In addition, the above-mentioned federal and state protocols have left some open issues for all lawyers governed thereby. For example, does the receiving lawyer have an affirmative obligation to notify the sender, or may she wait until she is “notified” of the inadvertent disclosure? And can the receiving attorney read the inadvertently produced material and/or share it with her client? Finally, what about privileged or confidential information that is overheard? (None of these rules seem to cover that scenario.)
Given the complexity and over-lay of different (but related) concepts, it is perhaps not surprising that courts, in sorting out the various protocols, have not been uniform in their approach to dealing with inadvertent disclosure. Compare Lipin v. Bender, 597 N.Y.S. 2d 390 (1st Dept. 1993) (disqualification of attorney) with MNT Sales, LLC v. Acme Television Holdings, LLC, Index No. 602156/2009, NYLJ, p. 42, col. 5 (Sup. Ct. N.Y. Co. April 29, 2010) (use of material barred at trial) with Rico v. Mitsubishi Motors Corp., 171 P. 3d 1092 (Cal. 2007) (attorneys and experts disqualified) with Merits Incentive LLC v. Eighth Judicial District Court, 262 P. 3d 720 (Nev. 2011) (disqualification of attorney not ordered).
To help flesh out many of the foregoing points a bit more, a very recent judicial decision is instructive. In Harleysville Ins. Co. v. Holding Funeral Home, Inc., No. 1:15cv0057, 2017 BL 395 (W.D. Va. Feb. 2, 2017), a federal magistrate judge denied plaintiff’s motion to disqualify defense counsel. The litigation arose out of a dispute about insurance coverage relating to a funeral home’s fire. An employee for the insurance company put the entire case file (which included privileged materials) on an unprotected file-sharing site (which had no password protection), and then emailed a link to the site to the company’s outside investigator. Defense counsel issued a subpoena to the investigator, and its production in response included the e-mail listing the link. Defense counsel (i) first accessed the case file, and (ii) later produced the case file back to the insurer; the latter of which led to the motion to disqualify, as well as to motion practice on whether the insurer could claim a non-waiver under F.R.E. 502(b).
With respect to the Rule 502(b) issue, the magistrate judge focused (as highlighted above) on the “reasonableness” of the insurance company’s actions to protect the privileged materials. Based upon “material facts… not in dispute,” the magistrate judge determined there was “no evidence… that any precautions were taken to prevent this disclosure.” (emphasis by the court) By making the case file “accessible to anyone with access to the internet,” with no password protection, the insurance company failed the most basic tenet of “reasonableness”; as the magistrate judge concluded: “It is hard to imagine an act that would be more contrary to protecting the confidentiality of information than to post the information to the world wide web.” (The magistrate judge also ruled that there was a waiver of any attorney work product on similar grounds.)
Turning to the disqualification motion, the magistrate judge then ruled that the actions of defense counsel were improper under federal and Virginia procedural rules, as well as under operative Virginia ethics opinions (including Opinion 1871). Given that the e-mail link to the file-sharing site had a prominent “Confidentiality Notice” (which included this language: “This e-mail contains information that is privileged and confidential, and subject to legal restrictions and penalties regarding its unauthorized disclosure or other use.”), defense counsel (i) should have contacted plaintiff’s counsel about its access to the case file, and (ii) should have sought the court’s guidance as to whether there had been a waiver of applicable protections, before making use of the information. [All defense counsel had done was to call the Virginia State Bar Ethics Hotline for advice, action which, in the words of the magistrate judge, “belie[d] any claim that they believed that their receipt and use of the materials… was proper under the circumstances.”]
As to a sanction, the magistrate judge ruled that disqualification would be pointless, since “based on the court’s ruling on waiver, substitute counsel would have access to the same information.” As such, she found that “the more reasonable sanction is that defense counsel should bear the cost of the parties in obtaining the court’s ruling on the matter.”
In light of all of the foregoing, a number of concerned folks have suggested that the ethics gurus should go back and articulate a better (and more transparent) set of standards to govern how to handle inadvertent disclosure. But there has been significant pushback to that suggestion—on the ground that such a step “would be a step backwards.” According to one commentator, “[a] profoundly important argument for limiting the scope of lawyers’ ethical obligations in these situations is the unfairness of making the ‘innocent’ lawyers who receive such communications potentially subject to professional discipline in situations” not of their making; according to this pushback argument, “vagueness is preferable to… any broader rule.” See A. Davis, “Inadvertent Disclosure—Regrettable Confusion,” New York Law Journal (November 7, 2011).
Who is right in this debate? Who knows. What I do know is that, at present, inadvertent disclosure is one tricky and sticky wicket for any lawyer who gets caught up in it unaware.