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Privileges, Clawbacks, and Inadvertent Disclosures

By Todd Presnell

Several issues and concerns populate corporate counsels' minds when confronted with e-discovery demands, but two rise to the top: 1) collection and production cost; and 2) inadvertently producing information protected by evidentiary privileges. And these two concerns overlap, producing a Catch-22 dilemma for in-house lawyers. On the one hand, a complete pre-production privilege review of documents constitutes the highest-cost item in the e-discovery process. On the other hand, producing documents with limited to no privilege review risks inadvertent disclosures and privilege waiver, which may result is disastrous ethical and strategy-related consequences.

Many thought that courts' approval of lenient inadvertent disclosure rules and nonwaiver, or clawback, agreements would solve this double-edged problem. But neither avenue proved acceptable in practice. Some courts still found privilege waiver when documents were mistakenly disclosed without acceptable safeguards; and other courts ruled that clawback agreements did not obviate a pre-production privilege review and were not enforceable against third parties in subsequent litigation. And in these situations, parties were neither saving production-associated costs nor protecting their privileged information from discovery.

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