Nation - Lawyers grapple with gaps in inadvertent disclosure rule

By David Frank The Daily Record Newswire BOSTON, MA -- Nearly two years after Congress enacted an evidentiary rule aimed at protecting lawyers who mistakenly turn over privileged materials during discovery, practitioners say they are still struggling with critical aspects of the measure. Signed by President George W. Bush in 2008, Federal Rule of Evidence 502 was initially praised by the legal community for creating a presumption that disclosures made in federal proceedings do not waive the attorney-client privilege if certain "reasonable steps" were taken to prevent them from occurring. Lisa C. Wood of Foley Hoag in Boston, who recently conducted an analysis of Rule 502, said one major problem she identified with the rule is that it applies only to cases in which litigation is pending before a court. Wood said lawyers across the country have learned the hard way that the rule's limited application means agreements reached with federal agencies during the critical pre-litigation stage of a case are not covered. It is precisely that preliminary stage of an investigation, Wood said, when parties often turn over large volumes of electronic documents that are most susceptible to inadvertent disclosures. "How you protect against the inadvertent production of privileged material in that setting is an open question that unfortunately is not addressed by [Federal Rule of Evidence] 502," she said. "It's really just an anomaly in the rule." Colin Miller, a professor at the John Marshall Law School in Chicago, said that the "reasonable steps" to prevent disclosure requirement has not been interpreted uniformly across jurisdictions. "Courts are having a hard time determining what constitutes a 'reasonable' step to prevent disclosure under 502(b)," Miller says. "Some courts require relatively minor steps while others want fairly extreme steps to prevent waiver of attorney-client privilege. It's very confusing." Miller says that the timing issue is also an important concern. "So much of the document exchange happens in the pre-litigation phase that it's hard to tell when the protections of Rule 502 get triggered. It's important because it affects both parties involved in litigation. Whether you're a plaintiff or defendant, discovery will inevitably involve the exchange of documents, some of which may be protected by attorney-client privilege." Bringing in the judge Wood, who chairs a local rules committee in U.S. District Court in Boston, said that agreements between parties to limit the scope of an attorney-client privilege waiver based on inadvertent disclosures are not binding on third parties unless a judge issues a protective order. "Even if you have an agreement with the agency that a disclosure should not result in a waiver of the privilege, I could see a lawyer in a related private litigation trying to challenge the insufficiency of that agreement because it has not been endorsed by a court," Wood said. "The rule expressly states waiver determinations must be made by court order, which by definition seems to exclude cases where a party is turning over documents to the government during a pre-litigation investigation." Because attorneys are often trying to keep their clients' dirty laundry out of the courtroom at that stage of a case, obtaining a waiver agreement in front of a judge is not always feasible, she said. "Congress wanted these agreements to be reviewed by judges, but if you're dealing with an agency of the government in an investigation, a judge may not want to be involved and it may not be in your client's best interests," she said. It is also unclear, Wood said, if the government agency would even agree to enter into such a deal. She said she plans to ask the Department of Justice's Antitrust Division and the Federal Trade Commission to comment on the matter. George E. Lieberman, an attorney at Vetter & White who is vice president of the Federal Bar Association for the 1st Circuit, said he also noticed the discrepancy. "There will be changes to the rule," he predicted. "Where, how and when remains to be seen, but I guarantee there will be changes." Until then, one way to deal with the pre-litigation uncertainty is to file a motion to quash or some other petition in which the lawyer can ask a judge to endorse a waiver agreement, he advised. Lieberman, who practices in Massachusetts and Rhode Island, said such a request is the only way to fully protect a client. "The rule was intended to protect documents that were inadvertently produced and to avoid having to bog down the court with discovery disputes," he said. "Before this was enacted, you had judges on all sides of the spectrum, so it would certainly be reasonable at this point to ask for a court order that will protect you against a third-party lawsuit." While the pre-litigation disclosure issue remains fuzzy, most practitioners agree that future decisions from the federal circuits will help provide clarity on many of the questions raised by Rule 502. Currently no federal circuit has made a decision on the rule. Allison McAndrew contributed to this story. Published: Thu, Aug 26, 2010

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