{"id":894601,"date":"2018-07-24T14:06:27","date_gmt":"2018-07-24T20:06:27","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=894601"},"modified":"2018-07-24T14:06:27","modified_gmt":"2018-07-24T20:06:27","slug":"practice-tip-clawback-agreements","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/practice-tip-clawback-agreements\/","title":{"rendered":"Practice Tip: Clawback Agreements"},"content":{"rendered":"

Katharine E. Kohm | The Dispute Resolver<\/a> | July 21, 2018<\/p>\n

As construction attorneys, we’re no strangers to voluminous productions\u00a0of client documents and communications, both in electronic and hardcopy formats, during discovery.\u00a0 Even with proper safeguards in place\u00a0during document review, there exists the possibility that some privileged material\u00a0may\u00a0accidentally slip\u00a0over to\u00a0an opposing party.\u00a0 Production of such material to a\u00a0third party, especially an adversary, runs the risk of waiving attorney-client privilege or attorney work product privilege.<\/p>\n

Rule 502(b) of the Federal Rules of Evidence creates somewhat of a\u00a0safety net for inadvertent disclosures, but\u00a0requires compliance with\u00a0a number of steps that, without a prior\u00a0agreement between the parties, the compliance could be challenged.\u00a0 Also the term “inadvertent” is not defined. Fed. R. Evid. 502(b)\u00a0(“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) [concerning inadvertent production of trial preparation materials].”)<\/p>\n

Clawback agreements,\u00a0pursuant to Federal Rule 502(d) and (e) equivalent state rules, are aimed at avoiding waiver of privileges without having to resort to proof\u00a0under Rule 502(b).\u00a0See<\/u>\u00a0Fed. R. Evid. 502(d) (“A federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court\u2014in which event the disclosure is also not a waiver in any other federal or state proceeding.”); Fed. R. Evid. 502(e) (“An agreement on the effect of disclosure in a federal proceeding is binding only on the parties to the agreement, unless it is incorporated into a court order.”).\u00a0 Likewise, scheduling orders under Rule 16 of the Federal Rule of Civil Procedure contemplate the Court approving the parties’\u00a0agreement\u00a0in this regard ahead of time.\u00a0 Fed. R. 16(b)(3)(iv) (“The scheduling order may . . . include any agreements the parties reach for asserting claims of privilege or of protection as trial-preparation material after information is produced, including agreements reached under Federal Rule of Evidence 502”).<\/p>\n

Here’s the concern with\u00a0clawback agreements\u00a0–\u00a0in the event of a dispute between parties, a court, depending on the circuit or state, may not be willing to enforce a generally stated\u00a0agreement\u00a0unless\u00a0it explicitly speaks to\u00a0the Rule 502(b) standard. \u00a0For example, in\u00a0IRTH Solutions, LLC v. Windstream Communications<\/u>, LLC, No2018 WL 575911 (S.D. Ohio Jan. 26, 2018), the district court\u00a0confirmed the magistrate judge’s opinion that\u00a0per Federal Rule of Evidence 502(b) the defendant had waived its attorney-client privilege by twice producing 43 privileged documents to plaintiff\u2019s counsel notwithstanding that the parties had a clawback agreement.\u00a0\u00a0Though the\u00a0defendant’s counsel did not dispute\u00a0that the production of the 43 documents was “reckless,” the defendant’s counsel\u00a0argued that the\u00a0clawback agreement should trump the requirements of 502(b)\u00a0for avoiding waiver upon an inadvertent disclosure.\u00a0 The district court disagreed instead\u00a0focusing on whether the parties’ agreement even spoke\u00a0to\u00a0avoiding Fed. R. Evid. 502(b)(2) requirement to “take reasonable steps to prevent disclosure.”\u00a0\u00a0The Court noted that “the clawback agreement here lacked any language to support a finding that the parties came to an understanding that there would be no pre-production review [and]\u00a0[m]oreover, the email memorializing the parties’ clawback agreement also contained a provision requiring the parties to provide privilege logs\u00a0 . . . [indicating to the Court] that the parties did in fact contemplate meaningful pre-production privilege review.”\u00a0 Accordingly, the Court concluded that the defense had waived the privilege by producing the documents.<\/p>\n

The\u00a0IRTH<\/u>\u00a0case recently was granted an interlocutory appeal to the Sixth Circuit to answer the question “what is the legal standard for determining whether a clawback agreement displaces the test under Rue 502(b) for evaluating if an inadvertent disclosure of privileged documents constitutes waiver of the attorney-client privilege? Defendant has argued that a clawback agreement, no matter how cursory, always prevails, such that an inadvertent disclosure does not waive the privilege.”
\nTherefore\u00a0additional guidance in that circuit is forthcoming.\u00a0 However, regardless of the circuit or state, formalizing clawback agreements so each\u00a0 Rule 502(b) element\u00a0is addressed\u00a0is a good rule of thumb\u00a0to avoid\u00a0possible waiver of privileges.<\/p>\n","protected":false},"excerpt":{"rendered":"

Katharine E. Kohm | The Dispute Resolver | July 21, 2018 As construction attorneys, we’re no strangers to voluminous productions\u00a0of client documents and communications, both in electronic and hardcopy formats, during discovery.\u00a0 Even with proper safeguards in place\u00a0during document review, there exists the possibility that some privileged material\u00a0may\u00a0accidentally slip\u00a0over to\u00a0an opposing party.\u00a0 Production of such… Continue reading Practice Tip: Clawback Agreements<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[172],"tags":[9895,10537,10538],"class_list":["post-894601","post","type-post","status-publish","format-standard","hentry","category-construction-law-2","tag-advise-consult","tag-clawback-agreement","tag-rule-502b","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nPractice Tip: Clawback Agreements - 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