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Posted on: November 19, 2014

in Blog

Advantages of Implementing Rule 502 Orders and Agreements

Advantages of implementing Federal Rule of Evidence 502 - Claw back, quick peek methods

At least in federal courts, there appears to be a solution when privileged material is inadvertently produced. Federal Rule of Evidence 502 was enacted in 2008 and provides a consistent framework to prevent waiver of privilege on inadvertently produced documents.  It ultimately provides greater protections against waiver than existing law otherwise did.  Rule 502 is aimed at relieving some of the burden of document privilege review and therefore saves clients the costs of paying for such review.

Prior to the Enactment of "The  Rule"

Prior to the enactment of Rule 502 (“the Rule”), parties used private “claw-back” and “quick peek” agreements to deal with privileged documents. Claw-back provisions allow the retrieval of inadvertently produced privileged documents, with a process spelled out by FRCP 26(b)(5)(B). Victor Stanley, Inc. v. Creative Pipe, Inc[1]. was a 2006 case that highlighted the danger of waiver in commercial litigation.  Although a claw-back agreement was requested at the outset of litigation, the defendant retracted the request after a time extension was granted.  Defendant’s counsel had not sampled documents that did not “hit” on privilege search terms and produced many documents that clearly fell under the attorney-client privilege.  The court stated that the defendant would have been protected under a claw-back agreement, but scolded counsel for withdrawing the request, especially given the volume of documents to be produced in the case.   Victor Stanley underscored the importance of having a claw-back provision, at the very least, as a fallback in the event of inadvertent production.

On the other hand, quick peek agreements are highly controversial and rarely appropriate.   Under a quick peek agreement, the requesting party receives an essentially non-reviewed production and then reviews and selects documents for production prior to any review. The producing party does not comb for privileged information, work product, trade secrets, or relevance.  Obviously, this practice is inherently risky, because the producing party might produce both relevant and non-relevant privileged documents to its adversary.

How Rule 502 Accomplishes its Purpose

Rule 502 accomplishes its purpose by limiting waiver to situations where the disclosure was intentional (under 502(a)), or where the disclosure was inadvertent but the privilege holder did not take reasonable steps to prevent it (under 502(b)). Rule 502(d) empowers the court to effectuate a non-waiver order. Any disclosure of privileged information subsequent to the order, whether purposeful or inadvertent, will not constitute waiver of the attorney-client or work product protections in that matter or in any other proceeding.  Rule 502(e), on the other hand, allows litigants to enter into agreements that bind only the parties to the agreement.  Per Rule 502(e), if a party wants “protection against non-parties from a finding of waiver by disclosure, the agreement must be made part of a court order.”[2] That is, the parties must enter into a Rule 502(d) agreement.

Because of the perception that the Rule is a timesaver and “insurance policy” of sorts, the eDiscovery industry is buzzing.  Some courts have even questioned whether there are any situations in which there is a good reason not to enter such an order.[3] A District Court Judge noted that “the train on the concept has already left the station, and claw-back orders are staples of modern complex litigation.”[4] From a risk management perspective, using the protections of Rule 502(d) orders and 502(e) non-waiver agreements makes sense for lawyers and their clients.

The codification of these standards has exciting potential to ease common litigation woes, reduce cost and duration of discovery, and encourage parties to cooperate.  However, there are still issues that remain uncertain.

Advantages of 502(d) Orders and 502(e) Agreements

The need for Rule 502 was driven by the ever-increasing volumes of ESI.  Prior to the enactment of the Rule, litigants could not justify saving money by reducing privilege review, because the risk of disclosure was simply too high.

  • Through a 502(d) order or 502(e) agreement, parties can reduce the length and cost of the discovery process by reducing or foregoing privilege review without fearing waiver.
  • With an order or agreement in place, parties can make an individual cost-benefit analysis of reviewing for privilege for each production set.
  • 502(d) orders reduce the consumption of judicial resources that would otherwise be required to resolve privilege disputes.  Especially in large document productions, or in cases dealing with sensitive and confidential matters.

502(d) Orders Provide Additional Protection

A 502(d) order is preferred over a 502(e) agreement because of the additional protection it provides.   502(e) agreements are binding only on the parties to the agreement, so any disclosure can be used by third parties in subsequent state or federal litigation. The utility of a confidentiality order in reducing discovery costs is substantially diminished if it provides no protection outside the particular litigation in which the order is entered.  Parties are unlikely to be able to reduce the costs of pre-production review for privilege and work product if the consequence of disclosure is that the information could be used by non-parties to the litigation.  Therefore, if parties negotiate a 502(e) agreement, they should seek court approval under 502(d) to obtain the full protections of their agreement. If the court declines to effectuate an order, the parties should plan their case strategy accordingly and remain aware of the risks.

Next up we will discuss the challenges 502(d) orders and 502(e) agreements pose to attorneys and their clients. 


1 - Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497 (D.Md. 2010). 

2 - Fed. R. Evid. 502. 

3 - Jeffrey G. Close, FRE 502, “Inadvertence” in Privilege Waiver, and Avoiding Malpractice (American Bar Association Article, 2013)

4 - S2 Automation LLC v. Micron Technology, Inc., No. CIV 11-0884 JB/WDS, 2012 WL 3150387 (D.N.M. July 23, 2012).

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