A negligence lawsuit has recently been filed against a top global law firm by its former client that alleges the law firm produced 3,900 privileged documents to the U.S. government and state agencies during a document review in an underlying federal court Qui-Tam litigation that has been unsealed.
The litigation has the e-discovery world buzzing. Everyone is hypothecating whether this could be the result of rogue contract review attorneys or the result of faulty key word searches. I am not so sure. I think it is the process. But I will render hypotheses on two possible reasons this could occur.
The complaint at ¶ 10 indicates “Relator’s counsel … alleg[es] that JME waived the attorney-client privilege with respect to the subject matter of the documents because MWE twice conducted privilege reviews before producing the documents to the government. JME is informed and believes … that approximately 3,900 privileged documents were produced by MWE and that such 3,900 documents should not have been produced by MWE.”
So how does a top tier law firm turn over 3,900 privileged documents to the federal government by mistake? Let’s look.
According to the Complaint, McDermott worked with J-M Manufacturing to identify about 160 custodians who likely had responsive electronic information. That’s a lot of custodians. The first thing you typically do in an e-discovery case is negotiate the number of custodians that are initially collected. But this is a Qui-Tam, and you can’t typically negotiate with the government for scope or timing. So, we know J-M was under the gun for both producing all relevant information responsive to the government’s subpoenas as well producing them by a date certain. Requests for an extension of time to respond to the subpoenas are usually not allowed.
Second, we know that McDermott then collected the custodians’ data and transferred it to a third-party vendor, Stratify, who used a list of keywords to search the data for responsive information. (¶ 8 of Compl.) The keyword list was developed jointly by McDermott and the Asst. U.S. Attorney working on the case. McDermott produced documents containing the keywords to the federal government. The government found a significant number of privileged documents and asked J-M Manufacturing (through McDermott) to conduct a privilege review and submit a new production set. (Id.)
McDermott took the production back and conducted a second privilege review by filtering a second keyword list. Contract attorneys employed by McDermott were hired to conduct this second privilege review. McDermott’s attorneys spot-checked the contract attorneys’ work and 250,000 electronic documents were produced to the government as the amended production set. (¶ 8 of Compl.)
In March 2010 J-M Manufacturing replaced McDermott with new attorneys to represent it with the defense of the Qui-Tam. (¶ 10 of Compl.)
In June 2010, counsel for the relator in the Qui-Tam action informed J-M Manufacturing’s new defense counsel that they found (3,900) privileged documents had been produced in the second document production. J-M asked the relator to return the privileged documents, and the relator said no, telling J-M that it had waived the attorney-client privilege with respect to the subject-matter of the documents because J-M twice conducted a privilege review and still turned over privileged documents. (Id.)
So how does this happen? We may never know as this case may likely settle. Key word searches are fallible. But 3,900 documents? That is a lot of documents containing privileged information that was handed over.
We could be talking about a combination of attorney-client and trade secret privileges that were waived.
Because there were 3,900 documents that the relator claims are privileged that were turned over without defense counsel noticing, if attorney-client privilege was waived, then it may have pertained to in-house counsel communications with the business units. This could explain why these communications were not noticed on the privilege log.
Attorney-client communications are flagged first on privilege logs. But since we have, 3,900 documents that were deemed to be waived for privilege, that seems to me like a lot of communications were missed. And I just don’t see that happening. Not that many. So, we must be talking about another type of privilege that was violated, which could have been missing the trade secret privilege docs.
According to the California Evidence Code, the owner of a trade secret has a privilege to refuse to disclose the secret, and to prevent another from disclosing it, if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice.
We routinely enter into nondisclosure and confidentiality agreements during litigations today and, most federal court cases involve the issuance of protective orders that address trade secrets. Protections of trade secrets are serious. But, a key-word search list could never be adequate to portray all words needed to filter for trade secret privilege. That’s just not possible.
So, if there was trade secret privilege violation, then a review of the standard protective order issued in the case may resuscitate the privilege and we would have a non-issue and the documents could be clawed back. If there was not a standard protective order issued that addressed trade secrets, then those documents produced may lose that privilege. Or would they? Theoretically, the owner of the privilege is the client, and I don’t know if the attorneys could waive it by inadvertently producing their client’s trade secret documents. After all, you can never adequately key word search through a predefined list of words to locate every trade secret privileged document. It can’t be done.
