In many lawsuits, e-discovery has become the 500-pound gorilla in the room. While it potentially provides a party with a treasure trove of valuable information, it is also expensive, time consuming and, at times, too much of a good thing.
Sophisticated computer systems are now necessary to review the hundreds of thousands of documents produced through e-discovery, with costs sometimes exceeding seven figures. But with proper preparation, competent assistance and cooperation between the parties, counsel can navigate the process in an efficient and relatively economical manner.
There is one area that requires special attention—the inadvertent waiver of privilege. When dealing with e-discovery, counsel should understand how best to prevent such waiver by using Rule 502 clawback agreements and court orders.
Inadvertent waiver of privileged documents
One of the most troubling aspects of e-discovery is the potential waiver of attorney-client privilege. When massive numbers of documents, especially emails, are produced in litigation, they will invariably contain information protected by attorney-client privilege or the work product doctrine. The question then becomes: How does the producing party make sure that it does not waive the privilege if it inadvertently produces protected material?
The best answer is simply not to produce protected material in the first place. But that is likely a fool’s errand. Unless every piece of paper is reviewed by attorneys familiar with the issues, the parties and the case, it is almost impossible to exclude all documents arguably protected by attorney-client privilege or the work product doctrine. Even the most sophisticated search engines cannot guarantee that they will catch every protected document.
Take, for example, an internal email among the directors of a company discussing their attorneys’ advice. Although this email might arguably be privileged, the search engine will not know that. For whatever reason, search engines do not flag all of the documents in which the attorneys’ names actually appear. Although the software is improving, it remains imperfect. So if there is going to be significant e-discovery in a case, there is still a good chance that you might inadvertently produce some protected material.
Rule 502 to the rescue
So what can you do? In federal court, Rule 502 of the Federal Rules of Evidence provides guidance. Enacted in 2008, this rule revolutionized the law of privileges in federal court and even in state courts to some extent. The rule provides a framework to prevent a waiver on privileged documents inadvertently produced through e-discovery.
Prior to Rule 502, some courts held that the inadvertent production of even one privileged document acted as a waiver not only with respect to that document but all other documents related to the same subject matter. Such subject matter waiver, of course, can be devastating. Recognizing this, Congress enacted Rule 502. As reflected in the Advisory Committee Notes, the new rule had two major purposes:
- “It resolves some longstanding disputes in courts about the effect of certain disclosures of communications… specifically those disputes involving inadvertent disclosure and subject matter waiver.”
- “It responds to the widespread complaint that litigation costs necessary to protect against the waiver of attorney/client privilege or work product have become prohibitive.”
The rule accomplishes these purposes by generally limiting subject matter waiver to either intentional disclosure (502(a)) or an inadvertent disclosure that the holder of the privilege did not take reasonable steps to prevent (502(b)). Under 502(b), if a party inadvertently discloses protected information, that disclosure will not act as a waiver provided the party has taken reasonable steps both to prevent the disclosure and also to rectify the error as soon as possible. What constitutes reasonable steps, of course, is open to question, as discussed in another InsideCounsel column. Although the law in this area is still evolving, it seems fairly clear that a simple keyword search is likely not enough.
Rule 502(d) court orders and 502(e) agreements
Just as important, if not more so, Rule 502(d) permits “a federal court [to] order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court—in which event the disclosure is also not a waiver in any other federal or state proceeding.” Note that this protection is available only if incorporated in a court order. Rule 502(e) specifies that an agreement not incorporated in an order “will be binding only on the parties to the agreement” and will have no effect in a subsequent court action or on nonparties.
Before e-discovery begins, a party should seek agreement with opposing counsel regarding inadvertent disclosures, including allowing the parties to recover, or claw backthe documents inadvertently produced (as well as copies and notes). The parties should then have that agreement formalized in a court order.
Privileges are important, so counsel should make sure that they are protected even during the rigors of e-discovery.