Eight Steps to Getting Sued by Blowing Your Client's e-Discovery Budget in a High Stakes Case – Part 1

8 Steps to Sued

Like any high-stakes profession, lawyers are vulnerable to the occasional malpractice case. Most often, this is related to claims of missed deadlines, building cases on untenable legal grounds or similar examples of poor judgment. One recent malpractice case instead based its claims on fiscal mismanagement, including nonpayment of e-discovery vendors and other litigation support to an extent so severe as to force the client to settle.

Devon IT, Inc. retained Mitts Milavec to build their case against IBM, claiming a Ponzi scheme (Devon IT, Inc. v. IBM Corp.). Mitts Milavec recommended that Devon arrange with Buford Finance for a litigation loan of $4 million up front in exchange for a percentage of the settlement. Mitts Milavec would receive $2,825,000 of this amount in advance, plus five percent of the settlement.

How Mitts Milavec then proceeded to simultaneously destroy the case and their reputation required eight very specific steps. Here are the first four:

Step 1: Misrepresentation of Financial Capabilities

Armed with $4 million, Mitts Milavec immediately hired outside e-discovery, damages experts and document review vendors. Yet, despite assuring Devon that the Buford fund would cover all litigation expenses in full, including vendor fees, it wasn’t long before that fund was dried up.

Step 2: … Without Paying Any Vendors

Yet, despite the rapid expenditures, it turned out Mitts Milavec hadn’t, in fact, paid any of the litigation support vendors.

Step 3: Don’t Bother Communicating with Vendors

Mitts Milavec failed to coordinate with the vendors, either about the case itself or the ever-increasing backlog of fees. Out of frustration at both of these, the e-discovery vendor eventually quit in the middle of the case, refusing further access to their data. This loss of obviously critical information crippled the case beyond salvageable.

Step 4: Don’t Communicate with Clients Either

As per their fee agreement, Devon had simply continued forwarding vendor invoices directly to Mitts Milavec with no idea that zero payments were being made. Sure, they knew the Buford fund was gone, but they assumed that was due to vendor fees. Lack of communication extended beyond the financial though; in their malpractice claim, Devon said Mitts failed to keep them informed of the case status and progress of vendors as well.

Look for four more steps in our next blog – 8 Steps to Get Sued by Blowing Your Client’s e-Discovery Budget in a High Stakes Case – Part 2. If you would like more information about eDiscovery or how TERIS solutions can assist you, please contact us!

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