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The CSPCentral Team

From a lawyer’s perspective, there’s a lot that clients can do to save time and money.  We’ll look at some key strategies in this series of posts.

Today, let’s look at the legal process of ‘discovery’, and why it needn’t add a small fortune to the bill.

What’s ‘discovery’ ?

At a certain point in a court case, there’s often a requirement that the parties ‘make discovery’ of documents.

That means they have to file with the court, and give to the other side, a complete list of all documents (relevant to the case) that they hold, or can get their hands on (e.g. held by their accountant) or that they used to hold, or were able to get their hands on.

That’s called ‘making discovery of’ or ‘discovering’ the documents.

There’s no choice about what you ‘discover’

Sometimes a court will order that discovery is limited to certain issues or kinds of document.  Save for those limitations, there are no exceptions to what must be discovered.

• If it’s relevant, you must discover it.
• If it harms your case, you must discover it.
• If it helps the other side, you must discover it.
• It it’s a ‘privileged’ document (e.g. legal advice from your lawyer), you must discover it.  (You can’t be compelled to let the other side see it, but you must discover it.)
• If you used to have it, but don’t have it any more, you must discover it.
• If it’s a computer file, you must discover it.

What happens after ‘discovery’ ?

Each side is entitled to inspect the other’s discovered documents, except for any that are privileged.

What makes discovery expensive ?

Frankly, many clients make it much harder and more drawn out than it needs to be.

• They use expensive lawyers as paperwork clerks.
• They drop off massive quantities of disorganised documents.
• They forget that they became familiar with the documents one by one over weeks, months or years.  The lawyer is seeing most of them for the first time, at once, in a huge mass.
• They let the lawyer figure out what everything is, instead of telling them.
• They dribble documents to the lawyer over days, weeks or months.
• They say unhelpful things like ‘you already have a lot of it’, when that involves the lawyer trawling through volumes of stuff that the client really could isolate into a single box if they wanted to.
• They omit things without explanation.
• They omit things that must obviously exist (e.g. emails that are referenced and partly quoted in other emails).
• They provide undated materials and let the lawyer spend hours trying to figure out when it might fit in.
• They assure the lawyer the documents are complete, and as soon as they are asked a single further question they say ‘Ah, yeah.  Then there’s all that other stuff.’
• They don’t pay attention when the lawyer explains exactly what’s required.
• They forward hundreds of emails to the lawyer, and let them make sense of what they are.
• They email attached documents with meaningless file names like ‘scan9848Ax.pdf’ instead of ‘Contract of Sale of Shares.pdf’.

Not all clients do this.  Just most of them

What if you don’t discover all relevant documents ?

• If your lawyer picks it up, they’ll have to spend more time chasing – at your expense.
• If the other side picks it up they can apply to the court for orders that you do it again.  If the court agrees, it normally makes you pay the other side’s costs of that application.  (Add a few thousand dollars extra to your expenses.)
• If you later want to show an undiscovered document to the court to assist your case, it can say ‘Nope.  Won’t look at it.  Should have been included in the discovered documents list.’  That can lose you the case.
• You might look dodgy, if the omissions seem deliberate.  That might lose you the case.

In really tough fights, one of the standard tactics for hurting the other side is to pick holes in their discovery and punch them up over it in court applications.  More delay, more cost, more gloom.

Best solution:  get discovery right the first time.

So how can clients help ?

• First, listen to what’s being asked for.  Your lawyer will often suggest certain documents or kinds of document that they know / expect to be relevant.  Re-read this article as you go through the process.
• Second, think hard and look hard.  Identify and locate every relevant document that is (or has been) in your possession or under your power or control.  (That means that you don’t actually have it but you could get it by asking.  A good example might be your tax return.  If it’s relevant but you don’t have a copy, you’d be expected to ask the ATO to supply one.)
• Third, prepare a duplicate set of all available documents.  (Use paper, unless you have some brilliant system for using soft copies.  A library of complete, clearly named PDFs is good.  But if you can’t produce a clear, simple software ‘library’, stick to paper.)  Keep the originals very safe.  Keep them ordered and easily available.  But don’t give the originals to the lawyer until they ask.
• Fourth, put the duplicates in the most sensible order you can.  It helps a lot.
• Fifth, number them for identification.
• Sixth, fill in a Discovery List like this one.  Lots of (relevant) info is good.  Do your best.  Often dates are uncertain and things aren’t cut and dried.  Give the best information and explanations you can.  It’s not a ‘photographic memory’ competition.
• Seventh, deliver the table and a complete set of numbered duplicates to the lawyer.
• Eighth, be sure to ask the lawyer (after they’ve had a look) whether you can do anything more.  Otherwise, they’ll assume that they are expected to work out any confusions and gaps (‘cos that’s how clients normally do it).
• Ninth, if you find yourself thinking ‘This is such a load of **** !  Surely the lawyers can just do it for me’ – remember … yes, we can.  We certainly can.  It’s only a matter of time and money.

If you can get all this done really well and thoroughly, you’ll shave a big amount from your bill.

The process is often tedious, painful, frustrating and time consuming.  But it’s ‘free’ when you do it and pricey when we do it.

We still have work to do

The data and documents you provide need to be considered, including whether privilege applies.  It would be rare for a client to get the process perfectly right.  And the list of ‘discovered’ documents needs to be turned into a format that’s required by the courts.

So there’s still work for the lawyers to do on discovery, but not nearly as much.

ACCC has made Dodo Australia give a Court enforceable undertaking to issue refunds customers and discount monthly plans, as a result of misleading statements.

According to ACCC, Dodo advertised misleading ‘free’ offer plans between October 2008 and March 2009 on both the television and its website.
 
ACCC’s concerns

ACCC said:

The ACCC was concerned consumers were likely to have been misled or deceived by the advertisements which represented consumers would receive either of an Asus Eee PC, a fuel card or a cash payment (to their nominated account) for free or at no cost when they signed up to any one of the Free Offer Plans.

An investigation by the ACCC revealed Dodo offered other cheaper mobile cap plans (that did not include the free goods or cash) that were comparable (in included value and services) with the Free Offer Plans.  In some cases the monthly fee for those comparable mobile cap plans was up to $30 per month lower.

Who was affected

Customers on the following plans may have been affected, and ultimately may be eligible for discounts or refunds:

1. ‘FREE $29.90 Mobility Cap Plan’,

2. ‘FREE Fuel’ and

3. ‘Cash Offer’ 24 month mobile cap plan offers

It’s not the first time …

Dodo is not new to controversy – we have previously reported on:

• Dodo Advert’s pushing the limit and
• Dodo stung hard for DNCR Act breaches

among others.

Hopefully this time Dodo will learn their lesson from the ACCC investigation, but based on past events this may not be the last time we hear of ‘run ins’ with the law.

ACCC expressed surprise that Telstra’s $30 application worked out to be higher than the previous proposal of $30 for metropolitan areas, which was rejected in 2006.

Charge not reasonable

ACCC Chairman, Graeme Samuel, said following an extensive assessment of Telstra’s application ACCC was not satisfied the $30 charge for metropolitan areas is reasonable.

ACCC believes that Telstra’s proposed price is unlikely to promote competition in the broadband and telephony markets. It may also discourage investment in telecommunications infrastructure. ACCC also considers that a $30 monthly charge would result in Telstra recovering more than is necessary to promote its legitimate business interest in providing this service,” Mr Samuel said.

In rejecting the undertaking, ACCC also noted Telstra’s proposed monthly charge was significantly above estimates derived from benchmarking against comparable countries.

Three strikes

This is the fourth time Telstra has submitted applications in regards to the ULLS service. One application was withdrawn while three have now been rejected by ACCC because they could not be satisfied that the undertakings were reasonable.  The two previous rejections were affirmed by the Australian Competition Tribunal on appeal.

The next move is with Telstra, one can only assume that being effectively sidelined in the Government’s NBN construction process, has prompted them to take an tough approach against their competitors who in the absence of the NBN rely on the ULL for service delivery for the short to medium term.

Over recent weeks, many reports have emerged of the ACMA internet filtering trial black list having been published on different websites, potentially compromising the Government’s current internet filtering trials. One such website was www.Wikileaks.de.

Wikileaks had been known for its collection of leaked documents, which in most cases lead to great controversy.  According to ARS Technica:

Wikileaks has built up an impressive portfolio of leaked documents like those from secretive religious organizations, congressional reports, specs for military hardware capable of jamming IEDs used by insurgents in Iraq, and even its own donors list. In doing so, it has found few friends in governments and courts, with one judge even ordering its DNS record be erased after documents from Swiss Bank Julius Baer were uploaded to the site.

ARS Technica have also reported that German police raided the residence of the domain name registrant Theodor Reppe of Dresden, Germany who denies any involvement in the posting of leaked documents. It is reported that the raids came shortly after the ACMA blacklist was published. It is unknown at this stage, what involvement if any, ACMA had in closing down this website.

Wikileaks.de now resolves to a generic DENIC page. Despite the action taken by DENIC another mirror site, which is hosted on an alternate TLD, still shows links to different versions of what they claim is the secret ACMA black list.

Last week we reported on an announcement by ACCC Chairman Graeme Samuels, that the ACCC would be taking action unless the Premium Service operators cleaned up their act. Today we have been contacted by a reader who has alerted us to a new scam one shonky operator is using.

Our reader received an SMS which said something along the lines of “who are you, and why did you call me“, of course our reader had no idea who the SMS was from, and thought to himself, ‘who could this be, I don’t recall ringing a wrong number’.

As it is with most of us, curiosity got the better of him, so he replied to say that the sender must have the wrong number, and that they must be mistaken.

Immediately after his reply, he was subscribed to an adult chat service, at which time he was informed that to unsubscribe he would need to reply with the word ‘STOP’. Before he could do this, he had received 2 SMS, no doubt at the bargain basement price of $4 each.

This conduct is clearly misleading and deceptive, and is precisely why the ACCC have been alerted to the actions of some shonky operators.

If you have been subject to a similar scam, please let us know, we are sure Mr Samuels would be interested to hear from us.

ACMA have reported that Westpac was issued with a formal warning for breaches of the Do Not Call Register Act 2006 (‘the Act’).

ACMA reported that Westpac was the bank that had the greatest number of complaints made against it to ACMA, concerning alleged breaches of the the Act.  ACMA claim that although Westpac had a relationship with its customers, ‘its procedures for recording the withdrawal of consent had failed.’

Westpac was reported to have agreed to and implemented a number of measures to resolve the issue including ‘washing’ their call lists against the Do Not Call Register.

ACMA’s report that they have had a total of 40,000 complaints since May 2007 concerning the Act, and noted a significant drop in the number of complaints from 2007 to the end of 2008.  This is no doubt in part to increasing awareness, and availability of tools to assist in compliance.

This serves as a timely reminder for ISPs and Telcos, particularly now that many utilise the services of overseas call centres.  Section 9 of the Act makes it clear that just because a call centre is located overseas it doesn’t prevent the application of the Act.

Nope, it says, we only finance equipment.  We have nothing to do with any bundled telephone services.  Dunno what you’re talking about.

We wonder if they will wake up after they see a copy of one of the telco services contracts that was paired with one of their own finance agreements.  Or will they just revert to their ‘We want money! You gotta pay!’ mantra ?

Finance company dumb not dishonest

At least at its higher levels, the finance company is probably genuinely ignorant.  But what happens at lower levels is less clear.

The scenario is typical of boom times when banks and finance companies can’t lend fast enough.  To increase the rate at which they write out loans, they get involved with ‘brokers’ or ‘agents’ or ‘partners’ who can get even more borrowers signed up.

Problem is that they don’t always pick their ‘partners’ carefully.  Even if the ‘partner’ is honest, they can well be careless.  In many cases, the honest but careless ‘partner’ engages with its own ‘partner’ who promises to deliver a steady stream of business … and therefore commissions … to the first partner.

The telco bundle scenario

In one all-too-familiar telco version of this scenario, our finance company (we’ll call them MoneyCo) engages with a well known broker (we’ll call them EquippiRent) which in turn engages with a dodgy telco (we’ll call ScamTel One).

Now, EquippiRent doesn’t monitor ScamTel One very closely.  Basically, it just hands them a stack of equipment finance and rental applications and agreements, and leaves ScamTel One to get the public signed up to them.

So Gung Ho Garry from ScamTel One hits the road, offering complex telephony ‘solutions’ (aka ‘bundles’) involving equipment (often misrepresented as ‘free’) and call services and call cost rebates.  It’s offered as a single package.

And remember, those equipment finance and rental applications and agreements are ultimately contracts with MoneyCo.  Yes, the noble and reputable MoneyCo is having its money flogged in the marketplace by Gung Ho Garry, from a company MoneyCo has never heard of.

What can go wrong ?

Garry gets the paperwork signed up

Once he’s sold the bundled deal to a customer, Garry gets all the paperwork signed up.  (Actually, there are a disturbing number of cases where customers claim their signatures were forged.  And in almost every case, customers find they were outrageously misled into signing the documents. )

Then MoneyCo is sent only the equipment finance documents.  Is EquippiRent in on the scam ?  Don’t know.  But certainly, MoneyCo is only supplied with the part of the paperwork that it suits ScamTel One for it to know about.  It seems hard to imagine that somebody in EquippiRent doesn’t know what ScamTel One is doing with MoneyCo’s contracts.

So MoneyCo sees a stream of equipment rentals coming from EquippiRent.  How good is that ?

It’s ScamTel One that collects most of the funds

Poor old MoneyCo may believe that it is paying, say, $80k for the purchase of new telephone hardware that the end customer is hiring.  In fact (using various devices, at least one of them criminal) ScamTel One artificially inflates the supposed value of any equipment involved and uses the inflated value to extract a nice fat cheque from MoneyCo.

So customer may indeed get a cheapo PABX worth $15k.  But the debt against it is $75k and ScamTel One has pocketed most of the difference.

Then ScamTel does a runner

Surprise, surprise.  Having collected a fat cheque from MoneyCo and other finance companies, ScamTel One just happens to go into liquidation.  So by the time the whole arrangement blows up and customer stops paying heavy monthly amounts, ScamTel One and MoneyCo’s cash are gone.

MoneyCo sues customer

When customer stops paying, MoneyCo gets out its paperwork file and gets its lawyers on the job.

Do they know anything about ScamTel, Gung Ho Garry or how their contracts were weaved into a dodgy bundling deal ?  No, sir, we know nothing about any of that.  Your client must be a desperate debtor, sir, to be making such extraordinary claims.

No, sir, all that’s on our file is a standard equipment finance agreement, signed by your client.

Deliberate blindness ?

After a certain point, you start to think MoneyCo is being deliberately blind to the facts.  Simple Google searches reveal that:

• The TIO was warned against such scams in 2007.
• ACCC has taken massive legal action in one case of alleged scamming.
• Whirlpool users report specific companies using specific dirty tactics to capture dodgy deals.
• CSP Central has analysed the scams in detail.

Yet all MoneyCo wants to know about is the partial documentation it was supplied with by its ‘partners’.

Now, at least one ‘MoneyCo’ knows the facts

At least one financier has been supplied with the other half of the documents, the telephony services sold as part of the equipment rental deal.  Same dollar amounts, same term, same time, same salesman.

It was the deal they said they had never been involved in.

But here’s the lesson, MoneyCo:  If you let third parties run around in a boom time using your contracts and your money without careful supervision, they’ll involve you in all sorts of things.  Heard of the sub-prime crisis ?

MoneyCo:  Act honourably

MoneyCo’s of the world, your argument is with EquippiRent, for letting scammers like ScamTel One act as your public face.  Your argument is with ScamTel One, which pocketed most of your ‘equipment purchase’ money.  Your argument is with whoever in your own business allowed EquippiRent to write deals without adequate supervision.  Your argument is with yourself, for greedily taking business without any real idea how it was being written.

But your argument certainly shouldn’t be with Joe Customer, who was misled and scammed by a dodgy phone bundling company that you financed.

We don’t yet know what the result of these trials will be, but the Europeans have developed an alternate approach to the issue of protecting children from harmful content online.

Yesterday was Safer Internet Day across the European Union. The European Commission has developed the Safe Internet Programme which has a budget of 55 million Euros, and which has been running since 2004.  According to its website, the programme is aimed at promoting:

safer use of the Internet and new online technologies, particularly for children, and to fight against illegal content and content unwanted by the end-user, as part of a coherent approach by the European Union

It aims to do this by co-funding projects to :

• Increase public awareness;

• Provide the public with a network of contact points for reporting illegal and harmful content and conduct, in particular on child sexual abuse material, grooming and cyber bullying;

• Foster self-regulatory initiatives in this field and involve children in creating a safer online environment;

• Establish a knowledge base on new trends in the use of online technologies and their consequences for children’s lives.

What makes this programme impressive in our view is that it takes a cooperative and educational approach rather than an imposed approach upon website operators. This year’s theme was protection of children on social networking sites such as Facebook, Myspace and You Tube. This cooperative approach has seen 17 of the leading social networking sites across the internet commit doing more to protect younger internet users.

Is this the magic bullet we have been looking for in Australia ?; Well, no it’s not. Does it have deficiencies ?; yes it does, but at least it is a different approach, and may help contribute to the debate on internet filtering and other steps that can be taken to protect children online.

Maybe the Government should look harder at alternatives to internet filtering, they do exist.

We at CSP Central encourage everyone to dig deep and support the victims of this disaster. You can help by supporting the Red Cross 2009 Bush Fire Appeal or other charities that are helping the victims.