On September 8, 2008, the U.S. House of Representatives passed a bill entitled “A bill to amend the Federal Rules of Evidence to address the waiver of the attorney-client privilege and the work product doctrine,” S. 2450, which previously had passed in the Senate in February 2008.
The bill, if signed by the president, will create a new Rule 502 of the Federal Rules of Evidence designed to limit the waiver of the attorney-client privilege through the inadvertent production of privileged materials in discovery. The new rule will provide, in part:
When made in a Federal proceeding or to a Federal office or agency, the disclosure does not operate as a waiver in a Federal or State proceeding if:
(1) the disclosure is inadvertent;
(2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and
(3) the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).
The rule also attempts to address the interplay between federal state proceedings, to eliminate the odds of having different waiver results occur depending on whether a proceeding is in federal or state court within the same jurisdiction. As cited above, the rule expressly provides that – if the the inadvertent disclosure was made to a federal office or agency, and the specified criteria are met, then the disclosure will not operate as a waiver either in a federal or state proceeding. The new rule also contains language providing that if “the disclosure is made in a State proceeding and is not the subject of a State-court order concerning waiver, the disclosure does not operate as a waiver in a Federal proceeding if the disclosure: (1) would not be a waiver under this rule if it had been made in a Federal proceeding; or (2) is not a waiver under the law of the State where the disclosure occurred.”
The new rule is intended to “apply in all proceedings commenced after the date of enactment of this Act and, insofar as is just and practicable, in all proceedings pending on such date of enactment.” Thus, potentially, the new rule will impact pending litigation, as well as future lawsuits filed after the date of enactment.
The Senate report, Report 110-264, that accompanies the bill explains that the new rule is a response to the “costs of discovery [which] have increased dramatically in recent years as the proliferation of email and other forms of electronic record-keeping have multiplied the number of documents litigants must review to protect privileged material.” As the report further explains,
though most documents produced during discovery have little value, lawyers must nevertheless conduct exhaustive reviews to prevent the inadvertent disclosure of privileged material. In addition to the amount of resources litigants must dedicate to preserving privileged material, the fear of waiver also leads to extravagant claims of privilege, further undermining the purpose of the discovery process. Consequently, the costs of privilege review are often wholly disproportionate to the overall cost of the case.
There's no doubt the costs of discovery can dwarf the amount at stake in many cases, if not properly controlled and limited as necessary. We will have to see how effective this new rule is in curbing those costs.
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