Proposed Evidence Rule 502 “Attorney-Client Privilege and Work Product; Limitation on Waiver” (Proposed Rule 502) addresses the waiver of the attorneyclient privilege in the context of disclosures to a federal agency or during a federal proceeding. On February 27, 2008, the Senate approved Senate bill S. 2450, an updated version of Proposed Rule 502 approved by the Judicial Conference. The last action taken by Congress was on February 20, 2008, when the bill was referred to the House Committee on the Judiciary. In order for the bill to take effect, the bill must pass the House and be signed into law by the President. If adopted, Proposed Rule 502’s inadvertent waiver provision could signify lower litigation costs and a more accurate perception of the risks associated with waivers for corporations.

If enacted, subdivision (b) of Proposed Rule 502 would reconcile the various common law rules within the federal courts regarding the extent to which an inadvertent disclosure of privileged information constitutes a waiver. Federal courts currently take three positions regarding inadvertent disclosures of privileged information, each providing a different level of protection for corporations. A few courts find that only an intentional disclosure will act as a waiver, thus providing clients with the highest level of protection. On the other end of the spectrum, some courts find that any inadvertent disclosure of privileged information, regardless of a corporation’s effort to avoid such a mistake, will act as a waiver. However, the majority of courts seek a balance between protecting a client’s privilege while ensuring that corporations do not act haphazardly during disclosures. These courts find that an inadvertent disclosure of privileged information will act as a waiver only if the disclosing party acted carelessly in disclosing privileged information and failed to request its return in a timely manner.

Subdivision (b) of Proposed Rule 502 follows the majority’s position by taking the middle ground approach. Subdivision (b) provides that an inadvertent disclosure of privileged information, disclosed during a federal proceeding or to a federal office or agent, does not operate as a waiver if the holder of the privilege took reasonable steps to prevent the disclosure and employed reasonably prompt measures to retrieve the disclosed communication or information. If approved, Proposed Rule 502 may provide relief to corporations that retain an increasing amount of privileged documents, particularly in electronic form. Corporations can be confident that, if they take reasonable precautions to protect their privileged information, an inadvertent disclosure will not act as waiver.