By Rea, Kelley V.
Records Management Quarterly , Vol. 23, No. 4
LEGAL AND ETHICAL RESPONSIBILITIES
Litigation Audits as Part of a Records Management Program
An audit of the litigation in which a company is involved can provide insights into the recordkeeping process and assist in the adoption of recordkeeping practices which, to the extent possible in a litigation-happy world, maximize a company's capability to bring and defend and avoid lawsuits.
This article will address the methodology of a litigation audit and its impact upon the record retention habits in a corporate setting.
A litigation audit is a review of litigation. It may be as focused as the evaluation of a current case or as broad as a review of all litigation --past and present--in which a company is involved as a party (plaintiff or defendant) or as a non-party (where, for example, a company's records are subpoenaed in a large, multi-party antitrust case).
STEPS IN THE LITIGATION AUDIT PROCESS
Litigation audits are often patterned after financial or general legal audits. Typically, these audits have the following steps:
* define the scope of the audit
* select the auditor(s)
* evaluate the subject of the
audit through record inspection
and personal interviews
* prepare findings and
* implement and enforce the
Determination of the audit scope
Initially, the company should determine the scope of the audit. Often, a brief overview of the cases involving the company can assist in deciding whether to review all cases, a class of similar cases, or only a single (usually major, precedent-setting) case. For example, if there are several classes of litigation affecting the company, or recurring patterns of legal problems, it may be cost-effective to embark upon a broad audit of all those major cases. On the other hand, if the litigation spectrum shows only a couple of "blips" on the screen, then the audit could focus those types of legal problems.
Who should conduct the audit?
A litigation audit most often is conducted by a lawyer. To control costs, and, frankly, to improve the audit results, the lawyer can be joined by a records manager or legal assistant who is familiar with the litigation and the records kept by those company departments directly affected by the litigation.
The lawyer may be either inside counsel or an outside lawyer. There are benefits (and limitations) with either type. The inside lawyer may know the cases and the business better and have a closer rapport with the business people who may be audited. That lawyer may also be close to (involved in) the cases which can detract from the objectivity required in any audit process. Also, not all lawyers are skilled in conducting audits.
The outside lawyer may bring audit skills and a more objective approach to the audit task. Also, the use of an outside lawyer may make the audit results more likely to be protected by the attorney-client privilege. The downside may be lack of familiarity with the business, and the people, to be audited.
The best of both worlds, but not without a cost, is to use (judiciously) outside counsel to offer some direction and a review function to supplement the work of the inside lawyer.
Preliminary review of litigation summary
Once the scope and audit team are determined, a good starting point is to review a summary of the litigation to be audited. This summary would include for each case:
* the key allegations, defenses,
* the results, if the case is
completed, including decision or
settlement, award of damages,
criminal or civil sanctions, if
* the types of documents which
were or are most important in
* the business practices which
were or are most important to
the case; and
* the identification of one or
more business people and one
lawyer who are familiar with
the case. …