Life Sciences Legal Update : Life Sciences Lawyers & Attorneys : Reed Smith Law Firm : Healthcare, Food and Drug Law, Biotechnology, Privacy, Product Liability

Prior to Rule 502’s enactment, federal courts generally took three positions regarding the issue of inadvertent disclosure. Some courts found that only an intentional disclosure acts as a waiver, providing clients with the highest level of protection. Other courts found that any inadvertent disclosure of privileged information, regardless of a corporation’s effort to avoid such a mistake, acted as a waiver. Most courts, however, adopted a “middle ground” approach wherein an inadvertent disclosure acts as a waiver only if the disclosing party was careless in disclosing privileged information and failed to request its return in a timely manner. Rule 502 mirrors the middle ground approach in many respects.

While adding clarity to the thorny issue of inadvertent disclosure, it remains to be seen if Rule 502 will have a substantial impact on litigation practices, especially in the context of electronic discovery. The principal purpose behind Rule 502 is to lower litigation costs associated with discovery by, among other things, reducing the potential impact of an inadvertent disclosure. As long as the producing party takes reasonable precautions to prevent an inadvertent disclosure, the provisions of Rule 502 will likely protect that party from a broad subject matter waiver if the party mistakenly discloses privileged or work product material to its adversary. With this added protection, parties are expected to direct fewer resources to privilege and work product reviews (i.e., parties will rely more heavily on less-expensive electronic searches for privileged and work product information), thereby reducing litigation costs. The enactors of Rule 502 also hope that fewer discovery battles will occur, given the increased clarity in the law of waiver provided by Rule 502.

Although Rule 502 may offer additional protection to parties who disclose privileged or work product material during litigation, counsel will in many instances still choose to conduct thorough privilege and work product reviews, considering that the cost of disclosing confidential information to your adversary remains high, even if the information is subsequently returned or if a court determines that disclosure of such information does not constitute a broad subject matter waiver. In addition, discovery disputes will still likely erupt over interpreting the specific provisions of Rule 502 and what actually constitutes “reasonable steps” to protect privileged and work product material.

Of equal importance is Rule 502’s requirement that any agreement between parties regarding the disclosure of privileged or work product material must be included in a court order if it is to be effective against third parties. Thus, counsel who wish to enter into an agreement with their adversary regarding the disclosure of privileged or work product information would be wise to make sure that the agreement is reduced to a court order.

Despite some of its deficiencies, Rule 502 is a step in the right direction. Confidential information of the client will receive enhanced protection, which is a welcome development in the face of recent assaults on the attorney-client privilege and work product doctrine.

I. Why Did The Court Find The Defendants Had Waived Privilege?

Prior to the dispute, the plaintiff objected to the sufficiency of “paper” discovery and sought the intervention of the court to compel the production of additional discovery in the form of ESI. The court granted the plaintiff’s request. In response, the defendants requested that the court approve a “clawback agreement” that would allow the defendants, in the event of inadvertent disclosure of privileged material, to have the material returned and the privilege preserved. The defendants, however, subsequently abandoned their efforts to obtain the “clawback” agreement, believing that they had sufficient time to conduct a “document-by-document” privilege review. Id.

Tens of thousands of documents were generated by the initial search, a fairly insignificant amount of data by today’s standards. The defendants, however, ultimately conducted their privilege review using additional keyword searches and by reviewing the page titles of documents only, instead of reviewing the documents in their entirety. Id. at 2. As a result, the defendants inadvertently produced 165 documents that the plaintiff, upon receipt, readily determined might be subject to privilege. Id. at 3. The plaintiff proceeded to file a motion asking the court to declare that the items were not exempt from discovery.

The court, in granting the plaintiff’s motion, ruled that the defendants had waived the attorney-client privilege, as well as the work-product doctrine, with respect to all of the 165 documents. The court found that the defendants failed to take reasonable precautions to prevent the inadvertent disclosure of privileged data because the defendants, to their detriment:

• Selected search terms for their privilege review on an ad hoc basis
• Were unable to identify for the court the precise search terms used in their privilege review
• Failed to test the reliability of their chosen search terms and failed to exercise quality control or conduct sampling of the data
• Failed to provide the court with information regarding the rationale for the selection of the search terms
• Failed to provide the court with the qualifications of the individuals who constructed the search protocol
• Failed to prepare an adequate privilege log as required by the court rules

The court noted that the defendants bore the burden of proving that their privilege review was reasonable and had obviously fallen far short of meeting that burden.

II. Why Did The Court Find The Defendants’ Search Methodology Inadequate?

The court also criticized the defendants’ use of keyword searches, finding that it fell woefully short of establishing reasonableness:

While keyword searches have long been recognized as appropriate and helpful for ESI search and retrieval, there are well known limitations and risks associated with them. . . .

Id. at 5 (citing United States v. O’Keefe, 537 F.Supp.2d 14, 24 (D.D.C. 2008) (“Whether search terms or ‘keywords’ will yield the information sought is a complicated question involving the interplay, at least, of the sciences of computer technology, statistics and linguistics.... Given this complexity, for lawyers and judges to dare opine that a certain search term or terms would be more likely to produce information than the terms that were used is truly to go where angels fear to tread.”))

The court observed that designing adequate search protocols “involves technical, if not scientific knowledge” that demanded familiarity with “the sciences of computer technology, statistics and linguistics.” Id. at 5. Offering some guidance, the court instructed that compliance with The Sedona Conference Best Practices for use of search and information retrieval “will go a long way towards convincing the court that the method chosen was reasonable and reliable.” Id. at 26.

The court observed that designing a computer-assisted privilege review “requires the utmost care in selecting [a] methodology that is appropriate for the task,” “careful advance planning by persons qualified to design [an] effective search methodology,” “test[ing] for quality assurance,” and keeping a paper trail so that the search protocols can be explained to a court in the context of future discovery disputes. Id. at 6. In other words, experienced assistance is needed so that the party facing a challenge to its retrieval methods can establish that the methods are defensible and in accordance with the literature describing the strengths and weaknesses of various methodologies, such as The Sedona Conference Best Practices.