Protecting Privilege — New Rule 502 mitigates the risk of inadvertent e-discovery disclosures

By Michael Kozubek

Published in the 2/1/2009 Issue of Inside Counsel.

Privilege review has been a major culprit in the skyrocketing cost of e-discovery. With hundreds of thousands of documents subject to discovery in numerous cases, attorney-client communications and work-product information frequently end up in the hands of the opposing party. Because the production of privileged documents during discovery waives the privilege, discovery teams scour through documents trying to ensure nothing slips through that could damage their case. Still, with the volume of electronically stored information, inadvertent disclosure is almost inevitable, with potentially devastating results.

“Cases have been lost in part because of inadvertent disclosures,” says Bobby Balachandran, CEO of Exterro, a legal hold and workflow software provider.

But that risk diminished when Rule 502 of the Federal Rules of Evidence (FRE 502), originally drafted by the Judicial Conference Committee on Rules of Practice and Procedure, recently became law. The new rule is designed to mitigate the expense of privilege review while protecting companies from potentially large liabilities arising from inadvertent disclosures of privileged communication.

The rule provides that privilege is not waived when privileged communications are inadvertently disclosed, provided the holder of the privilege took “reasonable steps” to prevent disclosure and to rectify the error.

Litigators celebrated the enactment of FRE 502 while warning that it is not a panacea and does not remove the need for sound e-discovery management practices.

“The new rule is welcome news for litigants,” says David Lender, a partner at Weil, Gotshal and Manges. “An inadvertent production will not result in the waiver of the privilege as long as reasonable steps are taken to preserve the privilege before production.”

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E-Discovery Trends in 2009 — New developments in e-discovery will affect enterprise general counsel and compliance officers, law firms serving corporate clients, and IT departments

By Christine Taylor, January 9, 2008, 12:10 PM

A few years ago, the Taneja Group coined the term “Information Classification and Management” (ICM) to describe the technology of locating and classifying data throughout the enterprise. ICM covered sub-technology sectors such as e-discovery, compliance, data security control, and data management. However, we saw the term “e-discovery” trump the more comprehensive name as rabid attention turned from ICM to the specifics of civil litigation software tools. We are now seeing the e-discovery term itself take on a fuller usage, more akin to ICM. People do use the term when talking about civil litigation, but are also expanding it to encompass compliance, corporate governance, data classification, and even knowledge management.

In this broad sense we have looked at the trends of the e-discovery market as they impact its largest stakeholders: the enterprise general counsel and compliance officers, law firms serving corporate clients, and IT.

The crux of the matter is that e-discovery and its related areas will be extremely hot for litigation and compliance, especially those related to the financial meltdown. The market increasingly understands the necessity of e-discovery software tools and systems, and will move toward proactive e-discovery adoption. A more reactive approach will remain alive and well as many companies will still avoid implementation until driven to it by a lawsuit or federal investigation. But companies will increasingly understand that the e-discovery solution phenomenon is much more than a litigation aid. It also has major effects on federal compliance and internal governance, and potentially on data management throughout the enterprise.

For more see byteandswitch.com.

Reviewing Your Email and Internet Usage Policies

Written by Sue Walsh on January 2, 2009

As the year comes to a close it’s good time to review your Email and Internet usage policies and insure that they are clear and comprehensive. The folks over at SmartBiz have published some helpful tips to assist you. Here’s an excerpt:

As the Internet and email have become a big part of our everyday lives, employers need to make clear the separation between work and non-work. What someone would consider appropriate with friends may be out of line in the workplace. Each practice needs to have a clear, written policy in place to eliminate confusion by the employees on what is and is not acceptable.

Such policies are critical in this day and age. It only takes one email or dubious website to cause your business a lot of trouble in the form of viruses, security or confidentiality breaches, even lawsuits. So keep your policy updated and easily available to all your employees!

Judge Looks Past Inadvertent Disclosure Protection Rule

Shannon P. Duffy
The Legal Intelligencer
December 8, 2008

In one of the first decisions to interpret a new rule of evidence that governs “inadvertent disclosure” of privileged documents, a federal judge has held that if the “reasonableness” of the accidental disclosure remains in dispute, courts should continue to apply the traditional five-factor test to determine whether the privilege has been waived.

In his 21-page opinion in Rhoads Industries Inc. v. Building Materials Corp. of America, U.S. District Judge Michael M. Baylson was forced to resolve a dispute that arose when plaintiffs lawyers accidentally turned over more than 800 privileged e-mails when they provided the defense lawyers with copies of 78,000 e-mails.

The decision is one of the first to apply the newly enacted Rule 502 of the Federal Rules of Evidence, which protects against waiver of privilege if the disclosure is inadvertent and if the holder of the privilege took “reasonable steps” to prevent disclosure and to rectify the error.

But for lawyers, the ruling also serves as a reminder of another rule, Rule 26(b)(5)(B) of the Federal Rules of Civil Procedure, which mandates that lawyers create a privilege log for all documents withheld.

Although Baylson ultimately concluded that the privilege wasn’t waived for all 800 documents, he nonetheless found that the plaintiff’s failure to comply fully and timely with the mandatory requirements of Rule 26 meant that the privilege was waived for 120 documents.

“The obligation to log privileged documents is mandatory under the specific terms of Rule 26(b)(5). Despite Rhoads’s attempts to justify, explain and minimize its failure to log all of its inadvertently privileged documents by June 30, 2008, the court finds that the delay in doing so until Nov. 12, 2008 is too long and inexcusable,” Baylson wrote.

Defense lawyers urged Baylson to rule that the plaintiff had waived the privilege for all of the inadvertently disclosed documents because its process of screening the documents was “grossly insufficient.”

For more see law.com.

Things You Should Never Put in an E-mail

Posted Dec 3, 2008, 12:37 pm CST

By Molly McDonough

Over at the Wichita Eagle blog What the Judge Ate for Breakfast, there’s a caution about e-mail during office hours on office computers.

Courts reporter Ron Sylvester quips, “My wife says you should never put anything in a company e-mail that you don’t want to be shown to 12 strangers on a big movie screen.”

His wife’s an employment lawyer, so she should know. The post notes that lawyers are increasingly searching company e-mail and files during e-discovery.

So what are they looking for?

Roger Matus, over at the blog Death by E-mail, reproduces a top 10 list.

Here are a few that will likely raise red flags for e-discovery sleuths:

• “Delete this email immediately.”

• “I really shouldn’t put this in writing.”

• “We’re going to do this differently than normal.”

• “I don’t want to discuss this in e-mail. Please give me a call.”

• “Don’t ask. You don’t want to know.”

Matus then advises, “If you find yourself typing one of these phrases, perhaps you should delete the entire e-mail.”

U.S. Federal Rule of Evidence 502

Ronald J. HedgesDecember 2nd, 2008

The Federal Rules of Evidence have now been amended to include a new Rule 502 [PDF], which should represent a sea change in the law of waiver in the United States. Rule 502 is intended to introduce uniformity in the law of waiver of attorney-client privilege and work production protection throughout the United States courts and, through operation of the Commerce Clause of the United States Constitution, among State courts.

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Rule 502 May Not Deliver Promised Cost Relief

Federal Rule of Evidence 502, enacted on Sept. 19, 2008, has been heralded as a significant development which “will effectively limit the skyrocketing costs of discovery.”[FOOTNOTE 1] The Rule and its promotion as a cost-saving panacea have no doubt raised expectations among clients and courts alike.

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