CLAWBACKAGREEMENTSARTICLE
020
AN INVESTIGATIVE PIECE ON
CLAWBACK AGREEMENTS
A mechanism to take back inadvertently disclosed
privileged and/or confidential information and protect
against an argument that you waived privilege.
where
The Federal Rules of Evidence were
amended in 2008 to introduce Rule 502.
States adopted Rule 502 shortly after its
introduction.
what
Clawback agreement; Alias: Rule 502 Agreement.
when
who
AUTHORS: Michele Molinario, Justin M. Ackerman
CONTRUBUTOR: Gaya Shanmuganatha
EMAILS: [email protected], [email protected]
BIOS: jshfirm.com/michelemolinario
jshfirm.com/justinmackerman
Rule 502 is located in the Federal Rules of
Evidence, and their State counterparts.
why
The scope of discovery seems endless. The rules permit a party to obtain discovery regarding any
nonprivileged matter that is “relevant” to any party’s claim or defense. Fed. R. Civ. P. 26(b)(1). What is
considered to be “relevant” evidence, for purposes of discovery, is essentially limitless. The Federal rules,
and State counterparts, permit a party to obtain any piece of evidence that could lead to the discovery of
admissible evidence. The rules, as they stand today, do not contemplate whether the discovery sought is
sufficiently reliable, trustworthy, or even admissible at trial. They simply ask: “Can this request potentially
lead to the discovery of admissible evidence?”
Attorneys routinely craft affirmative answers to that question. The rules, therefore, have not caught up with
the mountain of evidence that could be construed as relevant in today’s day and age. Parties can now
seek discovery from another’s Twitter®, FaceBook®, Instagram®, YouTube®, Email, Cellphone, WhatsApp®,
Snapchat®, Parascope® or any other digital resource. Unless your client is willing to spend an extraordinary
amount of money to have every email, picture, text, tweet, post, and document reviewed with a fine-toothed
comb, the likelihood of inadvertently producing privileged or confidential information expands with each
passing year as discoverable evidence becomes more and more “digitized.” Rule 502 protects you if and
when privileged or confidential information is inadvertently disclosed.
Prior to 502 Rule
Extent of Rule
Before Rule 502, production of privileged or confidential
information could permit your opponent to, rightfully, argue
that you waived your claim of privilege and/or confidentiality.
Some courts held that inadvertent production of even one
privileged or confidential document constituted a waiver of the
privilege for that document and all other documents related to
that subject matter. As you can imagine, such subject matter
waiver can drastically impact your client’s case. Therefore,
discovery costs skyrocketed as parties felt the need to review
each and every document for privileged and/or confidential
information to guard against the consequences associated
with inadvertent production.
The rule only protects those who take steps to weed out
privileged or confidential information beforehand. Therefore,
the rules do not cover a blind “document dump” on your
opponent in the hopes of your opponent calling your attention
to privileged or confidential information. While your opponent
is ethically bound to notify you and return any inadvertently
produced privileged or confidential information, you should
not rely on your opponent to identify all the privileged
documents. Furthermore, the purpose of designating
documents as “privileged” and “confidential”– secrecy–is
defeated if your opponent has to read the documents to
recognize that they are privileged and/or confidential.
Rule 502 was implemented to protect parties who do not
have Midas’ war chest. Rule 502 bars an opposing party from
claiming “waiver” if: (1) the disclosure was inadvertent; (2) you
took steps to prevent the disclosure; and (3) you promptly
took reasonable steps to rectify the error. Fed. R. Evid. 502(6).