Friday, 1st June 2012
Geert Aalbers, general manager for Brazil and director of corporate investigations in Latin America for consultancy firm Control Risks, discusses how Latin American countries can benefit from developing electronic discovery laws
Over 30 billion e-mails
are sent every day. One in five US companies’ employees’ e-mail has been
subpoenaed. A typical Fortune 500 company has 125 ongoing cases with at least
75 per cent requiring electronic discovery (e-discovery). These statistics,
from the American Bar Association digital evidence project and the National Law
Journal Report, help explain why US companies spend approximately US$5 billion
just to analyse e-mail traffic. There is a widely held belief among legal
practitioners in Latin America that e-discovery tools used frequently in
litigation in the US are of limited use in a region with no analogous discovery
laws. Perhaps part of the problem lies in the interchangeable use of the terms
“e-discovery” and “legal technologies”, which incorrectly conflates a discovery
process and a set of technological tools that effectively help attorneys in
counselling their clients. In fact, legal technologies are currently being
applied to a broad range of legal issues in Latin America.
E-discovery v legal technologies: what’s the difference?
E-discovery is a process whereby legal technologies are used to identify,
collect, process, review and produce documents for evidentiary purposes in
civil and criminal proceedings. Since relevant data may be stored in several
jurisdictions (or increasingly in the Cloud), in various formats, in a variety
of languages, over many years and involving multiple individuals, the process
often presents legal, technical and operational challenges. Depending on the
circumstances, forensic examinations of computers and other hardware may also
be required to recover or restore deleted, reformatted or tampered-with data.
The case for resorting to technology-based solutions becomes self-evident when
one also takes into consideration the widely varying global data privacy laws,
the requirement for chain of custody controls and the need to accommodate
simultaneous access by multiple reviewers of the data. But e-discovery, and
especially the practice of broadly defined “fishing expeditions”, commonplace
in civil litigation in the US, remain a largely foreign concept to the civil
law systems in Latin America. In these jurisdictions the party making the claim
carries the burden of gathering the evidence to substantiate that claim and can
only request the counterparty to produce documents or evidence, which have been
specifically identified.
Legal technologies, however, offer solutions to many situations outside the
realm of litigation discovery. In general, legal technologies can effectively
be deployed by companies and legal counsel when reviewing large volumes of data
and when one or more of the following are critical: relevant facts need to be
identified and understood quickly and comprehensively; the accuracy,
consistency and reliability of review needs to be guaranteed; chain of custody
must be preserved; precise timelines must be understood; the secure storage of
sensitive data is essential; and the examination of data requires multiple
reviewers. These tools can be applied across a wide variety of matters,
including, but not limited to, antitrust matters, compliance and
anti-corruption work, litigation and fraud cases.
Antitrust investigations
Twenty years ago, very few countries had programmes to allow companies or
individuals to self-report involvement in antitrust violations, such as price
fixing, market allocation and bid rigging, in exchange for immunity to
prosecution or reduced sentences. Over the past decade, however, many Latin
American countries modified their antitrust legislation to introduce leniency
programmes. A proliferation of recent leniency agreements throughout Latin
America involving antitrust violations has signalled a greater level of
enforcement activity in the region.
Benefiting from cooperation under these regimes depends, not surprisingly, on
the relevance of the information submitted to authorities after an internal
investigation. In a world of increased cross-border complexity and
technological dependence, those investigations often rely on technological
solutions to collect and review information.
In a recent case in Brazil, allegations surfaced that an industrial producer
had engaged in price fixing and other collusive practices with its key
competitors for approximately 10 years. After an initial review of e-mails,
Barbara Rosenberg and André Previato, of Barbosa Müssnich & Aragão, concluded that the most
advisable course of action would be for the company to apply for leniency from
antitrust authorities. “When a client comes to us for advice, they usually know
or suspect that something is wrong and our challenge is to quickly find out to
what extent alleged conduct took place, who was involved, and who might need to
be protected via a leniency application,” says Previato.
To expedite the investigation and guarantee chain of custody, Previato’s team
employed legal technologies to craft a solution. This was critical since the
results of the internal investigation had to be submitted to the local
antitrust authorities within several weeks. The process had to be accurate
enough to maximise the chances that the company and the employees involved
would be granted full immunity, and the information needed to be sufficiently
comprehensive and relevant to allow authorities to successfully launch an
investigation into the alleged activities. Previato was surprisingly upbeat
about the amount of data to be analysed, explaining that “the volume of
electronically stored information [ESI] is growing, but for antitrust issues
this is a positive development. The more information we have the greater our
ability to precisely define parameters and delineate the information we submit
to the antitrust authorities.” Previato is confident that the results of the
investigation are sufficiently robust and well-grounded to reach a favourable
agreement with authorities.
Compliance and anti-corruption
In the anti-corruption arena, legal technologies are increasingly being
deployed to conduct preventative reviews rather than responding to regulatory
probes, of which there have been few to date in Latin America. Referring to a
recent internal investigation conducted for a major consumer goods producer,
Marcos Masenello Restrepo of Pinheiro Neto Advogados noted: “Most of our clients are not
reviewing data related to possible anti-corruption practices with a primary
concern of producing evidence; rather, they are conducting reviews mainly to
assess the extent they may be exposed or might need to disclose information to
the authorities.” Restrepo’s team regularly provides legal advice alongside US
external counsel to conduct secondary review under Brazilian law of documents
tagged as relevant by his US counterparts. Restrepo frequently works with legal
technologies and is seeing a slow increase in acceptance in the use of these
tools in Latin America. In his view, this trend is set to intensify as the
legal profession becomes more familiar with the tools and the results they
produce. And this is likely to be further fuelled by a growing local awareness
of international anti-corruption laws and the implications of being subject to
international enforcement.
Litigation
Legal technologies are also increasingly used to gain efficiency and a
competitive advantage in traditional litigation disputes, which in most Latin
American countries still tend to be heavily dependent on the slow process of
physical document exchange and review. In this regard, Domingos Fernando
Refinetti of Machado, Meyer, Sendacz e Opice Advogados
commented, “Despite the lack of an ESI culture in Brazil, no one doubts that
legal technologies are increasingly becoming an essential tool for litigation
attorneys.” In litigation matters in particular, cost-benefit considerations
will continue to determine the extent to which clients are likely to approve
the use of legal technologies. As Refinetti observed, “Most clients involved in
litigation would think to themselves: why invest in the use of technologies to
conduct internal fact-finding if the burden of proof is on the counterparty?”
Nevertheless, Refinetti made reference to targets recently set by the National
Justice Council aimed at reducing the significant backlog in cases. To achieve
this goal, counsel may be more inclined to use legal technologies to hasten
their work as they come under greater time pressure and significantly
compressed timelines. According to Refinetti, other areas in which they can be
used to enhance the results of litigation efforts include reviewing data to
select and assess credibility of witnesses, and in tracing and identifying
assets following a judicial award.
Fraud
Finally, legal technologies are increasingly being used to support internal
investigations into allegations of fraud and other integrity breaches, such as
misappropriation, conflicts of interest and procurement fraud. David Rechulski,
of David Rechulski Advogados, frequently advises companies on internal
investigative matters, including when legal technologies should be used. “There
has been a sharp increase in demand for internal investigations,” he said.
Rechulski describes a typical scenario in which a company is embroiled in a
public scandal due to the misbehaviour of one, or a few of its employees. “In
Brazil, many companies’ natural first line response to being prosecuted by the
government is to deny wrongdoing. But you should not deny the obvious. First
and foremost, company leadership should seek to protect the reputation of the
company by demonstrating clearly that the acts of individuals involved deviate
from company ethics, policies and procedures as well as from their specific
mandates. Transparency is the best means to prove non-complicity.” In this
context, Rechulski recommends that companies, where possible, file criminal
charges against employees who engage in illicit behaviour as a means to isolate
and distance themselves from those acts. Although he acknowledges that this is
a more demanding and costly route for the company in the short term, a thorough
investigation involving legal counsel, an investigative firm and appropriate
legal technology tools is, in his view, the best means to achieve the longer
term strategic objective of preserving corporate reputation. Rechulski
concludes: “A greater dependency on information technology has, on the one
hand, made companies more vulnerable to fraud, but on the other also given them
new tools to detect and investigate fraud.”
Whereas paper and stamps are still very much the norm in most Latin American
legal systems, a slow transformation, fuelled by the growth of ESI and a
gradual cultural change in the judiciary and legal profession, is taking place.
In the absence of discovery laws, the use of legal technologies in Latin
America will not proliferate and be as transformative as they have been in the
US. However, they are increasingly being used to increase productivity and work
quality in the legal and investigations areas. Whether deployed to support in
antitrust, corruption, litigation or fraud-related matters, legal technologies
are much more useful than just to find the proverbial needle in the haystack.
They allow us to more quickly and accurately find out how big the haystack is,
how many needles there are and exactly where they are located.
(Latin Lawyer 01.06.2012)
(Notícia na Íntegra)
