Federal Rule of Evidence 502, which was recently signed into law, establishes a new set of guidelines governing the waiver of the attorney-client privilege and work-product protection in proceedings in federal court. The Rule dramatically limits both the effects of inadvertent disclosure and the circumstances under which a party waives the protection of all material on the same subject matter. The Rule also provides a mechanism for preserving the privileged status in subsequent proceedings of material voluntarily disclosed by the parties to a litigation. This article addresses the purpose of the Rule, its most significant provisions, and its potential impact on the discovery process.

Background

As noted in its Advisory Committee Note, Rule 502 seeks to provide a “predictable, uniform set of standards under which parties can determine the consequences of a disclosure of communication or information covered by the attorney-client privilege or work-product protection.” The new Rule seeks to address two issues, both of which are of significant concern in the age of electronic discovery, where parties often exchange millions of documents in a single production. First, Rule 502 resolves inconsistent case law on the effect of disclosure of protected “communications and information”(hereinafter, “material”), specifically on the subjects of inadvertent disclosures and subject matter waiver. Second, the new Rule aims to reduce the often disproportionately high cost of pre-production privilege review that may arise from the concern that any disclosure of protected material will result in a waiver of all protected material on the same subject.

Rule 502 was signed into law on September 19, 2008, and took immediate effect. The Rule applies to all proceedings commenced after its date of enactment, in addition to all pending proceedings “insofar as is just and practicable.”

Limitation on Subject Matter Waiver of Privileged Material

Rule 502(a) provides that a voluntary disclosure of material otherwise protected by the attorney-client privilege or work-product protection waives only the material disclosed, except under narrow circumstances. Specifically, only where a party intentionally discloses material which “ought in fairness” be considered alongside other material concerning the same subject will the waiver extend to the undisclosed material. As the Advisory Committee Note explains, this limited exception operates only when a party makes a “selective, misleading presentation that is unfair to the adversary.”

The corollary to this Rule is that an inadvertent disclosure will never operate as a subject matter waiver.With this in mind, litigants involved in pre-production privilege review need not be as concerned of the adverse consequences of accidentally producing privileged information.While this by no means suggests that pre-production privilege review is never appropriate, the Rule may have the effect of reducing the cost of the review. This is particularly true when the protection provided by Rule 502(a) is considered in conjunction with the additional protection of Federal Rule of Civil Procedure 26(b)(5)(B), which was added as part of the e-discovery ammendments to the Federal Rules and allows a party that inadvertently produces privileged material to provide notice to the receiving party, which then cannot use or disclose that material until the claim of privilege is resolved.

Effect of Inadvertent Disclosure of Privileged Material

Rule 502(b) also eases the burdens of pre-production review by limiting the circumstances under which an inadvertent disclosure of privileged material will waive the privilege. The Rule provides that where the disclosing party took reasonable steps to prevent disclosure and to rectify its error, including prompt notification to the receiving party, the disclosure will not operate as a waiver.

This provision—which resolves conflicting case law— protects parties that protect themselves. While the Rule itself does delineate measures that will determine the reasonableness of a producing party’s efforts, the Advisory Committee Note lists a few factors that courts may consider, including: the scope of discovery; the number of documents to be reviewed; the existence of an efficient system of records management before litigation; the use of analytical software and linguistic tools in privilege screening; the extent of the disclosure; and the time taken to rectify the error.With these factors in mind, attorneys are well advised to use established electronic review tools and applications and to carefully document their preproduction searches. Any accidental disclosure should be addressed immediately.

Effect of Court Order that Disclosure Does Not Constitute Waiver

The new Rule also addresses the scope of confidentiality agreements entered into by parties to litigation, which may not be binding upon non-parties for the purposes of other proceedings. Rule 502(d) provides that where a court orders that a disclosure in the instant litigation does not waive the attorney-client privilege or work-product protection, the disclosure does not operate as a waiver in any other future proceeding involving the parties or even third parties. Thus, if the court “so orders” a parties’ confidentiality agreement, any privileged material disclosed in the litigation will be cloaked with its protection in all future litigation. The corollary to this provision, as codified by Rule 502(e), is that where a court does not “so order” a confidentiality agreement, only the parties to the agreement are bound by its terms.

Nothing in Rule 502(d) requires that a court’s confidentiality order must memorialize an agreement between the parties. Accordingly, if the parties are unable to reach an agreement, either or both may make an application to the court for such an order. If granted, such order will have the same effect as a “so ordered” confidentiality agreement on protecting the privilege in subsequent proceedings.

Conclusion

Rule 502 seeks to provide greater protection of the attorneyclient privilege and work-product protection by limiting the scope of waiver and the effect of inadvertent disclosure of protected material. It remains to be seen whether these limitations will help achieve the Rule’s salutary goal of reducing the cost of pre-production privilege review.