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How E-Discovery and ESI Affect Family Law

October 13, 2011

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The following article by Robert Watts has been published in the California Society of CPAs Witness Chair publication. 

As the financial areas in family law continue to grow and develop with the code and case law, through theoretical and technical decisions that help guide forensics in the field in drawing financial conclusions. Recent procedural family case law decisions and legislative changes are also shaping our profession in the non technical area.

Two significant events in the area of discovery established more recently will effect us not in the technical areas of preparing a case but procedurally; In re Marriage of Feldman which mandates full disclosure of all information and facts by parties to the case, and more recently California’s Electronic Discovery Act (Assembly Bill No. 5 Ch 5), establishing procedures to govern the discovery of electronically stored information (“ESI”) in California state courts, signed into law in June 2009. The California Act largely tracks the 2006 amendments to the Federal Rules of Civil Procedure.

When considering the direct impact of Feldman and AB #5, Feldman is client focused, while AB #5 is inclusive of the financial professional. “ESI” as defined by AB #5 is “information that is stored in an electronic medium”. Wherein, electronic is broadly defined as “relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.” (Cal. Code Civ. Proc. §§ 2016.020 (d) and (e).)

What may ESI mean to the client? Emails, text messages, TIFF files, PDF files, computer program data files, digital voicemail formats, picture image formats. Think of anything stored electronically in our new tech age.

What does it mean to the expert? It could mirror everything listed above for the client, but additionally it may mean work product files and the data written and contained within developed formulas of in-house programs. Are live files and data written in common program, such as Excel and Access, that an expert’s firm has spent time, knowledge, and resources developing, outside of discovery and exempt as proprietary? It would appear to be no, based upon the language within AB #5. But we will see as the rules begin to get applied and challenges are made.

There are limitations written into the bill on the production of data sources, such as undue burden, accessibility, or costs, with cost shifting an available recourse, but nevertheless it is fairly broad and encompassing, and certainly open for interpretation.

Robert O. Watts, CPA is a partner at Gursey | Schneider LLP, Bob Watts specializes in litigation support relating to financial issues. He has been involved in innumerable family law matters, and his experience encompasses a wide range of family law accounting issues. He has qualified as an expert witness in the California Superior Courts in both family law and civil litigation matters, and has also been appointed as the courts expert under Evidence code section 730. He is also a member of  A Better Divorce.

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