As implied by my prior posting on trustee process attachments (“Gain Leverage By Freezing Bank Accounts – Part I, Offense“), the best way to avoid having your own bank account frozen is to make sure that you do not use a bank that has branches in Massachusetts. Even if your company does bank in Massachusetts, however, there are measures that can be taken to decrease the chances of having the company’s bank account frozen through a trustee process attachment.
An often overlooked fact about trustee process attachments is that payroll accounts are exempt from being attached. Thus, one prophylactic strategy you can employ is to fund your payroll account early and abundantly in order to shield as much money as possible from being attached. Be forewarned, however, that the payroll account exemption only applies if the account is used exclusively for payroll. Thus, if a company places money in its payroll account and later uses it for something other than payroll, the entire account can be attached – even those funds that are needed to comply with the company’s payroll obligation. Accordingly, and because there may be no better way to bring a company to its knees … Keep reading
As all good lawyers know, having leverage is everything, whether you are doing a transaction or trying to settle a dispute. And what could be better leverage than a court order directing your adversary’s bank to freeze the funds in an operating account? Obviously, such a potent weapon could, and often does, allow a plaintiff to dictate the terms of settlement to the defendant. While being able to do this might sound like a fantasy, Massachusetts courts routinely order a freeze on bank accounts through a mechanism called a “trustee process attachment.” Further, some judges even issue trustee process attachments ex parte, i.e., without the defendant having an opportunity to oppose the request for such relief.
If in-house counsel understand how trustee process attachments work, they can help position their companies to more easily (i) obtain trustee process attachments against future adversaries and (ii) avoid having their own bank accounts frozen.… Keep reading
While non-lawyers may not have heard of the term “spoliation,” most people intuitively know that destroying evidence related to an ongoing litigation is a bad thing to do. Conversely, even many lawyers do not know the breadth of a company’s obligation to preserve evidence, particularly electronically stored information (which is quaintly referred to as “ESI”). Further, knowing the basics of this obligation is critical because failing to preserve ESI can lead to monetary penalties, affirmative claims being dismissed and/or defenses being barred.
Perhaps the most common misconception about the obligation to preserve ESI is that a company runs no risk of punishment for having destroyed ESI pursuant to a document retention/destruction policy, as long as such policy (i) is objectively reasonable and (ii) was implemented at a time when no litigation could have been anticipated. Further, at first glance, Rule 37(e) of the Federal Rules of Civil Procedure would appear to support this notion:
Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.
While this rule seems simple enough, the … Keep reading