E-Discovery Resulting from Subprime Litigation and the Liquidity crisis: Lehman, Merrill, AIG et al ……

As stated by Mary Mack of Discovery Resources “The subprime crisis is really just beginning to take shape and is going to spawn a wave of litigation, much of which will turn on evidence uncovered during discovery. Mortgage lenders will be sued by borrowers who claim misrepresentation or unsuitability. The larger cases, however, will involve businesses suing other businesses — those that sold and bought risky collateralized debt obligations and are now teetering on the brink of insolvency as a result of investment actions taken in the midst of the subprime lending euphoria”.

The tricky part for those with subprime exposure will be tracking down all the loan originators, repackagers, resellers and purchasers of the bundled loans and those who marketed the packages. Their digital warehouses may contain information vital to the defense. As an example, counsel may need to learn as much as possible about where the subprime loans came from and how they were marketed when constructing a defense. During this process, they will need to determine which repositories, and from what organizations, contain relevant, responsive documents. From there, they will need to understand which repositories are in the “control of the company,” thus making them automatically subject to consideration for discovery.

Kevin LaCroix of The D&O Diary (http://www.dandodiary.com) indicates that lawsuits centered on the subprime/liquidity crisis may have surpassed those of the past banking crisis (the S & L bailout).

NOTE:  we use Kevin’s site to track subprime/liquidity crisis litigation and to track Foreign Corrupt Practices Act cases so we can report document review projects to Posse List members, and to agencies and law firms via our Research Unit. 

All of this interlocking litigation will increase the volume, speed and complexity of e-discovery and will (hopefully) generate more document reviews/contract attorney work throughout the country. 

There are two excellent overviews on the e-discovery issues (mapping the e-universe, knowing who was involved in the risk profiles, when did they know what, how were they represented, what due diligence occurred, etc., etc.) which we have listed below:  

http://www.discoveryresources.org/case-law-and-rules/subprime-liquidity-watch-lehman-merrill-aig-and-e-discovery

http://www.discoveryresources.org/featured-articles/are-you-ready-for-e-discovery-resulting-from-subprime-litigation