Jane Galt’s pseudonymous co-blogger, “Mindles H. Dreck”, has a link-filled commentary on recent developments in financial and corporate law Mar. 14) with too many interesting contents to enumerate here. It begins: “I submit to you that regulators of commerce in the United States are gradually: Subsidizing discovery for both public and private litigants; Substituting subjective standards of fraud and misbehavior for specific guidelines”. Among recent regulatory initiatives aimed at “creating a paper trail for litigators” are requirements for: “permanent retention and storage of internal and external email in non-alterable, third-party maintained media; substantial, sworn disclosure of procedures and safeguards (via Sarbanes-Oxley, for instance); the identification of key individuals that should become the focus of any government or litigation action (via designation of key officers and departments, and the Sarbanes-Oxley mechanism of written representations)”. The result of these rules will predictably be to accelerate the spread of various defensive practices through the corporate and financial world, such as more discussion of business matters on a strictly verbal basis with nothing committed to writing. Equally interesting is the question of who definitely does not have to maintain a discovery trail to facilitate outside scrutiny: “I recently had a billing dispute with a securities lawyer. I referred to an email he had written some months before estimating charges for the assignment. He informed me that his firm’s policy is to permanently destroy all email over three months old in order to protect the firm and its clients. Given the requirements for email retention in the financial industry (interpreting which his firm makes a pretty penny), I found this hysterically funny.”

Filed under: procedure