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Bankruptcy

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The Sedona Principles and Bankruptcy

By R. Lee Barrett

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My wife and I recently brought home a kitten for our children. Our youngest, the well-intentioned but maniacal three year old, has showered the kitten with so much attention and tough love that the poor kitten spends a lot of time with me in order to gain reprieve from the three year old. This morning, I watched, with no small amount of my own maniacal pleasure, as the kitten perched on the edge of the shower and tried to decide whether to

stay on the ground he had already claimed, or let natural curiosity get the better of him and jump into the running shower. Having leaned too far in, and belatedly realizing now the obvious problem of the running water, the kitty scrambled back on to his perch. In his panic, he over-corrected and nearly fell backwards onto the floor, forcing him to scramble, leading to another over-correction that nearly caused him to fall into the shower. Sometimes that is how I feel about e-discovery issues in bankruptcy. (I also feel that way about my paltry retirement account the last several weeks, but that is a topic for another day).

Thanks to the Sedona Conference, I have found something of a counter-balance to keep me from falling from my narrow perch. After perusing The Sedona Principles: Second Addition Best Practices, Recommendations & Principles for Addressing Electronic Document Production [or Electronic Document Discovery if Appendix B of the publication is to be believed] (The Sedona

Conference Working Group Series, 2007), a profound sense of calm came over me. I know that all of you, still bleary eyed from celebrating Barry Bonds' individual accomplishment last night will share in my relief. The Sedona Principles, which without a question are THE authoritative guidelines to electronic discovery, say nothing at all about bankruptcy. Surely this means by implication that the bankruptcy bar has nothing to fear from the December 2006 amendments to FRCP. Proof positive that e-discovery is just another way for our litigation colleagues to bulk-up against their opponents, finding another means to "juice up" as the kids all like to say.

On the other hand, maybe my own sense of calm is bred in the approach that the Sedona Working Group has taken establishing the suggested framework for dealing with digital information. More importantly, maybe there really are some good lessons to be gleaned from the recent publication.

The preface of The Sedona Principles boldly proclaims that the FRCP has not supplanted the group's efforts, rather than the principles continue to be the authoritative guide as to how lawyers ought to act in the digital age. The Working Group's claim to authority is well placed,

given the straight-forward, easy to comprehend organization that seems to be one of the hallmarks of The Sedona Principles. Although the publication is anchored by the 2006 amendments, one gets the sense that the working groups are looking well beyond just the FRCP in terms of addressing policy and best practices for dealing with electronically stored information. This inference is reinforced by the scope of the different Working Groups, the publications already available through the Sedona Conference, and the seminars that the group is hosting.

In looking beyond just the FRCP, this brings us back to bankruptcy practice and "e-discovery." So far, the bankruptcy bar seems to have given something of a collective shrug to the notion of adopting an updated set of standards for technological competence and in addressing modern business practices. Given that ESI is not defined, or mentioned, in the bankruptcy code, the consensus seems to be that ESI, and all of the attendant concepts and issues, are collectively a litigation problem, not a bankruptcy problem.

If for no other reason, sec. 521 and sec. 541 of the bankruptcy code suggests otherwise. (For all the other reasons, take another look at any of the articles from my friend and un-indicted co-conspirator Jack Seward). Although the Sedona Principles don't address bankruptcy outside of the litigation arena, the working group has framed key foundational premises in much the same way as Seward, and more recently myself, have. See generally The Sedona Prinicples, pp. 2-10.

The one key foundational difference between the role of ESI in bankruptcy and ESI as a litigation issue is summed up by the working group's conclusion that, "The Rules and Guidelines are not self-executing." Id p. 10. Section 521 and 541, being substantive law rather than procedural rules, are certainly "self-executing" within the context of bankruptcy, and woe be unto the debtor who believes otherwise. The point is that the concepts of ESI do exist outside of the shark tank of litigation, and bankruptcy lawyers, consumer and commercial, will likely soon find themselves farther into the "twilight zone" of ESI than even their litigation counter-parts. Fortunately for all of us, The Sedona Prinicples is the best written, authoritative and easy to comprehend publication I have yet seen on the subject.

The other "must-have" publication from the Sedona Conference that every bankruptcy judge, lawyer and academic ought to have on their desk is The Sedona Guidelines for Managing Information and Records in the Electronic Age (Sept 2005 Version), which is also available from the Sedona Conference as a free download. Especially in the case of commercial bankruptcy lawyers, this publication is vital.

Now, if I can just get the three year old to leave that damn cat alone...

Full post as published by E-Everything for Bankruptcy Lawyers... on September 17, 2007 (boomark / email).