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Litigation News Online

September 2008

President Signs Bill Creating New Evidence Rule

By Kristine L. Roberts, Litigation News Associate Editor

On September 19, 2008, President Bush signed into law S. 2450, a bill that creates a new evidentiary rule to address disclosure of information protected by the attorney-client privilege and work-product doctrine. New Rule 502 [PDF] of Federal Rules of Evidence is a direct response to the enormous cost of reviewing documents for privileged material, as well as concerns about conflicting rulings regarding inadvertent disclosures and the scope of privilege waivers.

Rule 502 seeks to protect litigants from subject-matter waivers, unless “fairness” requires otherwise. The new rule will also codify the majority rule in the federal courts to determine whether an inadvertent disclosure operates as a privilege waiver. Such disclosure will not waive the privilege as long as the holder takes reasonable steps to prevent disclosure and acts promptly to retrieve the inadvertently disclosed documents. Rule 502 will also allow parties to seek court orders providing that the disclosure of privileged or protected information does not constitute a waiver. Finally, parties in federal proceedings can enter into confidentiality agreements, which, if incorporated into a court order, will bind nonparties. The legislation does not affect the substantive law of privileges.

“The new rule is a very positive step toward achieving uniformity and rationality in how the federal courts address privilege waivers, and it should reduce skyrocketing litigation costs,” says Jeffrey J. Greenbaum, Newark, the ABA Section of Litigation’s budget officer and a former cochair of the Section’s Federal Practice Task Force.

“Any litigator will tell you we spend unnecessary dollars dealing with privilege issues in the context of discovery,” says Patricia Lee Refo, Phoenix, past chair of the Section of Litigation and a former member of the U.S. Judicial Conference’s Advisory Committee on Evidence Rules, which drafted new Rule 502. Lawyers err on the side of claiming privilege because of the fear of waiver, and as a result, she says, “parties spend hordes of money protecting documents that no one cares about.” Rule 502 establishes “mechanisms to allow parties to narrow their disputes to what matters,” she says.

Gregory P. Joseph, New York, past chair of the Section, says the “most critical piece” of the legislation is Rule 502(d), which sanctions agreed-upon court orders providing that the disclosure of privileged information is not a waiver. “Under this provision, the parties can enter into, for example, ‘quick peek’ agreements to allow each side to review the other’s universe of documents before determining the scope of production, and ‘clawback’ agreements to provide for the return of mistaken disclosures” says Joseph.

Refo agrees that Rule 502(d) “is the lynchpin for making the rule function. Unless lawyers have confidence that their agreements regarding disclosures in one case cannot be second-guessed by a judge in a second case, they cannot enter into those agreements.” The new rule “solves that very real dilemma,” she says.

Rule 502 is the culmination of three years of efforts by its drafters and proponents. “In 2005, the Section’s Federal Practice Task Force had identified the need for uniformity on these issues across in the federal courts,” explains Greenbaum. Around the same time, the U.S. Judicial Conference’s Advisory Committee on Evidence Rules began work on draft legislation, and the ABA was actively involved in commenting on the committee’s drafts.

In September 2007, the Advisory Committee submitted its final draft [PDF] to Congress. Unlike other federal rule changes, which take effect automatically unless Congress enacts legislation to reject, modify, or defer them, rule changes regarding evidentiary privileges “have no force or effect unless approved by Act of Congress.” 28 U.S.C. § 2074(b).

It was an “extremely unusual situation,” says Refo, “because the Judicial Conference presented the legislation in final form and after years of hearings, public comments, and revisions.” There was a significant education process by the rule’s proponents for both the Senate and the House, and Congress ultimately adopted the language of the rule as submitted by the Judicial Conference. The only addition was a “Statement of Congressional Intent Regarding Rule 502 of the Federal Rules of Evidence” to Rule 502’s explanatory note.

The new rule will apply to all cases filed after the effective date and, “in so far as is just and practicable,” to all pending cases.


What You’ve Had to Say:

  • September 22, 2008 – The purpose of the rule drafters was to reduce the cost of modern discovery. I sincerely hope that the rule will do just that. But as I see it, 50,000 documents are still 50,000 documents, and the only expense that can be addressed is the legal cost of bickering over mistaken disclosure and the other specific circumstances that the rule addresses.

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