Congress has passed and sent to the President a bill that amends the Federal Rules of Evidence with respect to the disclosure of a communication or information covered by the attorney-client privilege or work product protection. The bills S. 2450/H.R. 6610 limit the effect of inadvertent disclosure of privileged materials. The Senate passed S.2450 in February, 2008, and the House passed the identical H.R. 6610 last week.

One unfortunate aspect of the new e-discovery rules has been a tremendous cost due to the need to review ESI, particularly emails, to make sure that privileged information is not given to the other side. Mass tort defendants, in particular, must often sift through a mountain of documents to ensure that privileged material is not inadvertently released. While most documents produced during discovery have little value, attorneys must still conduct exhaustive reviews to prevent disclosures of the needle in a haystack that reveals confidential information. The cost to litigants is staggering and the time consumed by courts to supervise these activities can get excessive.

The bill impacts this problem not by changing the law on the attorney-client privilege or the work product doctrine, but by modifying the consequences of an inadvertent disclosure once a privilege exists, through creation of new Federal Rule of Evidence 502. The federal rules committees studied this problem in connection with various proposals to change the discovery rules. The rules committee concluded that the need for exhaustive preproduction privilege reviews could be significantly reduced if the risks of waiver were clarified and limited, and thus recommended the bill’s changes.

The bill provides that, in new Rule 502(a), when a disclosure is made in a federal proceeding (or to a federal office or agency), and that disclosure waives the attorney-client privilege or work-product protection, the waiver extends to an undisclosed communication or information only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together. When the disclosure is made in a federal proceeding (or to a federal office or agency), under new Rule 502(b), it 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.

Maybe a small step in the right direction.