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September 2, 2010 |
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| October 01, 2008 |
By: Billy Shields |
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hen a law firm’s lawyers leak privileged information, they place their bar cards in jeopardy.
But when a company entrusted with legal document management does the same thing, there isn’t much recourse available.
A recent decision from the 3rd District Court of Appeal spotlighted this problem, which has caused a lively debate in law schools, law firms and bar associations across the country.
“Here is where there becomes a real problem in principle,” said Robert Atkinson Jr., who teaches legal ethics at Florida State University. Document management companies, paralegals and secretaries are “not subject to the same sanctions as lawyers are. They’re not subject to the Bar’s discipline.”
Document management firms, Atkinson noted, could be on the hook for a costly breach-of-contract suit, but that doesn’t solve the problem entirely for the other litigants in a case.
“How do you contain the damage?” he asked rhetorically. In situations where nonlawyers make inadvertent disclosures, one party inevitably stands to gain, regardless if the disclosures are accidental or purposeful.
Atkinson worries that a company with little to lose holding the keys to confidential information creates the potential for real problems in litigating cases ethically.
“It gives you a real incentive as a sleaze bag to send stuff out inadvertently — it puts a big premium on accidents,” he said.
“There’s a big debate on how to contain these mistakes.”
Enter the complex case before the 3rd DCA:
St. Paul, Minn.-based Merrill Corp. was hired to manage documents being used in state litigation between Miami-based Atlas Air and the Miami law firm of Greenberg Traurig, whom it was suing. Merrill inadvertently delivered privileged information to members of Greenberg’s counsel, the Kenny Nachwalter firm in Miami. The exchange gave the firm a tactical advantage over Atlas’ lawyers, Garbett Stiphany Allen & Roza, according to the 3rd DCA ruling.
After Miami-Dade Circuit Judge Gill Freeman disqualified the Kenny Nachwalter lawyer who viewed the documents, the 3rd DCA disqualified the whole firm over Merrill’s mistake.
Merrill executive vice president Craig Levinsohn said in an e-mailed response that “Merrill takes great pride in our long history of appropriately handling confidential client information. We are reviewing the matter and have no further information to share at this time.”
Garbett Stiphany shareholder David Garbett declined to comment. Richard Critchlow of Kenny Nachwalter also declined comment for this article.
“The decision has far-reaching implications. This case shows that what has become an accepted way of document exchanges via third-party managers may need to be re-evaluated,” said Robert Fiore, former Dade County Bar president.
“These lawyers didn’t do anything wrong. They were engaging in an accepted method of document exchanges, they entrust the task to a third party and that third party makes an error disclosing confidential information. It has got to cause great concern to every law firm who entrusts document exchanges with a third party,” Fiore said.
Technology is conspiring to make already Byzantine discovery situations even more complicated, and causing bar associations nationwide to attempt to delineate the ethics of information-gathering in the still-uncharted realm of cyberspace.
Someone can hand out an innocent-looking document and redact the visible privileged information. But the document could nonetheless include electronic tags allowing a computer-savvy reader to track through the changes made to it — potentially peering into privileged territory.
The American Bar Association’s committee on ethics and professional responsibility addressed this issue in August 2006 that left open the issue of whether it’s ethical to use inadvertently disclosed information in hidden electronic logs.
This information, called metadata, is at the heart of a divide among state bar associations.
“This is a very dicey area,” said U.S. Magistrate Paul W. Grimm, Maryland’s chief U.S. magistrate judge and one of the nation’s leading authorities on electronic discovery issues.
In states like Maryland, handing over a document with metadata is considered a waiver and can be viewed by an attorney without incident. In states such as Florida, Alabama, Arizona and New York, an attorney must ask the other side if they were aware potentially privileged metadata was included in the communication.
“The rules are all over the waterfront on this. The state bars have taken radically different views on what the ethical obligation is on the receiving lawyers,” Grimm said.
A month after the ABA opinion, The Florida Bar issued a far more restrictive opinion using much more forceful language:
“It is the recipient lawyer’s concomitant obligation, upon receiving an electronic communication or document from another lawyer, not to try to obtain from metadata information relating to the representation of the sender’s client that the recipient knew or should know is not intended for the recipient,” The Florida Bar’s opinion reads. Such data should be considered an unintentional disclosure, according to the Bar.
“A lawyer who receives a document and knows it’s inadvertently sent should promptly notify the sender,” said Joy Bruner, assistant ethics counsel with The Florida Bar.
Although the Atlas case doesn’t deal with metadata, it does center on notifying the receipt of an inadvertent disclosure. In Atlas, Merrill delivered DVDs containing about 118,000 documents to Kenny Nachwalter last year — including 150 privileged documents. Those DVDs contained searchable e-mails as well that Garbett Stiphany alleges were privileged and Kenny Nachwalter lawyers had no right to read.
What happened after that is the subject of debate. Kenny Nachwalter contends in court pleadings it contacted Garbett Stiphany as soon as it believed it was examining potentially privileged documents. Garbett Stiphany contends the rival firm waited at least a month before disclosing it had received confidential documents.
The 3rd DCA disqualified the firm without ruling on whether its disclosures fit the description of “prompt.”
At the federal level, a new bill just became law that could have affected the Atlas Air case. President Bush approved Federal Rule of Procedure 502 on Sept. 19. The new rule holds that “inadvertent disclosure of privileged or protected information in connection with a federal proceeding constitutes a waiver only if the party did not take reasonable precautions to prevent disclosure.”
Aimed at lowering discovery costs, the rule only directly affects federal court, but language in the law also affects retroactive waiver agreements attorneys could enter into with their opponents. Lawyers enter into these agreements when they supply massive databases of information that could contain some privileged information, and these agreements are recognition that if privileged disclosures are made, those disclosures are accidental, the information remains confidential and the disclosing attorney can’t be punished for it.
Those agreements are generally between two parties. But under the new federal rule, if a federal court approves such an agreement, it becomes binding to all parties in every state, Grimm said.
“You’ve done nothing wrong but it doesn’t constitute a waiver, and that’s the impetus of 502,” Magistrate Grimm said. “It’s binding on everyone on that state and every other state.”
Billy Shields can be reached at (305) 347-6649. |
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