legal research

 

Businesses reeling after multiple international stay-at-home mandates are finding themselves out of options and filing for bankruptcy. The situation has led some law firms to cash in on bankruptcy service, and made many cautiously optimistic that the bankruptcy practice will be in high-demand during the current recession.

If it comes to fruition, a boom in bankruptcy proceedings could impact e-discovery counsel's workload as well. "If you have an uptick in bankruptcies, especially corporate bankruptcies, you will have a correlated uptick in e-discovery expertise," said Shannon Capone Kirk, Ropes & Gray's e-discovery counsel. "I think that's a fair projection to make."

Kirk's projection is based on the growing amount of digital communications that occur across companies. "We have seen in recent years an increase in the volume and nature of electronic discovery in restructuring proceedings," said Christine Payne, a partner at e-discovery boutique Redgrave, which last week announced a restructuring discovery team. "Not every restructuring is going to have discovery but those that do, it moves very fast and the data types are becoming increasingly complex. Parties are more interested in text messages and we have to keep up."

Suffice to say, the demands of collecting and reviewing all electronic data during a bankruptcy proceeding can be challenging.

"You have the accelerated pace for discovery in bankruptcy, [so] you have to have a good knowledge about the efficient technology and efficient workflows" she said. While not all bankruptcies entail a quick turnaround for discovery, "often [there's] a need to resolve the issue as soon as possible so creditors can be paid and resolution can be had," Kirk explained. 

E-discovery conducted during a bankruptcy proceeding can also include unique data collection and privacy demands.

During Chapter 7, for example, collecting computers from departing employees should include recovering encryption keys, because once people leave it may be difficult to access data, noted Littler Mendelson shareholder and national e-discovery counsel Paul Weiner.

While Chapter 7 liquidation places a stronger emphasis on collecting data, Payne noted that Chapter 11 restructuring typically entails obtaining C-suite communications and assessing messages. "Restructuring discovery is mostly done by agreements and parties are incentivized to produce comprehensively and quickly. If the merits counsel [is] negotiating on behalf of a debtor and agrees to give officer-level communication, you have to be able to jump on it."

Still while they have their own unique challenges, e-discovery during bankruptcy proceedings also can be similar to other litigation, e-discovery counsel said. After all, understanding the scope, what's is needed and other rules agreed upon by the parties are essential for all discovery matters, including bankruptcy proceedings.

It's only bankruptcies' heightened timeline and unique collection challenges that really make the difference, Weiner explained.

"The fundamental issues that would come up in litigation will also arise in those [bankruptcy] cases but, because of the unique setting of bankruptcy, when things may be winding down, reorganizing or changing, those are when the unique circumstances come in," he said.