The next time you check your e-mail in-box, count how many e-mails you received the previous day. Yesterday I received eighty-two. Now, count how many computers with e-mail in-boxes there are in your organization, and multiply. After I did that calculation for our firm, I looked out my window and saw twenty or so highrise office buildings, each filled with people, each person with a computer, each computer with an inbox, and each in-box refilled daily. The number of emails received each minute in downtown Chicago alone is staggering.
This is a frightening prospect for lawyers and clients who are involved in, or are contemplating litigation with attendant discovery burdens. Ever since e-mail communications became commonplace, courts have struggled to balance attorney-client and attorney work product privileges with practicalities. No judge or barrister practicing at the bar in England in 1577—when the attorney-client privilege was first recognized—could have imagined how the privilege, which excused a solicitor from testifying regarding a matter on which he had been retained, could possibly be applied with justice in our world. Back then, and indeed, until very recently, attorney-client communications were likely to be in person or by letter. Even with the advent of faxes and word processors, though the volume of documents increased, it remained relatively easy to locate and segregate privileged communications— letters and faxes were kept on paper in filing cabinets and could be reviewed. E-mails and other electronic data and information, however, are nearly impossible to review and segregate without enormous cost; and unreviewed materials cannot be produced for an adversary without important risk of disclosure.
Fortunately, Congress in enacting Rule 502 to the Federal Rules of Evidence last September imposed some uniformity and predictability into the process by addressing the issue with a commonsense approach that is cost effective and that preserves the privileges. The most important change under Rule 502 is that while reducing the costs of discovery in federal courts, it greatly reduces the risk of a waiver of these privileges in other state and federal proceedings.
Before the adoption of Rule 502, the inadvertent production of a single privileged document could lead to a broad waiver of the privilege regarding all documents relating to the same subject matter. Moreover, the effect of an inadvertent disclosure varied among the several federal circuit courts of appeal and from state to state. As might be expected, to avoid a finding of a broad waiver, counsel or their clients felt compelled to review each document for privileged material. Time-saving e-discovery tools, such as word searches for attorney names, while useful in identifying relevant documents, were not as effective as document-by document review, and more important, were not uniformly recognized as reasonable approaches to protecting the privilege.
Earlier attempts to create some predictability and cost savings were not enough. In 2006, the Federal Rules of Civil Procedure were amended to allow courts to enter discovery orders based upon agreements of the parties that inadvertent disclosures would not constitute a waiver of a privilege. Those Rules also permitted parties to include “claw-back” and “quick-peek” agreements. Under a “claw-back” agreement, the parties agree in advance to return inadvertently produced documents which will not result in a waiver. Under a “quick-peek” agreement, a party allows the other side to review documents prior to its own review, and lets the other side decide what materials it wants copied. Only then does the producing party review the selected documents for privilege. In addition the new rules provided that in the event a privileged document was inadvertently produced, the receiving party, when notified by the producing party, was required to return, sequester or destroy the document. It could then seek an order declaring that a waiver had occurred.
These improvements, while helpful, were not sufficient because the federal courts had no authority to bind nonparties or other courts to these non-waiver agreements or discovery orders. If, for example, a party produced privileged documents to the other side pursuant to a nonwaiver agreement in federal court litigation, it was quite possible that when the disclosing party became involved in subsequent litigation with another party in another court, the subsequent court would not follow the prior agreement or court order and would instead determine that the privilege had been waived. As a result, parties remained reluctant to rely upon these agreements and continued to engage in extensive document review.
New Rule 502 directly addresses this issue by declaring that all federal court orders finding that there has been no waiver or approving the parties’ non-waiver agreement, must be respected in all other proceedings, whether in state or federal courts. Thus, a party can now be confident that whatever order is entered by a federal court regarding waiver will be binding in all subsequent state and federal proceedings wherever conducted. There will no longer be different determinations with respect to disclosure based upon the jurisdiction or location of a subsequent court. These amendments are a great improvement over the former patchwork of decisions in various federal and state courts.
This Rule is not merely effective when the original proceeding is in a federal court. It also attempts to bring some uniformity in later federal court proceedings regarding the decisions made in prior state courts. A disclosure in a state court proceeding will not operate as a waiver of privilege in a subsequent federal court if it would not be deemed a waiver under Rule 502 or under the law of the state in which it was made. In other words, the federal court will apply whichever law promotes a finding non-waiver. Rule 502 is not only procedural, but also substantive and sets forth the effect of disclosure of a privileged document to a federal agency or in a federal court proceeding. Prior to its enactment, the scope of attorney-client privilege and effect of disclosures were determined by federal common law for cases arising under federal law and by state law for cases arising under state law. The Rule provides a single set of rules for waiver of privilege in federal court.
Rule 502 (a) provides that such disclosure will be deemed a subject matter waiver i.e., the waiver extends also to non-produced materials, only where (1) the waiver is intentional; (2) the disclosed and undisclosed documents concern the same subject matter; and (3) “they ought in fairness to be considered together.”
Importantly, Rule 502 limits the effect of inadvertent disclosure. It provides that the privilege is not waived by disclosure to a party in a federal court proceeding or to a federal agency if (1) the disclosure is inadvertent, (2) the holder of the privilege took reasonable steps to prevent disclosure, and (3) the holder of the privilege promptly requested return of the document when inadvertent production is discovered.
While Rule 502 will not eliminate all of the costs in time and money of protecting the attorney-client and work product privileges—and parties still need to protect privileged documents—it should greatly assist the parties and courts in reaching balanced and cost-effective methods for producing and reviewing documents.