Is FRE 502 all it’s cracked up to be? Not so much
December 4th, 2008 Filed Under E-discovery, Federal Rule of Evidence 502, legal news
As pointed out by one author, FRE 502 may not the panacea to ediscovery costs that many herald it to be. See below the three main problems that FRE 502 does not address and therefore makes the new rule.
Federal Rule of Evidence 502, enacted on Sept. 19, 2008, has been heralded as a significant development which “will effectively limit the skyrocketing costs of discovery.” The Rule and its promotion as a cost-saving panacea have no doubt raised expectations among clients and courts alike.
As a rule of evidence, FRE 502 is significant because it (a) resolves conflicts among federal courts concerning the effect of voluntary and inadvertent productions of privileged material and (b) imposes federal evidentiary rules on state courts. FRE 502 will not meaningfully reduce the costs of discovery, particularly in cases involving huge e-discovery obligations, related investigations by state government entities, and “asymmetric” discovery obligations (where one party has to produce a tremendous number of documents and the other does not) for three reasons:
- The touting of FRE 502 as a cost-savings measure is based on the erroneous premise that mitigating the risk of waiver will substantially reduce e-discovery costs.
- To avoid waiver, litigants must take “reasonable steps” to avoid inadvertent disclosures and “reasonable steps” to rectify productions errors, an ambiguous standard that is expensive to meet.
- As acknowledged by its drafters, FRE 502’s ability to mitigate the risk of waiver requires that state courts be bound by the Rule. Its so-called “controlling effect” provisions may not be constitutional. Until, and unless, FRE 502’s constitutionality is established, it will provide little assurance to litigants that state attorneys general and private litigants will be unable to establish waiver in state court proceedings.
OTHER FEARS DRIVE DISCOVERY COSTS
FRE 502 is based on the premise that litigants spend millions of dollars on privilege review, which they would not otherwise spend, out of fear that waiver of attorney-client privilege or work-product protection will result from the inadvertent production of protected documents. Thus, the scope and cost of privilege review can be reduced if the risk of waiver is minimized.
While avoiding waiver is important, the practice of reviewing potentially privileged documents on a document-by-document basis is motivated primarily by the desire to prevent disclosure of the protected information contained in the reviewed documents to adversaries. Avoiding waiver is a worthwhile goal, but the risk of disclosure, itself, warrants close scrutiny of potentially privileged documents.
Even if a document can be clawed back, the protected information in the document cannot be retrieved once it is viewed by an adversary. For this reason, the consensual disclosure of potentially privileged documents pursuant to “quick peek,” “claw back,” and non-waiver agreements is virtually inconceivable in a major litigation, where counsel has not first reviewed the documents for privilege.
Clients willing to allow adversaries access to privileged documents and work-product may save some money, but the costs of discovery in major cases will still be extremely high.
The high costs of e-discovery are driven by the sheer volume of documents and e-data that must be retrieved and reviewed because they are potentially “relevant” pursuant to Rule 26 of the Federal Rules of Civil Procedure. Large scale document production in the electronic age requires an integrated approach to review large numbers of documents, often on a document-by-document basis, for responsiveness, confidentiality, substantive analysis and the need to redact trade secrets, privacy information and other sensitive information.
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