Theories for why attorney use of eDiscovery clawbacks is dreadfully low

The exponential rise in the sheer volume of data relevant to legal disputes — to say nothing of the growing complexity associated with searching and producing that data, or the increasingly exotic forms in which it manifests — has further perpetuated risk of privilege waiver in civil litigation. Waiver, the forfeiture of attorney-client or work product protections, generally occurs when a party mistakenly produces confidential materials to an opposing party and either did not take appropriate precautions to prevent the disclosure, make the appropriate effort to retrieve the disclosed materials, or both.

In federal courts, the mechanism by which courts assess the severity of a disclosure, and whether it acts as a waiver, is Federal Rule of Evidence 502. Part (b) of that rule states, in full:

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).

Those guidelines appear to be pretty straightforward. The terms “reasonableness” and “promptly,” however, are less so. In addition to the caveats in 502(b), courts have also traditionally considered when deciding issues of waiver the number of inadvertent disclosures, their scope, and whether forgiving the disclosing party of its errors would weigh in favor of justice.

Still, there is much grey area.

Surely the nine months it took attorneys for defendants in the Thorncreek Apartments III case to recognize they’d uploaded 159 privileged documents to an online review database accessible to plaintiffs does not constitute “prompt.” Nor does suing your law firm for failing to appropriately safeguard privilege, as the L.A. pipe-maker J-M Manufacturing did, signal that the firm’s preventive conduct was “reasonable” (even if you argue it was).

In the J-M instance, a waiver determination would seem to hinge on whether, under Rule 502, the client is bound by the actions of its attorneys — or whether the client acts “reasonably” simply by way of hiring qualified professionals to handle its sensitive documents. Judge George Wu, in that case, opined that, assuming a client is bound by the conduct of its agents, a party could hire the “Clarence Darrow of document productions” and not satisfy the reasonableness standard if the attorney’s conduct is not “up to snuff.”

A letter makes all the difference 

But when it comes to Rule 502, the lede, buried here, is that parties can circumvent privilege determinations altogether by simply seeking a 502(d) order, by which the court mandates that privilege is not waived irrespective of the factors laid out in 502(b). This is to say, there is no privilege waiver, period, no matter what.

This so-called “clawback” order has been called the sweet candy of privilege protection because it generally preempts — although not always — but, in any event, seemingly always thwarts a claim by an opposing party that privilege has been waived.

Sound clawback orders, models of which prominent federal judges have made widely available, essentially guarantee against waiver. They are not larded with unnecessary language that can have the effect of inadvertently writing the authoring party out of the protection it seeks. Good clawbacks just say what they mean, which is “a production of privileged information does not act as a waiver” — in this or any other proceeding, without regard to the efforts that were made to prevent the disclosure.

502(d) orders are, essentially, get-out-of-jail-free cards, and they have little if any substantive cost associated with preparing them. Yet, as judges in the know have long lamented, their adoption by practitioners in federal courts and otherwise has been dishearteningly low.

Seven years and a month have passed since Rule 502 was enacted, and the window of peak awareness has seemingly come and gone. So the question to be asked now is not will the rule ever “take,” but whether there are legitimate reasons for why it hasn’t.

Pros don’t use safety nets (but they should)  

Some have speculated that having a clawback order in place facilitates broader, potentially more intrusive and expensive, discovery requests. The thinking here is that — by removing the threat of confidentiality breach and, thus, implicitly lowering the standard of care attorneys must meet in reviewing information for privilege, as well as the costs associated with meeting that standard — judges will be less likely to appreciate objections of producing parties that requests are “overly broad.” Privilege review is, after all, among the most expensive aspects of litigation. Does easing that burden entitle an adversary to more?

“You don’t have to work as hard or spend as much to protect privilege,” a party might envision a judge reasoning, “so let the other side have what it wants.”

Relatedly, there is potentially concern that the execution of a clawback order may impinge on counsel’s preferred privilege review workflow — and that, if that workflow is disturbed, the risk of disclosure of privileged materials increases. The 502(d) order itself would prevent waiver in such an instance, but that doesn’t mean the knowledge to be gained from a “quick peek” of the disclosed materials will be unlearned by the opponents who see it.

Still there is another, perhaps more persuasive theory that lawyers who seek 502(d) orders signal to their clients not an astuteness and familiarity with best practices, but rather an inability to achieve perfection. Michael Simon, an attorney in Boston, floated this thesis on a recent Logikcull webcast.

In other words, he suggested, asking for a clawback is a tacit acknowledgment that, no matter how prestigious the firm or adept its practitioners, mistakes will likely be made. Some firms, the ones that have built reputations for immaculate service, simply aren’t willing to swallow that pill — either out of chutzpah or to save face with demanding clients.

A clawback also potentially represents a letting down of the guard and lowering of stakes that permeates the document review and influences the performance of its players (Note: Not Simon’s idea). Laziness or, as Judge Shira Scheindlin put it in her related critique of proposed changes to Rule 37, “sloppiness” may ensue.

Put another way, eliminating the threat of waiver and the associated penalties may breed careless or reckless practices, or just bad habits, with regard to the review. Such a phenomenon can be seen in the difference in how one would play a video game if granted unlimited lives.

Fear a client would look unfavorably upon counsel’s use of a clawback, if such a fear does exist, is surely wrongheaded. After all, what savvy client, who both knows enough about the fine details of e-discovery to recognize a clawback from a bear claw and is involved enough in the process to know if a 502(d) order has been entered in the first place, would prefer its outside lawyers to litigate without one? Judges have said doing so is tantamount to malpractice.

The “sloppiness” argument is, if also clearly misguided, more compelling, if only because lowering the risk associated with almost any action potentially undermines the quality with which it is performed. There are many analogues. Some football coaches, for instance, insist on full-contact practices because threat of injury keeps their players sharper and more attentive.

In the end, though, it is no easier to justify not using a clawback than it is to protect the integrity of sensitive documents without one. While perfection is admirable, it is certainly not unattainable in modern discovery — nor is it the standard.

Inadvertent disclosures have become routine. Litigating cases with complex discovery issues and voluminous data at play without a clawback is akin to juggling on a high-wire without a net. It may be a mark of pride to “do without.” But pride comes before the certain fall — and case-swinging waiver may come after.

Robert Hilson is a director at Logikcull. He can be reached at robert.hilson@logikcull.com. The header image is courtesy of the Washington Post