly oriented. Rules of legal ethics are being impacted enormously. All this changes the practice of law, as well as the procedural aspects of law, substantially and forever. Its arrival is immensely more significant than the arrival of the standing desks.
This court was not far behind a broader ethics opinion in California asserting definitely and at some length that the ethical rules require attorney competence and that this requires that a lawyer doing ESI related work must be competent as to handling it. Thus bar rules as to a non-legal area of being require knowledge by lawyer. (Of course, thats not really much new.Lawyers who handle car cases need to know about cars. Still, its sound dramatic.)
How will this affect the true,real, and actual responsibility of lawyers in general and insurance lawyers in particular? The implied point is that the impact will be enormous. E-discovery has and is creating a whole new sub-profession within the legal profession, and this point is not just applicable to litigators. Attention to e-discovery willreturn presently.
Obviously, coverage lawyers will continue writing opinions,giving advice, counseling cyber clients, initiating and responding to coverage litigation threats, discussions and actualities, dreaming about having nightmares concerning statutory bad faith causes of action, conducting litigation, and likely negotiating settlements. Few coverage cases will get tried, but not many are anyway. So whats really new about all this? Well,maybe, the language has more difficulty involved than Im letting on.
For one thing, the required new learning has uncomfortable complexities. Who really wants to go back to lower school and study Greek and Latin? Lawyer learnedness doesn’t require thatmuch, surely. Alas, false.
Applicable cyber language is quite unknown, obscure, subject to rapid, odd changes, and involves diverse usages and meanings. Knowing this vocabulary is necessary for doing the business of law and competing for customers-then-clients in the concentrated cyber world. It is also necessary for understanding the sorts of insurance policies found in that world. Most of them define new terms in ways that are not always self-evident, or they define in new ways. what appear to be old and much used terms which lawyers think they understand, but actually may not. Thus, the maxim coverage lawyers are taught from the day they start, READ THE WHOLE POLICY CAREFULLY (and then be ready to read it again and again often in pieces while remembering the rest of it), becomes especially important more like an axiom. (This is repetitious, I know, but the significance of there being a lawyer obligation and practical necessity with regard to knowing the cyber-digital language is so great that it must be said, at a minimum, many times.)
More Definitions in Policies. Second, it seems to me that the number of definitions has gone up. Im not sure about this. Maybe I just feel overwhelmed. Of course, some of the best New World coverage lawyers, who are also accomplished as making digital-rain for the Cyber-Insurance Peninsula, lawyers like Roberta Anderson, for example, are doing fine and remember much from their archival cyber-memories.
New Discovery Dimensions. Imagine taking the deposition of a software geek or a mathematical wonk in change of algorithm design and improvement who has a Ph.D. from MIT (and maybe another from Stanford). Of course, some lawyers are already fit to do this. A few more will get those degrees and bail out so they can go to law school. Obviously, this number is not high. Some people people are growing into this. Most are not and will not. Maybe not many such cyber world legal geniuses are not needed. To be sure, I guess. But consider the following.
E-Discovery. Electronic discovery, or discovery searching for Electronically Stored Information (ESI), has to some degree and in some ways been around as something rule-regulated since 1970, at least. Thats 46 years. In some senses e-discovery is therefore nothing new. I know a good number of lawyers younger from birth than that. The trouble is that the rules governing relevant components of the Federal Rules of Civil Procedure have changed considerably over those 46 years. In the FRCP, for example, there have been nine (9) amendments, the last one taking effect in December of 2015.
In addition to the FRCP, there are local rules, and various governmental agencies have rules of their own. And then there is Federal Rule of Evidence 502. This can be a serious matter for lawyers since a lawyer can be sanctioned for citing out of date rules, and if a lawyer exposes a client to a sanction for negligence discovery practice, there may be a malpractice case in the offing. Spoliation and satisfactory versus negligent failure to avoid or present spoliation can be sanction-creating the lawyers. The pile of new responsibilities is enormous, and some of them carry immense responsibilities for all sorts of lawyer, including insurance lawyers. What is called information governance is one of these.
Perhaps the situation can be nicely summed up in a paradoxical sounding remark by Shannon O’Malley at the Zelle. He said that his first interaction with serious e-discovery was in 2007 and that the serious attention to e-Discovery was really just in its infancy at that time.  Thus, the framework of the e-discovery system is an old one, by cyber cyber standards. The frame, however, hold a new multi-dimensional cyber-digitally-produced picture, with moving parts.
Granted most lawyer errors do not lead to sanctions or malpractice; even bench sarcasm is relatively rare; still, its new world, and gospel gets around. In some ways, the sanction threat is smaller in terms of amount and probability than having the pay the attorney fees of the flashy cyber practitioners on the other side.
One might think that the practice of e-discovery is involved only in quite large cases, but this is not always true. The most famous of all e-discovery cases5 published opinions in one case–involved an employment discrimination suit. See Laura A. Zubulake, SUBULAKES e-DISCOVERY: THE UNTOLD STORY OF MY QUEST FOR JUSTICE (2012).
Moreover, it can be reasonably speculated that the amount of reasonable, proportionate e-discovery increases more or less at the size of the case created. Small cases usually do not tend to need predictive coding or very much in the way of concept grouping, near-duplication detection, nor, probably, a good taring, i.e., a technology assisted review (TAR), nor even the production of a TIFF imagery. However, no lawyer doing e-discovery things should every forget the significance of metadata. Sounds simply enough, doesn’t it. Now, how does one make sure she gets it and all of it.
Coverage cases can involve an all-out search for emails. In other sorts of cases not long past, emails proved to be smoking guns. The same has proven true time and time again in bad faith cases. An email search will include emails and email threading, at least. It will also involve the historically significant practice of manual review history never dies and the use of search terms of all fileshow primitive. Established procedure to be sure. But parties to lawsuits can hid self-damaging documents. Searching for them is a sophistical enterprise, and it requires extensive antecedent knowledge. Email searches are certainly involved in litigation where insurance companies are involved. This is obviously true when an insurer is conducting/controlling the defense of an insured under a liability policy. It is also true when there is a coverage case. In the latter type of case, the policyholder is likely to have more edata to preserve and present, and it is worth remembering that that the duty to preserve can extend to third parties, e.g., all sorts of companies that serve the policyholder.
The insurer, however, is not off the hook. Its discovery questions directed to the policyholder must be reasonable, proportional to the probably size of the case, and specific. All of this means that lawyers representing insurer are under as much pressure as lawyers representing policy holders when it comes to e-discovery obligations. In addition, of course, the duty to preserve may extend to brokers, claims administrators, and some underlying counsel sometimes. Thus insurers may have the same types of duties policyholders can have when it comes to keeping third parties in the discovery loop.
Besides, in some coverage cases the insurers cache of document may be every bit as large as that of the policyholder. Consider the insurer that contests a business interruption claim of a multi-billion-dollar corporation. The insurers stash of electronic data is likely to be huge. Even its list of emails is likely to be long.
E-discovery can be a complex process requiring considerable planning, negotiating, and management by lawyers. This includes even relatively simple insurance coverage litigation involving only the policyholder and the insurer. Of course, the size of a suit matters when it comes to determining appropriate electronic discovery.
In the FRCP, the principal rules are 26, 34, and 37, but these are not the only three, and they are neither brief nor simple. Observes of this new kind of discovery remark from time to time that seasoned litigators can be as confused and confounded as novitiates. (In fact, in my opinion, new comer lawyers can sometimes start in better shape than the more experienced lawyer, since it is more likely that they will have actually studied the subject of discovery in law school, where there are whole courses on it now, whereas even in the 90s where weren’t any or only a few–even at the best law schools.Having read all this, does it comfort the reader to know that there are barely any reported courts cases pertaining to e-discovery problems in insurance cases? Its true. However, I recommend taking no comfort, since there are a good and growing number of suchcases in lower federal courts, especially district courts and magistrates. Whatgoes around spreads out and around.
The law in Texas regarding e-discovery is much more stable, moderate, flexible, looser and maybe more discretionary, plus probably often less expensive than federal procedural law. Perhaps it is also more in linewith a philosophy of law thats founded on individualism, entrepreneurialism,and privacy-as-extended-to-business entities, whereas the FRCP are more disciplined, oriented to a kind of Progressivism-based , regulatory federalism.
In any case there are certainly fewer amendments to the governing Texas Rule, to wit: Rule 196.4is not lengthy; it does not sound complex; indeed, it sounds simple. Roughly here is what it says: The requesting party (RqP)must specifically request electronic/magnetic data; It must specify the formin which it wants it produced; The responding party (RpP)must produce responsive data that is reasonably available to it in its regular course of business; If RpP cannot through reasonable efforts retrieve or produce in the form requested, RpP may object; If the court orders production, it must also order RqP to pay the reasonable expenses of any extraordinary steps required to retrieve and produce.
. This rule is anything but simple; it is nothing if complexity is not hidden in the language of the rule.One could argue that the some of the terms in the rules generalists overall formulation create avenues for a courts requiring plenty of clarity and specificity. At the same time, if a pair of litigators is aware that the court in charge is unsympathetic to trying to hide data or trying to get way too much you dont need, the pair is likely to work hard at negotiating a result. Making sure there is a reasonable result is what energy,negotiation talent, knowledge of discovery rules, cyber knowledge concentration, time and stamina are about. The matter gets more complicated as to negotiation when the set of litigators in increased beyond a pair.
The generality of this rule governed by itself, with the assistance of lower courts, for about 10 years.From then until nearly now, Rule 196.4 has been supplemated and explicated by a single case, In re Weekly Homes, L.P., 295 S.W.3d 309 (Tex. 2009). (At the sametime, this crucial case states that it is not inconsistent with the federal rules, just more practical and less structured. Some might think it sounds like a critique of federal regulations in general.)
I say nearly now because the Texas Supreme Court ruled in a purely procedural e-discovery case that e-discovery would be stayed pending a ruling on a petition for a writ of mandamus. The insurance companys arguments were vivid and dramatic. In re State Farm #15-0905 (Tex. January 8, 2016)(hail loss claim: insurance coverage + insurer bad faith). The stay was lifted by a court of appeals in an opinion datedSeptember 16, 2016. That opinion is very educational. In re State Farm Lloyds, # 13-16-00362-CV (Tex.App.Corpus Christi, 2016). Its technicalities are outside the scope of this discussion, since they do little explore the impact of e-discovery on the professional lives of insurance coverage lawyers, except to reinforce by implication the point that e-discovery is inevitable, pervasive, and transformative,even in relatively minor insurance coverage cases.
E-Testimony Given E-Discovery. One might think that the uses of video communication techniques are not part of the cyber revolution. Maybe not, but they go hand in hand. There was an issue raised in the recently settled case of Trump University as to whether The Donald by then President Donald could testify by video, presumablyWashington to San Diego.
How is this changing the professional insurance coverage lawyers? Learning, doing, machining, negotiating, constructing investigative systems, insisting, and so forth. Sounds like what we already do? Read theFRCPs again. Think of the more general and flexible law of Texas law as if it were FRCP + 502(c)-(e) law. Now, do you really think there is not a radical change? Think again.  For an amusing and helpful introduction to legal ethics and e-discovery see the lengthy outline of a presentation by Amy Dashiell (of Scott Douglass &McConnico LLP) and Robert Schmidt (of the Crews Law Firm, P.C.) entitled ElectronicDiscovery (and Privacy Issues) (emphasizing Texas law and easily findable on the Internet). This is a truly excellent starting place. Formal Opinion #2915-193 (June 30, 2015) (dimension of competence required).
 Vocabularial changes, new terms, and new systems of terms have had somethinglike a retro-impact on non-cyber litigation. One good place to observe this is in currently used definitions of termslike documents in relatively routine litigation.  To show you how far the reach of electronics reaches into the practice of law, I will note an electronic source. Learn from it, but heavens to Betsy, don’t cite it yourself. Electronic Discovery, WIKIPEDIA (last revised August 21,2006). Dont trust it for longa few weeks at the most; its getting old and therefore stale.  Will Texas Stay Moderate When It Comes to E-Discovery? (Texas Law 360, April8, 2016)  These cases were the infant, according to Shannon O’Malley that brought what he calls serious attention to e-discovery.
 See H. Christopher Boehning and Daniel J.Toal, Court Praises Predictive Coding, But Ultimately Rejects It 252.24 NEW YORK LAW JOURNAL[–]TECHNOLOGY TODAY, August 5, 2014.  To TIFF or Not to TIFFThat Is the Question, An Ad for WARROOM DOCUMENTS SOLUTIONS (September 11,2013)  See Theodora R. Lee and Littler Mendelson, Ethical Minefields and e-discovery:A Perfect Match, ABA ANNUAL MEETING: SECTION OF LITIGATIN (August 7-11 (2014)(Quoting from a 2005 trial court order, Electronic data are the modern-day equivalent of the paper trail. Indeed, because of the informalities of e-mail,correspondents may be less guarded than with paper correspondence.) Tell it to John Podesta. Sources of Authority: Any national newspaper you like in theory English speaking countly during dates falling into late October and earlyNovember 2016.  This is all in addition to the fact that many experienced litigators want to fob off document discovery on the lower classes. (I try resolve or try disputes. Others help get me ready.) A reprint Business Insurnce.com opened with the headline E-discovery falls hardest on insurance industry. (October 22, 2016). The newspaper-like piece contains a lot of interesting tid bits. One of the most interesting is this:Insureds. . .are expected to face increasing scrutiny from underwriters of liability and D & O policies about their own data management programs,which may be reflected in future insurance premiums. Might one hypothesize that coverage lawyers, and the like, might be involved in dealing with this demand, or qualifying it?