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Management

The Attorney-Client Privilege and the Amended Federal Discovery Rules

December 2006

When the complexities of the legal landscape are added to the logistical difficulties of performing effective privilege reviews on millions of page-equivalents of information within the tight timeframes of typical pretrial discovery, it should come as no surprise that efforts are being made to develop laws for privilege and privilege waiver. This article addresses principally federal law on privileges.

The amended Federal Rules of Civil Procedure formalize a procedure to address inadvertent disclosures of privileged and trial preparation materials. A party that believes it has unintentionally produced privileged information may give notice to the receiving party, who must then "promptly return, sequester, or destroy the specified information and any copies it has" and "take reasonable steps to retrieve" any information it has already distributed. The receiving party also "may not use or disclose the information until the claim is resolved." Rule 26(b)(5)(B).

Rule 26(b)(5)(B) permits the receiving party to bring the privilege issue promptly to the court's attention for determination. The producing party is required to preserve the information until the claim of non-waiver is resolved.

The "privilege hold" procedure crafted in the rules amendments only addresses procedures. Nothing in the amended rules addresses whether particular information might be privileged or whether a particular disclosure waives the privilege. For answers to those questions, one must turn to substantive law. That substantive law may be federal or state – or a combination – depending upon the particulars of the case and information. All that can safely be said is that the substantive law is not uniform.

When the complexities of the legal landscape are added to the logistical difficulties of performing effective privilege reviews on tens of thousands or perhaps millions of page-equivalents of information within the tight timeframes of typical pretrial discovery, it should come as no surprise that efforts are being made on several fronts to develop uniform laws for privilege and privilege waiver.

One example in the federal arena is proposed Federal Rule of Evidence 502. If it becomes effective in its present form, it would impose some uniformity in the federal courts regarding waivers. It would provide, among its exceptions to waiver, that a voluntary disclosure does not operate as a waiver if the disclosure is inadvertent and is made during discovery in federal or state litigation or administrative proceedings, so long as the holder of the privilege or work product protection took reasonable precautions to prevent disclosure and took reasonably prompt measures, once the holder knew or should have known of the disclosure, to rectify the error. Proposed FRE 502(b) (2).

Even with such a rule, the existing and developing case law confirm that parties and counsel will still have wide latitude for error, with all of the attendant consequences.

What is "the privilege?"

Federal Rule of Evidence 501 provides that "the privilege of a witness, person, government, State, or political subdivision thereof, shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness, person, government, State, or political subdivision thereof shall be determined in accordance with State law." SeeHopson v. Mayor of Baltimore, 232 F.R.D. 228, 240 (D. Md. 2005).

The balance of this article addresses principally federal law on privileges.

Attorney-client privilege

Under principles of federal common law, the attorney-client privilege protects confidential communications by a client to an attorney made in order to obtain legal assistance from the attorney in his or her capacity as a legal adviser and the advice given by the lawyer in the course of representing the client. SeeUnited States v. Amerada Hess Corp., 619 F.2d 980, 986 (3d Cir. 1980); In re Benun, 339 Bankr. 115, 126 (Bankr. D.N.J. 2006); In re Universal Service Fund Telephone Billing Practices Litigation, 2005 WL 3725615 at *5 (D. Kan. July 26, 2005):

Under federal common law, the essential elements of the attorney-client privilege are: (1) where legal advice of any kind is sought (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except if the protection be waived.

Only the communications pertaining to advice, and not the underlying facts, are protected by the privilege. Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); Williams v. Sprint/United Management Co., 2006 WL 1867478 at *5 (D. Kan. July 1, 2006) ("The protection of the privilege extends only to communications and not to facts. A fact is one thing and a communication concerning that fact is an entirely different thing."); United States v. Keystone Sanitation Co., 885 F. Supp. 672, 675 (M.D. Pa. 1994) ("attorney billing statements and time records are protected by the attorney-client privilege only to the extent that they reveal litigation strategy and/or the nature of services performed."); Philadelphia v. Westinghouse Elec. Corp., 205 F. Supp. 830, 831 (E.D. Pa. 1962). As the Supreme Court explained in Upjohn: "The client cannot be compelled to answer the questions, ‘What did you say or write to the attorney?', but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication with his attorney." 449 U.S. at 396.

While privileged communications are usually thought of as lawyer-to-client or client-to-lawyer, courts have recognized that the pathways can be more indirect in corporate contexts. SeeWilliams v. Sprint/United Management Co., 2006 WL 1867478 at *7 (D. Kan. July 1, 2006) ("A party may successfully demonstrate applicability of the privilege to written communication between corporate management employees by establishing that the communication was made in confidence for the primary purpose of obtaining legal advice. [Citation omitted.] In preparation for, or in the midst of, consultations with an attorney, employees of the client will often consult one another to ensure that the attorney's advice is based on full knowledge of all relevant facts.").

However, the privilege may be lost if the privileged information is circulated to employees who have no substantive reason for needing it. SeeUnited Investors Life Insurance Co. v. Nationwide Life Insurance Co., 233 F.R.D. 483, 489 (N.D. Miss. 2006) (applying Mississippi state privilege law); In re Universal Service Fund Telephone Billing Practices Litigation, 2005 WL 3725615 (D. Kan. July 26, 2005). The rationale is that the circulation is now for a business purpose rather than in connection with obtaining legal advice, and so the privilege is waived. Kintera v. Convio, Inc., 219 F.R.D. 503, 514-15 (S.D. Cal. 2003).

The attorney-client privilege is not to be construed more broadly than necessary to effectuate its purpose. SeeHopson v. Mayor of Baltimore, 232 F.R.D. 228, 236 (D. Md. 2005). If the communication predominantly concerns business matters, the privilege does not apply. De Espana v. American Bureau of Shipping, 2005 WL 3455782 at *2 (S.D.N.Y. Dec. 14, 2005).

Similarly, courts have consistently refused to apply the privilege to information that the client intends that the attorney will impart to others. Hopson v. Mayor of Baltimore, 232 F.R.D. 228, 236 (D. Md. 2005), citing In re Grand Jury Proceedings, 727 F.2d 1352 (4 th Cir. 1984).

Disclosure of the information in question to a testifying expert for consideration in the expert's report also waives the any claim of privilege, even if the testifying expert ultimately rejects the information. Synthes Spine Company, L.P. v. Walden, 232 F.R.D. 460, 464 (E.D. Pa. 2005).

The cloak of privilege cannot be used to prevent disclosure of information provided with the intent to further a continuing or future crime or a fraud. SeeIn re Grand Jury Investigation, 445 F.3d 266, 274 (3d Cir. 2006) (providing a detailed discussion of the crime-fraud exception); Wachtel v. Guardian Life Ins. Co., 2006 WL 1286189 at *1 (D.N.J. May 8, 2006). However, the crime-fraud exception applies only when a client knowingly seeks legal counsel to further a continuing or future crime; the privilege is not lost if the client innocently proposes an illegal course of conduct in order to explore with counsel what the client may or may not do. United States v. Doe, 429 F.3d 450, 454 (3d Cir. 2005).

Work product protection and trial preparation materials

Work product protection is technically distinct from the attorney-client privilege. Indeed, the Tenth Circuit referred to it as "not a true privilege" in a recent decision. In re Qwest Communications International Inc., 450 F.3d 1179, 1184 n.3 (10 th Cir. 2006).

The doctrine originated with the Supreme Court's decision in Hickman v. Taylor, 329 U.S. 495, 510 (1947), where the Court held that witness statements collected by the defendants' attorney and memoranda concerning the attorney's interviews of other witnesses fell outside the arena of discovery: "Not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney."

The doctrine is presently embodied in Federal Rule of Civil Procedure 26(b)(3). The rule limits the discoverability of materials prepared in anticipation of litigation or for trial, and admonishes that, even where discovery is ordered, courts must "protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation." SeeSynthes Spine Company, L.P. v. Walden, 232 F.R.D. 460, 463 (E.D. Pa. 2005).

Because it is embodied in a rule prescribed by the Supreme Court, the work product doctrine is exempted from the provision of FRE 501 that privileges in federal question cases are "governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." Application of the rule thus is still governed by the principles established by the Supreme Court in Hickman v. Taylor, 329 U.S. 495 (1947). SeeIn re Qwest Communications International Inc., 450 F.3d 1179, 1184 n.3 (10 th Cir. 2006).

Work product can be subdivided into opinion work product and non-opinion or fact work product. Some courts have applied the Hickman principles to hold that opinion work product is absolutely privileged from discovery, while fact work product may be discoverable under appropriate circumstances. SeeIn re Qwest Communications International Inc., 450 F.3d 1179, 1186 (10 th Cir. 2006).

It has been held that a party seeking to invoke work product protection must establish that the threat of litigation was both real and imminent in order to invoke the provisions of Rule 26(b)(3). SeeIn re Universal Service Fund Telephone Billing Practices Litigation, 2005 WL 3725615 at *6 (D. Kan. July 26, 2005).

Work product protection can be waived. SeeUnited States v. Nobles, 422 U.S. 225, 239 (1975). In particular, production of work product material during discovery can waive the protection. SeeIn re Qwest Communications International Inc., 450 F.3d 1179, 1186 (10 th Cir. 2006).

Some courts draw a distinction between the work product doctrine and the attorney-client privilege when addressing questions of waiver or loss. SeeWestinghouse Electric Corp. v. Republic of the Philippines, 951 F.2d 1414, 1428 (3d Cir. 1991). Other courts, however, treat waiver issues for documents to which the doctrine applies by the same standards as documents to which the attorney-client privilege applies.

Other privileges

The joint defense privilege can be seen either as a variant on the attorney-client privilege, or as a distinct privilege. It protects "communications between an individual and an attorney for another when the communications are ‘part of an on-going and joint effort to set up a common defense strategy.'" In the Matter of Bevill, Bresler & Schulman Asset Management Corporation, 805 F.2d 120, 126 (3d Cir. 1986).

In order to establish the existence of a joint defense privilege, the party asserting the privilege must show "that (1) the communications were made in the course of a joint defense effort, (2) the statements were designed to further the effort, and (3) the privilege has not been waived." Id.

Other privileges may be available as provided by federal, state or common law. For example, Pennsylvania recognizes an accountant/client privilege in certain circumstances. SeeUnited States v. Keystone Sanitation Co., 885 F. Supp. 672, 678 (M.D. Pa. 1994). No similar privilege is recognized under federal law. Id. The United States Government and its agencies in proper circumstances may avail themselves of the deliberative process privilege, which protects "documents containing ‘confidential deliberations of law or policymaking, reflecting opinions, recommendations or advice'", or the bank examination privilege. SeeRedland Soccer Club, Inc. v. Department of the Army, 55 F.3d 827, 853 and n.18 (3d Cir. 1995).

Whether a particular privilege is available and applicable in a given case depends upon what law provides the rule of decision. Id.See also FRE 501.

Who owns the privilege?

The attorney-client privilege belongs to the client. This is most strikingly demonstrated in cases involving the common interest or joint defense attorney-client privilege, where waiver of the privilege by one of the clients with common interests does not effect a waiver as to the other clients' attorney-client privileges. In re Benun, 339 Bankr. 115, 128-29 (Bankr. D.N.J. 2006). See generallyUnited States v. Doe, 429 F.3d 450, 452 (3d Cir. 2005).

In contrast to the attorney-client privilege, "‘work product is the privilege of the attorney,' … and thus the attorney is the one who may waive it." In re Hechinger Investment Company of Delaware, 303 Bankr. 18, 24-25 (D. Del. 2003).

Waiver by loss of confidentiality

A core element of any privilege is the confidential nature of the communication.

The attorney-client privilege is waived when a privilege holder, without coercion and with knowledge of his right or privilege, makes disclosure of any part of the privileged matter or consents to such a disclosure being made by anyone else. Williams v. Sprint/United Management Co., 2006 WL 1867478 at *5 (D. Kan. July 1, 2006); Curto v. Medical World Communications, Inc., 2006 WL 1318387 (S.D.N.Y. May 15, 2006); Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 411 (D.N.J. 1995).

The consequences of this rule can be dramatic. For example, Kaufman v. Sungard Invest. Sys., 2006 WL 1307882 (D.N.J. 2006), involved communications between Kaufman and her attorney prior to and about the sale of OSI to Sungard. The communications were effected by means of Sungard's computer system, notwithstanding established company policy that Sungard's systems could not be used for private communications and that all emails were subject to monitoring. Kaufman acknowledged that she did not remove or segregate the communications with her counsel at the time of closing, nor did she take steps to protect or segregate the existing communications after the closing. Sungard thereafter recovered the communications and sought to use them in the litigation. The court held that there was a knowing and voluntary disclosure of the e-mail communications at issue that waived any privilege. See alsoKelleher v. City of Reading, 2002 WL 1067442 (E.D. Pa. May 29, 2002).

The Kaufman decision and similar "no expectation of privacy" decisions stand in contrast with cases such as Curto v. Medical World Communications, Inc., 2006 WL 1318387 (S.D.N.Y. May 15, 2006), where the court found that the affirmative steps taken by the privilege-holder to delete e-mail communications with her counsel from her corporate-issued laptop computer and to prevent the transfer of the messages into the corporate system were sufficient to sustain a finding of non-waiver.

The loss of confidentiality through disclosure of work product material waives the protection of that doctrine. SeeIn re Qwest Communications International Inc., 450 F.3d 1179, 1186 (10 th Cir. 2006)

"Selective waiver" refers to the assertion by a party that has previously produced materials to a government entity performing investigatory functions, that the confidential and hence privileged or protected quality of the information was not waived through the voluntary surrender of the information to the governmental entity. The opinion in In re Qwest Communications International Inc., 450 F.3d 1179 (10 th Cir. 2006), includes a lengthy discussion of the concept of "selective waiver." The Tenth Circuit reported in Qwest that, in the attorney-client context, the Eighth Circuit had established and supported the concept; the D.C., First, Second, Third, Fourth, Sixth and Federal Circuits had all rejected selective waiver; and the Seventh Circuit had rejected it in a specific case but had not wholly rejected the concept. Turning to the work product context, the Tenth Circuit concluded that the Fourth Circuit had approved using selective waiver for opinion work product but not for non-opinion work product; the Third, Sixth and Eighth Circuits had rejected the concept; and the D.C. and Second Circuits had rejected the concept in specific cases but had not wholly decided whether selective waiver might apply in some circumstances. After further discussion, the Tenth Circuit itself declined to adopt the selective waiver doctrine as an exception to the general rules of waiver upon voluntary disclosure of protected material. 450 F.3d at 1192. In intriguing commentary, however, the Tenth Circuit held open the possibility that a new privilege might someday be created for materials produced in government investigations. 450 F.3d at 1197. See alsoWestinghouse Electric Corp. v. Republic of the Philippines, 951 F.2d 1414 (3d Cir. 1991) (rejecting selective waiver in both attorney-client and work product contexts).

Inadvertent waiver – standards for evaluation

Most of the cases addressing loss of privilege through production in discovery are directed to allegedly inadvertent waivers of privilege. These may be due to the client's conduct, but more typically are due to the conduct of other persons, such as the client's counsel or, in at least one recent case, the client's financial lender. SeeJame Fine Chemicals, Inc. v. Hi-Tech Pharmacal Co., 2006 WL 2403941 (D.N.J. 2006) (document in question obtained in response to subpoena to lender).

There are three schools of thought on the consequences of an allegedly inadvertent waiver of privilege. The strict accountability line of cases holds that the inadvertent disclosure of a privileged document vitiates the privilege and constitutes a waiver – once confidentiality is lost, it cannot be restored. The Federal Circuit, First Circuit and D.C. Circuit currently follow this approach. SeeHopson v. Mayor of Baltimore, 232 F.R.D. 228, 235 (D. Md. 2005); Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 410 (D.N.J. 1995).

At the other end of the spectrum are cases "which espouse the ‘no waiver' rule." Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 410 (D.N.J. 1995). The Eighth Circuit and some district courts, including the District of Delaware in Helman v. Murry's Steaks, 728 F. Supp. 1099, 1104 (D. Del. 1990), have applied this lenient "to err is human" approach. Substantively, the rationale is that waiver requires an intentional and knowing relinquishment, and that an inadvertent disclosure can only constitute a waiver if it occurs through the gross negligence of the client. SeeHopson v. Mayor of Baltimore, 232 F.R.D. 228, 235 (D. Md. 2005). Therefore, an attorney's negligence cannot waive the privilege, because the client, and not the attorney, is the holder of the privilege. Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 410-11 (D.N.J. 1995).

The third approach takes the middle of the road, focusing on the reasonableness of the steps taken to preserve the confidentiality of privileged documents. The substantive theory appears similar to tort law, with a higher threshold for "liability" than mere negligence. It begins with the general premise that a waiver must be knowing and intentional to be effective. A truly inadvertent disclosure is, by definition, an unintentional act and thus not an effective waiver. Everyone should be aware, however, that mistakes do happen, so the producing party must take appropriate steps in anticipation. If it does, a mistake is just that and can be excused. However, at some point, the extent and quality of the protective steps become inadequate and unreasonable in the circumstances – the producing party is effectively courting a disaster. When the conduct preceding the disclosure becomes grossly negligent in the opinion of the reviewing judge, the disclosure is deemed to be intentional, thus effecting what is constructively a deliberate waiver of the privilege. SeegenerallyHopson v. Mayor of Baltimore, 232 F.R.D. 228, 235 (D. Md. 2005); Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 410-11 (D.N.J. 1995).

The Third Circuit has not yet staked out a position along the spectrum of approaches. In Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 411 n.13 (D.N.J. 1995), Judge Wolfson read the tea leaves in Redland Soccer Club, Inc. v. Department of the Army, 55 F.3d 827, 856 (3d Cir. 1995), and concluded that "Redland Soccer implies that the Third Circuit would adopt a balancing test to determine whether an inadvertent disclosure constitutes a waiver." More recently, Judge Thompson wrote in Jame Fine Chemicals, Inc. v. Hi-Tech Pharmacal Co., 2006 WL 2403941 at *2 (D.N.J. August 18, 2006), that, although "the Third Circuit has not definitively addressed the issue of waiver by inadvertent disclosure, courts within this Circuit have generally utilized the approach outlined in Ciba-Geigy …."

The approach outlined in Ciba-Geigy and followed in Jame Fine requires the court to weigh the following factors when evaluating an inadvertent waiver of the attorney-client privilege:

  1. the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production;
  2. the number of inadvertent disclosures;
  3. the extent of the disclosure;
  4. any delay and measures taken to rectify the disclosure; and
  5. whether the overriding interests of justice would or would not be served by relieving the party of its error.

Ciba-Geigy, 916 F. Supp. at 411. "If the court determines that the disclosure resulted from ‘gross negligence,' then it will deem the disclosure to be intentional, and will find that the attorney-client privilege has been waived." Jame Fine, 2006 WL 2403941 at *2.

Where the materials qualify for work product protection, a similar test is applied to determine whether inadvertent production of the material has waived the protection. In that circumstance, the "court will ‘consider, among other factors, the steps taken by a party to remedy the disclosure and any delay in doing so.'" Jame Fine, 2006 WL 2403941 at *3. "To prevent a waiver of privilege under the work-product doctrine, ‘the party asserting the … doctrine must pursue all reasonable means to restore the confidentiality of the materials and to prevent further disclosures within a reasonable period.'" Id. Notably, the "party ‘asserting waiver of work product immunity, rather than the party asserting the work product protection, has the burden of establishing waiver.'" Id.

What constitutes "reasonable efforts" is very much a case by case matter at present, with wide variation even within districts. This should be no surprise, as the assessment of what is reasonable is and should be "fact driven" in light of the circumstances of the individual case. Parties and counsel should pay careful attention to local rules and opinions by the judges handling their matters when they embark upon discovery. To the extent that common threads can be teased from the mass, they include: making meaningful efforts to determine the names of attorneys who may be authors or recipients; electronically searching or manually reviewing a very substantial portion of the documents; and some form of quality control before anything meaningful is transferred to the adverse party. Once a disclosure has been made, prompt efforts to recover the materials are vital – waiting too long to request the return of an inadvertently disclosed document has repeatedly doomed the recovery effort. SeeHernandez v. Esso Standard Oil Co., 2006 WL 1967364 (D. P.R. July 11, 2006); Crossroads Systems (Texas), Inc. v. Dot Hill Systems Corp., 2006 WL 1544621 at *3 (W.D. Tex. May 31, 2006).

Consequences of a waiver

The court in Hopson observed that the consequences of an inadvertent waiver of the attorney-client privilege can vary widely with the jurisdiction, the court and the circumstances. The consequences can range from a limited waiver of privilege as to a particular item of information, to subject matter waiver for all items related to the relevant issue, to a complete waiver for the entire data collection. Hopson, 232 F.R.D. at 232. See, e.g., Crossroads Systems (Texas), Inc. v. Dot Hill Systems Corp., 2006 WL 1544621 at *3 (W.D. Tex. May 31, 2006) (stating that Fifth Circuit applies broad subject matter waiver rule); Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 414 (D.N.J. 1995) (waiver limited to disclosed document); United States v. Keystone Sanitation Company, 885 F. Supp. 672, 678 (M.D. Pa. 1994) (limited waiver as to narrative portions of billing statements).

The consequences may well be different when it is work product protection rather than the attorney-client privilege that has been inadvertently waived. For example, in one recent decision, the court refused to extend the waiver to the "broad subject matter" of the disclosed documents and explicitly limited the waiver to the disclosed documents themselves. The court said that it was "reluctant to further intrude upon the work product protection and extend that waiver to the entire subject matter of the disclosed documents. … [W]hile there is no question that Hechinger opened the gate …. defendants are not entitled to drive a bulldozer through it." In re Hechinger Investment Company, 303 Bankr. 18, 26 (D. Del. 2003), discussing Westinghouse Electric Corp. v. Republic of the Philippines, 951 F.2d 1414, 1428 (3d Cir. 1991).

Privilege log contents

Several recent cases have addressed what must be included in a privilege log. The basic rule is given in FRCP 26(b)(5):

the party [asserting privilege] shall make the claim expressly and shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.

The simple statement in the rule has given parties wide latitude in drafting privilege logs. As more discovery disputes – involving larger numbers and more categories of documents – are surfacing, some courts have become frustrated with the all-too-typical cookie cutter approach to privilege log entries and are demanding that the logs become truly useful tools to evaluate claims of privilege. Thus, the court in United Investors Life Insurance Company v. Nationwide Life Insurance Company, 233 F.R.D. 483, 486 (N.D. Miss. 2006), stated:

This court will not grant an in camera inspection where, as here, there are potentially hundreds, perhaps thousands, of documents which would require review. … The court orders defendants to revise their privilege log entries to include each element of a claimed privilege or protection so that the court and the plaintiff are able to "test the merits" within the four corners of the privilege log itself.

The court in In re Universal Service Fund Telephone Billing Practices Litigation, 2005 WL 3725615 (D. Kan. July 26, 2005) was more explicit, requiring that a privilege log include the following information:

  1. A description of the document explaining whether the document is a memorandum, letter, e-mail, etc.;
  2. The date upon which the document was prepared;
  3. The date of the document (if different from # 2);
  4. The identity of the person(s) who prepared the document;
  5. The identity of the person(s) for whom the document was prepared, as well as the identities of those to whom the document and copies of the document were directed, "including an evidentiary showing based on competent evidence supporting any assertion that the document was created under the supervision of an attorney;"
  6. The purpose of preparing the document, including an evidentiary showing, based on competent evidence, "supporting any assertion that the document was prepared in the course of adversarial litigation or in anticipation of a threat of adversarial litigation that was real and imminent;" a similar evidentiary showing that the subject of communications within the document relates to seeking or giving legal advice; and a showing, again based on competent evidence, "that the documents do not contain or incorporate non-privileged underlying facts;"
  7. The number of pages of the document;
  8. The party's basis for withholding discovery of the document (i.e., the specific privilege or protection being asserted); and
  9. Any other pertinent information necessary to establish the elements of each asserted privilege.

Id. at *3. Moreover, the Universal Systems court required that the privilege log separately address each individual email within an email "strand" or thread for which privilege was claimed. Id. at *4.

Clawbacks and non-waiver agreements

The court in Hopson v. Mayor of Baltimore, 232 F.R.D. 228, 234 (D. Md. 2005) warned that parties must obtain court approval of their bilateral agreements regarding non-waiver of privilege from inadvertent production, particularly if the parties want the agreements to be effective against third parties. The warning is well justified. For example, the Third Circuit has held as far back as 1991, in its decision in Westinghouse Electric Corp. v. Republic of the Philippines, 951 F.2d 1414, 1426-27 (3d Cir. 1991), that a bilateral agreement not to disclose privileged information that was exchanged – in that instance, between Westinghouse and the Department of Justice – was ineffective as to third parties and constituted a waiver of the privilege.

The amended federal discovery rules that become effective on December 1, 2006 similarly urge counsel to recognize the possibility of inadvertent disclosures, to develop solutions to avoid waiver and to ask that agreements addressing the issue be incorporated in scheduling orders. See amended FRCP 16(b)(6) and 26(f)(4).

Litigants should not simply assume that courts will approve non-waiver agreements without review, or that non-waiver agreements will be a magic bullet protecting haphazard document disclosure. A non-waiver agreement must incorporate meaningful procedures to review for and remove privileged materials if it is to be given deference, even as between the very parties who entered into it. For example, Judge Wolfson flatly rejected a clawback arrangement that had been counsel's excuse to bypass all meaningful preliminary review for privileged material and held that counsel's "inexcusable neglect" and "absence of reasonable precautions" justified a finding of waiver. Ciba-Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 412-13 (D.N.J. 1995). The Hopson court similarly directed the parties to discuss the nature of the privilege review they would undertake in order to qualify for non-waiver of privileges as to privileged materials that might unintentionally be produced. Hopson v. Mayor of Baltimore, 232 F.R.D. at 246.

Conclusion

The state of the law on privileges and waivers, inadvertent or otherwise, is complex and in flux. Decisions such as Hopson are providing valuable guidance to the legal community. Until the legal issues are resolved (if ever), it is wise to follow a conservative approach when designing the review and production procedures for privileged information.

About the Author

Carl G. Roberts, is a partner in Ballard Spahr Andrews & Ingersoll, LLP, in Philadelphia and a former Chair of the ABA Law Practice Management Section.