President Signs Bill Curbing Inadvertent Waiver of Privilege

On September 19, President Bush signed into law S.2450, amending the  Federal Rules of Evidence (FRE 502) with respect to the disclosures covered by the attorney-client privilege and work product protection.  The ACC, with its coalition partners, actively supported the bill as passed.

Prior to the passage of this bill, early efforts by the ACC and the coalition were effective in heading off a proposal by a Department of Justice representative mandating federal judicial recognition of “selective waivers”. A selective waiver is an agreement that a party under investigation will produce privileged material to the government, while preserving no-waiver status to nonparties. The ACC was instrumental in arguing that this proposed requirement would further stifle the necessary dialogue between corporate counsel and their clients. Executives would be concerned that solicited advice would later become evidence in the process of investigation and/or litigation. Susan Hackett, ACC’s Senior Vice President and General Counsel, testified that selective waiver would put “an inherent endorsement upon the culture of waiver.” See Testimony of Susan Hackett, Jan. 29, 2007, Hearing of the Advisory Committee on Evidence Rules, at 218. Ultimately, this language was dropped from the bill.

The ACC did strongly support what did pass, which strengthens privilege. With recent significant increases in email and other forms of electronic communication, the potential for unintentional disclosure of privileged documents is markedly increased. This dramatically increases the risk, time, and expense to litigation as companies attempt to prevent unintended disclosures when, for instance, a company sorts through millions of electronic documents, many imbedded within e-documents, to produce several hundreds of thousands of responsive pages. Recognizing the unacceptable risk to companies’ privileged communications and work-product, the amended rule applies to attorney-client privilege or work-product protection as follows:

‘502(b) Inadvertent Disclosure- 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:

  • the disclosure is inadvertent;
  • the holder of the privilege or protection took reasonable steps to prevent disclosure; and
  • the holder promptly took reasonable steps to rectify the error, including (if applicable) following Federal Rule of Civil Procedure 26(b)(5)(B).’

For more information on the amended Rule 502 see the documents below: