Finding the Electronic Smoking Gun in Unfair Business Practices Cases

Unfair business practices, corporate raiding, breach of fiduciary duty and business conspiracy cases all have much in common. Usually there are one or more disloyal employees and often an aggressive competitor. The fact patterns follow a number of predictable scenarios. For example, a disloyal employee who wants to be marketable to a competitor may misappropriate proprietary information that he then provides to a new employer to earn instant goodwill. Or, if a conspiracy is present it may involve one or more employees who desire to start a competing company because they believe they can make more money than they are currently being paid or who have been approached by a competitor who wants to hire a group of key employees from the competitor firm. In such cases because they are either risk averse or are experiencing pressure from the competitor to bring work with them, the employees pilfer proprietary data from their employer that might be useful to the new company in creating efficiencies or expediting revenue. The end result is the same: loss of key employees, clients and profits.

For the plaintiff’s lawyer representing the victim employer, electronic data may be the source of the most important evidence in the case. So where do you look?

First, start with the client’s IT system. But, before any search methods are employed, engage a forensics expert to make a bit map image of the server or any hard drives that might contain relevant evidence. In addition, take the last set of full backup tapes, if they exist, out of rotation. That way, no discoverable electronic data should be lost that could later serve as a basis for a spoliation (unlawful destruction) motion.

Then, examine the renegade employees’ emails, user files and electronic faxes. Most jurisdictions do not protect employees’ communications using work computers from review by their employer. From this information, you may find evidence that supports your claim against the departed employees, but it may also reveal evidence of concerted action by other individuals who are still employed by your client.

Once a lawsuit is filed, serve comprehensive document requests that require the production of documents from the individual defendant’s personal computers and PDAs in electronic form. It is important to negotiate a protocol for the form of production with opposing counsel in advance or seek approval of one from the court. Make certain that the metadata for all documents and emails is produced. It will provide details of when documents were created, modified, last accessed and by whom. Again, emails may hold the key to the identities of others who may be involved. Cell phone records are another fertile ground for evidence of complicity.

Twenty first century litigation is almost wholly dependent upon electronic evidence. If you are still chasing the paper, you will likely miss 90% of potentially relevant evidence. Working closely with a competent forensic expert will help you identify other potential sources of electronic data that can assist in evaluating your case early, before costs escalate and can possibly enable you to find that smoking gun that will lead to an early settlement of the litigation.