Maintaining the attorney-client privilege is a basic necessity for effective representation. Attorneys take routine precautions to maintain the privilege and prevent disclosure, including labeling certain communications as privileged. But sometimes, the worst still happens. Sometimes, privileged materials are disclosed or produced inadvertently.

In modern litigation, even the most careful attorney can inadvertently produce privileged materials. The technology through which attorneys conduct document production is good, but not perfect. Despite best efforts, human error can result in disclosure of privileged materials. Inadvertent disclosure is one of those nightmares that keeps attorneys up at night.

There are solutions. Amendments to the Federal Rules of Evidence in 2008, combined with standards of practice, help ensure that attorneys can protect themselves and their clients against and limit the impact of the inevitable inadvertent disclosure of privileged materials.

A formal clawback agreement

Parties in litigation, particularly where there are thousands of documents and large productions at issue, should prepare for the inevitable: an inadvertent disclosure of privileged materials. Although some courts are sympathetic to such developments, depending on the precautions taken by the party, the best way to "claw back" inadvertently produced materials is with a formal agreement between the parties and a court order pursuant to Federal Rule of Evidence 502.

FRE 502(d) provides that: "a federal court may 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."

In addition to protecting against waiver, the agreement and order should also identify the obligations and steps in the event of a disclosure of attorney-client privileged materials.

The protections of Fed. R. Civ. P. 26(b)(5)(B) bear on this issue as well, but there is a benefit to also having the precautions in writing. Indeed, if a party acts to violate a written court order, the party is typically subject to stricter sanctions than if the party simply acts inconsistently with a rule of procedure.

Some attorneys are comfortable relying on technology to excise privileged materials from their production. However, this typically only gets an attorney halfway there. While electronic searches and exclusions are an excellent first step, an agreement is still the best practice.

For example, an attorney could search for and exclude every document that was sent to or from an attorney, or references the attorney's firm, or is labeled "privileged." However, that would not pick up an internal email in which the clients discuss legal advice they received (without identifying the attorney by full name).

This example shows why even the most technologically sophisticated attorney still needs a clawback agreement.

The Advisory Committee notes, reflecting the amendment of FRE 502 in 2008, shed light on why 502 agreements are now the standard path: "[The amendment] responds to the widespread complaint that litigation costs necessary to protect against the waiver of the attorney/ client privilege or work product have become prohibitive."

The cost of turning through every page of a large electronic production is staggering; through a combination of targeting searching, procedures and an agreement and order, a litigant can protect the privilege in a cost-effective way. It also helps California attorneys comply with their obligations under 6068(e) to protect client confidences at all peril to the attorney.

Clawback Agreements: Most Effective Prior to Start of Document Production

Litigants should have an agreement in place, with the court's blessing, before the first production is issued. It can be too late to reach an ex post facto agreement once a production has been made or a mistake discovered.

From a risk management perspective, it could be viewed as self-serving for an attorney to reach an agreement once a mistake is made during document production. The perception may be that the attorney is making concessions in an agreement not because it is in the client's best interest, but because the attorney is attempting to undo a mistake. Even when the attorney has the best intentions, the optics of a post-error clawback agreement are not favorable for the attorney or his or her firm.

Judges in most courts are familiar with clawback agreements and will facilitate the timely entering of such an order upon a request by the parties. However, for courts that are less familiar with the procedure of an FRE 502(d) agreement, it is imperative that the attorneys explain the issues and request an order.

Given the parameters of the rule, even a court typically inexperienced in electronic discovery issues will have a template to follow to help the attorneys protect the privilege. The risks are too great not to take these extra steps.

Best Practices: Protocols and Procedures

The ability to claw back materials is often directly linked to the precautions taken by the producing party before production. Indeed, whether the inadvertent disclosure of privileged materials will constitute a subject matter waiver depends on whether the disclosure was truly inadvertent, whether the privilege holder took reasonable steps to prevent disclosure, and whether the holder took reasonable steps to rectify the inadvertent production. FRE 502(b).

Whereas once the production of a privileged document risked certain waiver, the amendments to the Federal Rules of Evidence are aimed at preventing an unlimited subject matter waiver. Indeed, the advisory Committee notes report that FRE 502 was revised to "resolve some long-standing disputes in courts about the effect of certain disclosures of communications … specifically those disputes involving inadvertent disclosure and subject matter waiver."

However, FRE 502 only helps those who help themselves. It does not apply to intentional disclosures of privileged materials, and it only protects inadvertent productions where the producer took reasonable steps to prevent disclosure.

What constitutes "reasonable steps" is an evolving area of the law. It tends to fall into the "know it when you see it" category. Factors include the reasonableness of the precautions, the amount of time it took to remedy the errors, the scope of discovery, the extent of the disclosure, and the overriding issue of fairness. Typically, a litigant is required to expound a reasonable effort on a privilege review and show that reasonable steps were taken to prevent disclosure. Conceptus, Inc. v. Hologic, Inc., No. C 09-02280 WHA, 2010 WL 3911943, at *2 (N.D. Cal. Oct. 5, 2010).

An attorney may have to detail to the court how many attorneys conducted the privilege review, how long they spent on the review, and what search terms they used to identify privileged documents. The analysis and ultimate review of the precautions taken will focus on whether the party acted reasonably.

Too often, when faced with the financial and time burden of preparing thousands of documents for production, a litigant may be tempted to gamble and issue a production without doing a proper privilege review, hoping to rely on the ability to "claw back." even in the face of an agreement, this likely will not be sufficient because it is not a "reasonable" effort to protect the privilege.

While inadvertent disclosure may be inevitable, attorneys can protect themselves. Be proactive, utilize clawback agreements early in discovery. Using these protocols can limit the damage if and when inadvertent disclosure occurs.

As published in The Recorder