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eDiscovery Law: Federal Rule of Evidence 502 Protects Against Accidental Waiver of Privilege
 

As noted yesterday, attorneys have reason to be worried about accidental waiver of privilege in today’s cases, where discovery of electronic documents reaches unprecedented volumes. With more electronically stored information (ESI) comes an increased risk of accidentally producing privileged information. Fortunately, there are provisions that can prevent some of the damage of such accidents.

Yesterday, we discussed “clawback” provisions and “quick peek” agreements. Both of these types of agreements can be used to protect against accidental waiver of privilege through production of the wrong documents for discovery. But, sometimes parties are unable to complete such agreements.  In other cases, these protections have been defeated by lawyers in court.  That's where Federal Rule of Evidence (FRE) 502 steps in to ensure that privilege is safeguarded when parties inadvertently produce privileged materials, assuming they take reasonable steps to avoid such inadvertent production.

FRE 502 was enacted in 2008, and it provides that:

  • "Subject matter waiver", the idea that production of a single privileged document waives privilege on all related documents on the same subject matter, does not exist. If and when waiver occurs, it is limited to the documents and information that were actually produced.
  • There is no waiver if the producing party takes reasonable steps to withhold privileged material or requests that materials accidentally produced be returned or destroyed.  Of course, what constitutes “reasonable steps” is open to interpretation.
  • If parties have agreed that inadvertent production will result in no waiver, such an agreement is binding only on the parties involved unless it is part of a court order. The effect of the agreement is broader if the agreement is included in a court order.
  • Any conflict between state and federal rules is determined by choosing the rule that provides the greatest protection of privilege.
  • FRE 502 applies even if a case is conducted under state law.

FRE 502 is relatively new and is still being interpreted by courts, but one thing is clear: the greatest protection afforded by FRE 502 is present when parties have entered into a “clawback” agreement and requested that it be made part of a court order. However, there remains no definitive ruling on what constitutes inadvertent production of privileged information or what constitutes “reasonable steps” to avoid such inadvertent production.

So, what do you think? Does FRE 502 provide important protections, or does it overstep in protecting parties and attorneys who are negligent? What do you think is necessary for a party to claim that production was inadvertent? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Law: Inadvertent Production is Inevitable, So How Do You Protect Yourself?
 

With exploding volumes of electronically stored information (ESI) being required in discovery proceedings, there is more chance than ever of inadvertently producing materials that should have been protected by privilege. No case exemplifies that better than the current eDiscovery malpractice case involving McDermott, Will & Emery discussed in this blog here, here and here where McDermott’s former client, J-M Manufacturing, has contended that 3,900 privileged documents were erroneously produced.  It is virtually impossible these days to keep every item from production that is protected by attorney-client or work product privilege.

Fortunately, there are protections against a claim of privilege waiver through inadvertent production.  The two most common historical protections are “quick peek” agreements and “clawback” provisions.

“Quick Peek” Agreement

“Quick peek” agreements are available, but not very common, because they present challenges for both parties in a lawsuit.

Instead of reviewing documents, everything is presented for a "quick peek." The requesting party is obligated to sort through all of the evidence and select the documents they wish to have presented for discovery. The producing party then has the opportunity to review those documents for privilege. The onus of review and labor for reviewing the entire collection is on the requesting party, but the producing party must be willing to accept the risk that opposing counsel will use any privileged information viewed against them, even if that information hasn’t been produced.

“Clawback” Provision

The more common protection is known as a “clawback” provision or “clawback” agreement. A part of the protective order made by the court early in a case, a “clawback” provision is an agreement between both parties that any discovery documents that are accidentally produced when they should have been protected by privilege are to be destroyed or returned upon request.

This kind of early agreement is usually simple and straightforward. It protects parties from disagreement over specific documents and prohibits the requesting party from making a claim of waiver.  Of course, parties don’t always agree to enter in such an agreement and sometimes courts have to decide.

One More Protection: Federal Rule of Evidence 502

In addition, the Federal Rule of Evidence (FRE) 502 was created in 2008 to provide additional protection. Before this rule was brought in, it has been argued, and sometimes upheld, that despite agreement between the parties as to no waiver through inadvertent production, that agreement did not extend to other parties in other proceedings. Waiving privilege on a single document has often constituted a waiver for all other documents on the same subject (called “subject matter waiver”).  FRE 502 provides extra protection in these cases.

But, more on that tomorrow!

So, what do you think? Have you ever been in a situation where you had to rely on one or more of these protections to deal with inadvertent production in a case? How did that work out for you and/or your client? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Update: J-M Manufacturing Tries to Clawback Privileged Documents at Issue in McDermott Malpractice Case
 

One of the most talked about cases from an eDiscovery perspective this year is the case against McDermott Will & Emery for alleged malpractice in the disclosure of privileged documents.  McDermott’s former client, J-M Manufacturing, has contended that 3,900 privileged documents were erroneously produced as part of 250,000 J-M electronic records that were reviewed under McDermott’s supervision.  In late July, J-M filed an amended complaint to its case, naming Navigant Consulting, Stratify and Hudson Legal as third party vendors hired by McDermott to run documents through a filter to identify potential attorney-client privilege documents and perform review of those documents.

Now, J-M has filed a motion seeking clawback of 3,400 privileged documents it contends that McDermott wrongfully produced, claiming the US government and, then, their opponents in the case, received the documents erroneously from McDermott.

The malpractice case was filed in California Superior Court, but was successfully moved to federal court by McDermott.  Recently, Hobson Dungog Bernardino + Davis, representing J-M in this case, filed a motion to remand the case to state court.

J-M says the first production of privileged documents in the case, in response to federal subpoenas, occurred in 2007 and 2008.  Stratify was hired by McDermott to search 1.3 million electronic files to identify potentially responsive and privileged files.  J-M claims it took “various precautions to identify and segregate documents that were subject to attorney-client privilege.", but that McDermott turned over files to the government that were not properly screened for privilege. J-M retrieved those documents through an informal July 2007 “clawback” agreement with the government. Both parties agreed to “return, sequester or destroy any inadvertently produced privileged materials.”

According to the filing, J-M then turned over a second production to the government assuming that its McDermott and its vendor, Stratify, had properly conducted the privilege review as previously instructed.  However, on May 20, 2010 (two months after McDermott had been dismissed), attorneys for one of the relators (John Hendrix at Day Pitney), notified J-M that they held potentially privileged documents, J-M requested the return or destruction of the 3,400 privileged documents in June 2010, but was rebuffed by Day Pitney attorneys, who rejected the request saying J-M had waived privilege by not taking “reasonable steps to prevent disclosure” as specified in Federal Rule of Evidence 502 and Federal Rule of Civil Procedure 26.  J-M has contended that the production of privileged documents was inadvertent and not a waiver.

On February 18, 2011, almost a year after McDermott had been dismissed, J-M entered into a joint clawback agreement with all relators.  Ironically, in a June 3, 2011 email to Day Pitney attorneys, Sheppard Mullin noted an additional production in 2011 by them of 500 allegedly privileged documents as Stratify (still being used as the vendor in this case) “mistakenly released approximately 9,650 ESI files without first presenting them for attorney review”.  As these documents may fall under the February 2011 clawback agreement, the plaintiffs have expressed willingness to destroy these documents.

As Sheppard Mullin has been disqualified in federal court due to conflict of interest, J-M has hired yet a third mega-firm in the False Claims case, Paul Hastings.  The False Claims Act case is still awaiting trial, so it may be difficult for J-M at this point to show how the disclosure of privileged documents has caused it damages.

So, what do you think? Should J-M Manufacturing be able to clawback its privileged documents?  Is it too early to assess malpractice against McDermott? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Are Attachments Part of the Email Or Are They Separate?

A Special Master recently investigated the legal standard concerning whether or not attachments must be produced with the emails to which they were attached in discovery proceedings, and determined that there is no certain answer to be found in case law precedent.

In Abu Dhabi Commercial Bank v. Morgan Stanley & Co, Inc., No. 08 Vic. 7508(SAS), 2011 WL 3738979 (S.D.N.Y. Aug. 18, 2011), the defendants argued that SEI Investments (“SEI”) was at fault for neglecting to produce certain attachments to emails as part of discovery, and that SEI was obligated to produce these attachments and explain their absence. This request ultimately delved into issues of precedent and legal standard:

  • SEI stated that it had already produced the documents that were relevant and were not protected by privilege, and argued that it was not obligated to produce the attachments in question because they were non-responsive to discovery.
  • A Special Master was convened to consider the issue and to establish the legal standard for this type of discovery question.
  • The Special Master found a number of conflicting examples: In some cases, the obligation to produce attachments with the relevant emails was implied, but most of these instances assumed that attachments were required to be produced and focused solely on the format of production. In a number of cases, producing attachments with their emails has been the norm; however, in other cases, emails and attachments were treated as separate in terms of privilege determination.
  • The Special Master concluded that “conceptually” the two could be viewed separately, or they could be seen as a single unit for the purpose of discovery, and advised that the decision should generally be made by the parties involved in advance, during pretrial discovery talks.
  • In this case, the Special Master questioned SEI’s argument for not producing the attachments in question, and at the same time, argued against the probably unnecessary expense of forcing SEI to produce all attachments to all emails previously included in discovery.
  • Therefore, the Special Master made a series of recommendations that were adopted by District Court Judge Shira Scheindlin. These included: a) Production of the non-privileged attachments to the 126 emails previously identified by the defendants, as well as a complete list of any such documents that it proves unable to produce; b) permission for the defendants to request further such attachments as deemed relevant and necessary to this case; and, c) a meeting between all parties to discuss this issue and reach an agreement on policy regarding the production or withholding of email attachments and their format.

So, what do you think? Do you believe that email attachments should generally be produced as a matter of course with the emails to which they were attached, or that they should be considered as separate documents for the purpose of discovery? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: A Site Designed to Facilitate Meet and Confer Conferences
 

The past two days, we discussed the basics of the Rule 26(f) “meet and confer” conference and details regarding the topics to discuss during that conference.  Hopefully, you found that review informative.

Now, as noted in a recent Law Technology News article by Sean Doherty, there’s a web application to facilitate the process to prepare for and conduct the Rule 26(f) conference.

MeetandConfer.com, provided by 26F LLC, was created to help attorneys prepare for court mandated “meet and confer” meetings.  The application is designed for law firms and corporate clients to help them determine the content, scope, and extent of ESI associated with the case.  There are four modules to coordinate the process, as follows:

  • Manage Enterprise Information: Enables users to map out organizational information, allowing all parties to understand where potentially relevant ESI is located, policies and practices associated with the ESI, and who is responsible for the ESI.  This module also enables various aspects of the organization to be documented, including backup policies and disaster recovery plans.
  • Matter Scoping: Enables users to track the various matters, and, for each matter, it enables users to track custodians and generate surveys to gather information about the locations of potentially responsive ESI.
  • Meet and Confer: Allows attorneys to define essential ESI needs for both parties while projecting a budget to identify, collect and process the data.  This module also provides a mechanism for computer-aided video conferencing (which can be facilitated by an independent mediator) to actually conduct the conference.
  • System Administration: Supports the creation of clients and users and establish rights for each user group.

Sean’s article mentioned above goes into more detail into each module, reflecting his “hands on” experience in “test driving” the application.  MeetandConfer.com is offering a free one month trial to “qualified” users (i.e., attorneys and judges), with the monthly rate of $149 per user to be billed after the free trial.

So, what do you think? Would an application like this make it easier to fully prepare for “meet and confer” conferences? Would you consider using such an application?  Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Rules: ESI Topics of the "Meet and Confer"
 

Yesterday, we talked about the basics of the Rule 26(f) “meet and confer” conference, Today, let’s go into more detail about the topics that are typically covered during the “meet and confer”, and why.

The "meet and confer" conference focuses on the exchange of information regarding discovery and the creation of a comprehensive plan that will govern the sharing and privilege of ESI. Accordingly, the requirements of this meeting specify discussion of the following topics:

  • Initial Disclosures: This exchange may be specific and detailed or very basic, depending on the needs of the case and the attorney's agendas. Proposed changes to the requirements, timing, or form of these disclosures may be discussed.
  • Topics on which Discovery may be Needed: It may be easy to agree on subjects for which discovery is necessary, or it may require prolonged discussion to reach an accord. In some instances, time and expense can be saved by beginning with a single area and later expanding discovery to include other topics, if necessary. Known as "phased discovery", this can be a very effective choice, as long as it is conducted in a way that does not require duplication of effort in later phases.
  • Format of Production of ESI: Although the actual discovery process may be conducted over weeks or even months after the conference, it's important to agree now on the format of production to prevent parties from accidentally converting files into a type that will later prove to be inconvenient or result in loss of data. This is especially important if one party has a request for a particular format.
  • Privilege, Inadvertent Disclosure, and Protective Orders: Although we all strive to prevent disclosure of privileged information, it's important to discuss in advance the possible implications and a process for dealing with such an eventuality, if it should occur.
  • Potential Deviations from Discovery Rules Requirements: In some cases, opposing attorneys will agree that they can accomplish discovery in fewer depositions than specified by Federal Rules or local rules. If so, this discussion and any related proposals should be part of the "meet and confer" conference so they can be incorporated into the discovery plan.
  • Any Other Orders or Concerns about Discovery: From discovery agreements to questions or requests, almost any topic related to eDiscovery can be part of the "meet and confer" conference.

To get the most out of the "meet and confer," and to save time and expense, most attorneys will prepare an extensive agenda of the topics for discussion in advance of the meeting itself. Although there are many other topics that may be included in the conference, this list covers key requirements of the Rule 26(f) "meet and confer" conference and the discovery plan to be created there.

So, what do you think? Did you learn something that you didn’t already know about the Rule 26(f) "meet and confer" conference?  If so, then we accomplished our goal! Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Rules: What's Really Required for the "Meet and Confer"?
 

Almost any litigation professional who works with eDiscovery is aware of the Rule 26(f) "meet and confer" conference, but many don't fully understand its parameters and how it affects ESI. What exactly is the "meet and confer" and what are some of its implications in regard to eDiscovery?

What is the "Meet and Confer"?

The "meet and confer" conference is now a requirement in Federal cases as of the rules changes of 2006 to the Federal Rules of Civil Procedure. In addition to Rule 26(f) for Federal cases, an increasing number of states now have (or are contemplating) a similar rule.  It provides an opportunity for the parties in a lawsuit to discuss discovery and create a plan for the sharing of information during and before trial.

The goal of the "meet and confer" rules is to provide a basis for an open exchange of information and a productive dialogue about discovery-related topics. Even in the antagonistic world of litigation, it is possible to reach an accord on the details of discovery by conforming to the requirements of these rules and of the discovery process.

What are the Parameters of the "Meet and Confer"?

Rule 26(f) states that attorneys must meet and discuss "any issues about preserving discoverable information" as well as developing a "discovery plan." It also specifies that:

  • Attorneys must already be aware of the location and nature of their own clients' computer systems and discoverable documents, and must be prepared to ask questions about their opponents' ESI, electronic systems, and data preservation actions.
  • In order to be fully prepared for this conference, an attorney needs to know as much as possible about the location, volume, and logistical challenges that surround the collection of ESI, as well as the client's preferences regarding privilege, protective orders, and document review.
  • The more informed the attorneys are on each of these counts, the more capable they will be to address relevant issues, streamline the discovery process, and minimize eDiscovery costs.
  • Attorneys may exchange either in-depth or limited information about the legal holds process.
  • The result of the "meet and confer" conference is to establish a comprehensive discovery plan and lay the groundwork for the discovery aspects of the rest of the proceeding.

Tomorrow, I’ll go into more details about the specific topics to be covered at the Rule 26(f) conference.  Oh, the anticipation!

So, what do you think? Do you have any experience with Rule 26(f) conferences that went awry or cases where having a Rule 26(f) conference would have helped? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Case Law: Defendants' Privilege Waived for "Completely Ineffective" Discovery Procedures

In a case over purported building and zoning code violations, an Illinois District Court has found the defendants responsible for inadvertently producing several privileged documents during discovery and for a failure to correct the problem in a timely manner, and has ordered the privilege to be waived.

In Thorncreek Apartments III, LLC v. Vill. of Park Forest, Nos. 8 C 1225, 08-C-0869, 08-C-4303, 2011 WL 3489828 (N.D. Ill. Aug. 9, 2011), the plaintiff appealed to have six documents that were accidentally submitted by the defendants (as part of discovery nine months earlier) declared to be not subject to privilege. The court ruled in favor of the plaintiff after the following events:

  • More than two months after the production of discovery documents was completed, the plaintiffs attempted to use two of the defendants’ privileged documents at deposition and the defendants became aware of problems in their own discovery production. Defense counsel contacted the plaintiff’s counsel shortly thereafter to notify them that certain privileged documents had been produced inadvertently during discovery.
  • Four months later, defense counsel produced a privilege log that noted 159 documents that should have been protected during discovery, but which had all been inadvertently disclosed. Defense counsel had intended that plaintiffs would have access to all documents in their shared online discovery database, but that documents “marked as ‘privileged’ during its review… would be automatically withheld from the production database.”
  • The defense and plaintiffs were able to come to an agreement about the majority of the documents between themselves, but six documents remained at issue. The plaintiff filed a motion “seeking an order finding that six documents produced… are not protected from disclosure by the attorney-client privilege or, alternately, are not protected from disclosure because the privilege has been waived” by production of the documents during discovery.
  • The court examined the events of the previous nine months, since the beginning of discovery, and determined that the defendants’ steps to prevent disclosure were “completely ineffective.”
  • The defendant was found to have failed to perform a final check of its discovery documents before production, to have inadvertently produced all of its privileged documents, and to have taken an excessive amount of time after such production to discover its error due, in part, to its failure to produce a privilege log at any time before the problem was uncovered.
  • A portion of each of the six documents was found to be subject to attorney-client privilege, but despite the inadvertent nature of production, the court found the defense entirely at fault for the violation of privilege and ruled accordingly that privilege had been waived.

So, what do you think? Does this kind of inadvertent disclosure constitute a waiver of privilege? Was the ruling appropriate or should the defense have been allowed to “clawback” those privileged documents? Please share any comments you might have or if you’d like to know more about a particular topic.

eDiscovery Trends: Third Party Vendors Named in McDermott eDiscovery Malpractice Case
 

You might remember eDiscovery Daily's blog post a few weeks ago about the filing of an eDiscovery malpractice lawsuit against McDermott Will & Emery by J-M Manufacturing Co., a former client of McDermott's.

This case has struck a chord in the eDiscovery community since its filing on June 1, drawing attention to the practices and standards that are at the heart of eDiscovery and outsourced review. Now, the First Amended Complaint has revealed the third party vendors involved in the eDiscovery malpractice suit.

Navigant Consulting, Stratify and Hudson Legal Named in First Amended Complaint

On July 28, J-M Manufacturing filed the amended complaint to its case against McDermott. The amended malpractice complaint describes the role of the third party vendors hired by McDermott, as follows:

  • According to J-M Manufacturing, McDermott hired both Navigant Consulting, Inc. and Stratify, Inc. to run documents through a filter intended to identify and separate materials that were covered by attorney-client privilege and any documents not responsive to subpoenas.
  • Prior to the second production of privileged documents to the federal government, Hudson Legal was also hired by McDermott, and was tasked with reviewing documents identified as potentially privileged and classifying them as either: a) responsive and privileged, b) responsive and not privileged, or c) nonresponsive.

Despite the efforts of these three companies, approximately 3,900 privileged documents were included in the 250,000 discovery documents that were turned over to the government and, in turn, given to relators for examination. The relators subsequently refused to return the privileged documents on the grounds that McDermott twice conducted privilege reviews before producing the documents.

J-M Manufacturing Claims McDermott Held Files Hostage

The new amendment also includes the assertion that McDermott held relevant case files “hostage” against payment of an outstanding invoice of $530,477 after it was replaced as J-M Manufacturing's attorney. A McDermott partner reportedly emailed the president of J-M Manufacturing and said, "I'm told that our firm policy is not to release all files until full payment is made. If you'd like all the files now, please send a check for the entire $530,477 and we'll get them out to you promptly."

In the amended complaint, J-M Manufacturing contends that McDermott’s contact (including the above referenced email) violated the California Rules of Professional Conduct, preventing J-M from recognizing the “true nature and extent of the negligent disclosure” until it was too late.

In its own filing, McDermott responded to the amended complaint by criticizing J-M Manufacturing for "scandalous and irresponsible allegations that could not have been the result of a reasonable pre-filing inquiry." McDermott indicated that they’re “willing and able to set the record straight”, but has “resisted the temptation to tell the full story without first giving J-M the opportunity to withdraw its complaint”.  McDermott also warned that “J-M’s interests could be seriously compromised” if McDermott is forced to fully disclose the facts.

So, what do you think? Has this case degenerated into "scandalous and irresponsible allegations", or are McDermott and its vendors at fault? Will we see more cases like this? Please share any comments you might have or if you'd like to know more about a particular topic.

eDiscovery Trends: Is eDiscovery Malpractice More Widespread Than You Think?
 

Last month, we discussed the eDiscovery malpractice case filed against McDermott Will & Emery for allegedly failing to supervise contract attorneys that were hired to perform the client’s work and to protect privileged client records.  This case is still continuing to generate much buzz in the eDiscovery community and I’m sure it will be closely followed as it progresses.

At least one attorney from another firm has weighed in on the possibility of eDiscovery malpractice in other cases.  Dennis Kiker, a partner with LeClair Ryan noted in their blog The e-Discovery Myth that eDiscovery malpractice is probably more widespread than most people think.  Among his observations:

  • “E-Discovery is a discipline.  Far too many attorneys in firms large and small think that e-discovery is something they can do on the side, when they are not drafting motions to dismiss an antitrust class action or preparing to depose a scientist in a patent infringement matter.  Unfortunately, this is simply not true.”
  • “[E]-discovery goes far beyond the rules.  It is one thing to understand that there are different possible forms of production permitted for electronically stored information under Rule 34, and quite another to know how to effectively and defensibly identify, preserve, collect, process, review and produce ESI.”
  • “Not even IT professionals pretend to understand all of the different information systems that exist in a single company.  Do we really expect every trial attorney to have greater expertise and understanding than the professionals that work in the field every day?”
  • “A large document review is, by definition, a large project requiring significant project management skills… In short, this is a complex, high-risk task that requires specialized skills and experience.  It is not something one does once a year and gets good at.”
  • “Malpractice claims are just one of the possible consequences of practicing in a complex area without the requisite expertise.  Loss of client goodwill, damaged reputations for lawyer and firm alike, monetary sanctions – all of these are the dancing partners of those that believe that e-discovery is something that every litigator knows how to do.”

It’s an excellent post with a number of good points.  There are some attorneys who have really worked hard at developing their eDiscovery expertise and knowing when to rely on others with the expertise they don’t have.  But, as I have observed, there are many attorneys that have tried to play “part-time eDiscovery expert” with less than terrific results (at best).  In many cases, their saving grace is that the opposing attorney is equally inept when it comes to eDiscovery best practices.

So, what do you think? Is eDiscovery malpractice more widespread than we think? Please share any comments you might have or if you'd like to know more about a particular topic.