Saturday, December 15, 2007
A new bill (available below) introduced by Senate Judiciary Committee Chairman Patrick Leahy and cosponsored by Senator Arlen Specter, the Committee's ranking member, would add a new Rule 502 to the Federal Rules of Evidence to deal with waiver of the attorney-client privilege and work product protection when a litigant discloses such information to a federal office or agency or in federal litigation. Companies are often reluctant to disclose the results of internal investigations to the government because giving protected information to an adversary means the privilege and work product claims are waived for all other cases, and it may be difficult to determine in advance how broadly the waiver will be construed. The new legislation seeks to give a measure of protection by limiting waiver to those materials actually disclosed unless the party intended the waiver to reach undisclosed information or communications. The new rule also addresses inadvertent disclosures in the same way.
An earlier proposal to add a provision to the FRE to allow for "selective waiver" of protected information appears to have been dropped, so this new legislation is taking a different tack. Rather than an across-the-board rule allowing such a waiver, the proposed rule would put the issue in the hands of a federal judge when the disclosure occurs in litigation. The bill, S. 2450, provides: "A Federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court — in which event the disclosure is also not a waiver in any other Federal or State proceeding." Importantly, the new rule also overrides state provisions that would construe the waiver in one proceeding as applying in others, so that the protection afforded by a federal court order will also apply in state court litigation. This is an important protection for companies disclosing internal investigations because they are subject to shareholder derivative suits in state court, so if adopted new Rule 502 will apply uniformly.
The legislation is new, and there have not been any hearings on it at this point. But the sponsors are the leaders of the Judiciary Committee, so it's likely to get a favorable reception. (ph)