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New Federal Rule of Evidence Aims to Reduce Unnecessary Discovery Costs in Your Business Litigation

Sep 24, 2008

One of the causes of increased litigation costs in the recent past has been the proliferation of electronic mail and other electronically stored information which is responsive to document requests filed in commercial lawsuits. President Bush is expected to sign recently-passed legislation which will help reduce unnecessary legal costs associated with concerns arising out of the unintended disclosure of an attorney-client and/or work-product privilege document. Before the advent of the new rule (Federal Rule of Evidence 502), a significant concern facing litigants was the inadvertent disclosure of privileged documents which might act as a waiver of privilege protection for all documents on the same subject matter.

One recent study suggests that the volume of electronic data is doubling every 18 to 24 months, to the point of unmanageability in the view of 40% of executives polled. Not surprisingly, the expense of responding to document requests is the single greatest concern about document discovery. Since large numbers of pages of electronic documents are usually within the scope of document requests, there is always a possibility of an inadvertent disclosure. Furthermore, lawyers will usually err on the side of being conservative in determining whether a privilege applies to a document because of the potential for waiver of the privilege. This often leads to costly battles over which documents are entitled to protection. The new legislation passed by Congress attempts to address these issues.

First, the rule makes it clear that an inadvertent disclosure is not considered a waiver of the privilege if the disclosure was inadvertent and reasonable steps were taken to prevent the disclosure and/or to quickly rectify the disclosure.

Second, if a waiver of the privilege occurs on a document, that waiver does not extend to all documents in the same general broad subject matter.

Third, the rule provides that if a federal court enters an order finding that an inadvertent disclosure of privileged information does not constitute a waiver, that order will be enforceable against persons in federal and state proceedings, and can be relied upon in any subsequent proceedings.

It can be anticipated that courts will be receptive to parties seeking protection in order to protect privileges that may apply in the document production. Moreover, Rule 502 should reduce the current tendency to assert a blanket privilege for documents in order to avoid an inadvertent waiver of the privilege. Rule 502 does not affect the substantive issues of attorney-client privilege and/or work-product doctrine. Our commercial litigation practice group is available to answer any questions regarding Rule 502 and/or any other questions related to commercial litigation in Hawai’i. Please contact John R. Lacy at [email protected], Bruce Lamon at [email protected], or LindaLee (Cissy) Farm at [email protected].

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