Wisconsin Business Law and Litigation
A blog dedicated to Wisconsin business law and business litigation matters, authored by Chris Moander of the Moander Law Firm.

Over the next few posts, I plan on breaking down one of the most expensive and often most stressful part of litigation: discovery. Specifically, I will focus on: (1) the purpose and strategy of discovery, (2) the “types” of discovery and when will they affect a party, (3) how a business can prepare and cope with discovery. As always, I’m not posting legal advice and you won’t see any case citations, legal tests, or statutes. My goal is to lay out a roadmap of discovery so a potential litigant can feel a bit more comfortable with the discovery process.

Strategy and Purpose of Wisconsin Discovery

Discovery is, on a basic level, the tool used by attorneys to locate evidence that has some bearing on a filed lawsuit. Both plaintiff and defendant have the right to request the other to reveal all types of information, ranging from tangible, physical things to a person’s memories and recollections. The body of information may be very small in volume (a box of papers) or the body of information may fill an entire warehouse (boxes piled to the ceiling) - as always, it just depends on the case. Further, each party’s requests are to be respected and observed, *ideally* without any judicial involvement, unless the parties have a disagreement they cannot settle independent of the judge - professionalism and negotiation skills of an attorney are very important to avoid irritating the judge.

Discovery can make people and businesses feel violated as opposing counsel sifts through one’s paperwork, email accounts, demands that you or your people answer questions (some of which make most people feel very uncomfortable and would never be asked in any other situation), and in some cases require those same people to submit to physical inspections or psychological evaluations. These experiences mask the true intent and goal of discovery, that being revelation of information that can substantiate (or undermine) a party’s claim - information that becomes trial evidence.

Other, more specific goals of discovery include capturing information from a perishable source or from a witness who might be unavailable should a trial be required, evaluating the nature and utility of potential witnesses in anticipation of trial, avoiding surprises during trial for either party, determining that facts thought to exist do not exist at all, and finding particulars that encourage settlement. The real strategy of discovery comes in the timing and achievement of these goals - who to depose and when, what documents should be requested and how do we ask for them, is it worth the trouble to inspect a piece of property or machinery and when should we do it.

In summary, discovery is not a tool of abuse (although some attorneys may use it that way), nor is it a fishing expedition. Rather, discovery is focused on revealing facts, specifically those facts that are: relevant to the claims/defenses of the parties, reasonably likely to be admitted at trial, and are not privileged (i.e. protected under Wisconsin law).

Types of Discovery

In the next few posts, I will go over the basic types of discovery: depositions, interrogatories, requests for admission, and inspections (of places, people, and things). The next topic: depositions.

As a follow-up to my post on cultural barriers to contract formation, the Small Business Times reported that Wisconsin officially topped a billion dollars of exports to China. Well done! Further, out of the top five nations to which exports are sent, three of those nations are non-english speaking - 3.8 billion dollars of exports in Wisconsin are affected by significant language and cultural barriers. Perhaps it is time for all of us Wisconsin business attorneys to buy some language software and diversify our tongues?

Sharmil McKee of the Small Business Blog by McKee Law Office reminds us business owners that the price of stamps is going up…again.

Perhaps this might be a catalyst for a business to reduce it’s physical mailings and move toward email and PDF’s as a cheaper and faster alternative?

I prefer and recommend email for a number of reasons, one of which is particularly relevant to litigation - that emails can preserve the who, what, when, where, why, and even how of communications between businesses and individuals. Such information can be incredibly important during discovery and early phases of a lawsuit. A litigant can show that s/he did send certain documents at a given time, or that things said were memorialized - these are great tools for counsel and encourage necessary prudence of tongue and act by businesses.

Another benefit to email usage is cost. You spend less on stamps, but you can also organize your incoming information without having to do much other than create folders on your computer (versus typing and printing a letter or telephone call).

Uncle Sam’s postal price increases could be seen as creating unintended incentives for more CYA-centered actions by businesses…

Intellectual Property (”IP”) has great value for companies of all types, not just those in the tech/computer/software industry, which means that all business owners need to understand the concepts to protect their companies. If you, as a business owner, have no idea what IP is, I recommend you check out the US Patent Office’s site on small business IP. The site explains patents, trademarks, and copyrights in clear terms, along with methods for filing or protecting each. Also, make sure you examine the downloadable materials to help educate you about what you can do to protect your IP and what the U.S. government is doing to do the same. Other media are also available for your review.

IP can be worth a lot of money and, in some cases, may be your money - think “golden arches.”

Drafting contracts of any kind sounds simple, but is in fact far from it. Ask Mr. Adams and Mr. Fox - contract drafting is about precision usage of the english language in such a way that an agreement can be read in one and only one way. Such usage is a very lofty goal, but is essential to good agreements.

However, a meeting of the minds is not the only facet of reaching an agreement. Hanna Hasl-Kelchner at Legal Literacy points out that cultural, geographical, and even regional differences can and will impact the contract formation process. She cites a WSJ article on the matter. Several points in the article are particularly relevant to smaller business, specifically the regional differences in the U.S. (which are significant).

Yes, businesses across the U.S. operate under very similar contract laws, but we also have very different notions of how to boil a relationship down to an agreement. I can recall people I knew growing up in Iowa who would more than willingly rely on a handshake based on local theories of doing business (essentially the terms and concepts local farmers used in doing business with each other). Everyone in the area “got it.” Outsiders, such as representatives from large multinationals based in a major city or another region, would have notions that differed from the locals, creating a potential for misunderstanding. This situation may sound like it needs a run-of-the-mill contract negotiation, but I disagree. What is missing here is understanding and education of both sides as to the background and experiences of the other - the key to reaching precision terms and a meeting of the minds. Other examples could be the “northerner” doing business with the “southerner,” or the L.A. company selling goods to the N.Y. company - the variations are numerous.

The business lawyer needs to be more than just the contract expert. She needs to do her cultural research, keep her ears and mind open, and ask questions. In other words, the business lawyer needs to constitute the complete package of law and business.

UPDATE: I just came across a blog that addresses cultural issues for lawyers, albeit in a litigation context.

Having attended law school in Oklahoma and thus been exposed to the Texas Bar, I have to hand it to the Texas Young Lawyers Association. They offer several tools for the practitioner but the crowning jewel is the “Ten Minute Mentor” series. One has to watch the state-specific law aspects of any presentation, but these lectures are wonderful and incredibly useful. The speakers almost always come off as (1) knowledgeable, (2) professional, and (3) passionate about what they do as evidenced by the detail and concision with which they present their material. I recommend that any and all practitioners check the site out.

I participated in TYLA’s trial competition while in law school, which is cosponsored with the American College of Trial Lawyers. I was coached by an outstanding and accomplished attorney who taught me volumes about trial lawyering. I think TYLA has a good thing going and hope they continue to produce valuable tools for the profession.

Social networking sites have been a “hot topic” for some time. There is site for every persuasion, which would indicate that your employees could very likely be a member of a social networking site. “So what,” you say? “I monitor whether my employees are looking at inappropriate material or spending a lot of time surfing.” As you should! However, these sites offer a unique set of problems, as outlined in this Computerworld article. Are you, as employer, aware of all that is being or can be posted on these websites? What about the unintentional downloading of malware, loss of bandwidth to the sites…or the risk that your employees engage in various business torts? Obviously, information can leak out of a company in any number of ways, but does it hurt to close off one more opportunity and reduce your risks? I don’t think so and neither does Bill Gates. Further, one particular site appears to have made it all but impossible to actually delete a person’s profile, so any given item of information posted may live on forever and thus be accessible to any number entities.

I personally use Linked-In and so disagree with the Computerworld article’s stance that executives don’t use these sites. I’ve found a lot of my professional friends, older and younger, put Linked-In to good use. Then again, it is also used as an effective recruiting tool…

So, employers, how do you respond to these social networking site concerns?

The Startup Lawyer is asking how the current economic downturn will affect startups? There are a number of ways to look at this, as I stated in The Startup Lawyer’s comments. PC’s are ubiquitous at this point, so those whose livelihoods rely on services and not goods may be in a position to open a company. However, those looking for venture capital may find there is none, or maybe there is, at least here in Wisconsin. An economy in this kind of flux could arguably reward those who can use technology in the most effective manner. Alternatively, it is certainly possible that people will not form startups. I’m not an economist, but I am an entrepreneur and I surely believe that, even when times are bad, startups can continue to sprout.

People looking to start a business of any kind understandably (and intelligently) look to prevent spending on any unnecessary services or goods. Sadly, legal services are often lumped into the “too costly” or “unnecessary” category. It’s easy to see why - legal services are not cheap and Foonberg’s Client’s Curve of Gratitude reflects a form of Buyer’s Remorse as applied to legal work. The former is the experience of the younger (lawyers are too expensive), the latter the experience of the older (I could have done it without legal advice). These reasons appear sound from a business standpoint. However, there are some very real downsides….

- Purchased form documents create a false sense of security as “boilerplate” terms are assumed by the entrepreneurs to be “safe,” which is hardly the case. Owners who are not getting along and decide to split may find themselves mired in extremely expensive litigation over a long period of time, all of which could have been avoided by spending a fraction of the litigation costs on quality document drafting by an attorney.

- Technical faults in any number of license or regulatory filings go unnoticed until the company is audited, a criminal investigation occurs, or some other form of litigation begins. The litigation costs dwarf up-front legal costs due to the belief that preventative legal advice was not necessary or worthwhile.

- Buyers and sellers throw together an amalgam of words, believing that the resulting document reflects a mutual understanding. Eventually, one party feels aggrieved and suddenly the so-called contract is revealed as imprecise and nebulous…and so costly litigation commences.

While I am an attorney and we attorneys do like to earn a living, most of us hate (and I do mean hate) to see client’s creations swallowed up by truly preventable events. As one business attorney told me “Businesses will either pay me now, or they will pay me later.” That’s not a threat, it is a fact. That fact may not apply to every situation, but it applies to enough of them to warrant attention - so much so that not getting good legal advice up front results in an inverse form of Buyer’s Remorse…that services should have been procured at the start.

The question is: is it worth it to pay now, or to pay later?

UPDATE: I failed to note that the Milwaukee Business Blog discussed this same issue a few weeks ago.

First, we need to define “metadata,” as the term is used everywhere but not always understood. Simply stated, metadata are data about data or information about data. Translated into useful terms for business, it is information tied to most digital forms of statistics, documents, intelligence, or other data in your computers and digital devices - metadata tells the detailed life story of information you possess and/or created. For example, when you write a document in Word, the metadata behind that document can reflect all the changes made to the document over time, such as the date you created the document and what alterations you made to the text from creation up to the document’s current edition. The wise practice is to assume that all digital information contains metadata, including emails, VoIP communications, and text messages.

So, now we know what metadata are, but why should a business care about it? Because metadata are discoverable during litigation. In other words, your opponent may get far more information from your files than you intended or anticipated (or you may get a gift from the opposing party), information that can severely damage your case. Examples include changes in specific items (names of people/businesses, dates, or dollar amounts) or sections of text (such as sentences, clauses, and phrases). The lesson here is that it pays to control your metadata because it can harm your case.