Federal Rule of Evidence 502 and the Bankruptcy Lawyer

At long last, proposed Federal Rule of Evidence 502 has been introduced to the Senate as S.2450. In a nutshell, FRE 502 is intended to reduce the likelihood of waiver of attorney-client privilege and work product in an age where even simple litigation can involve thousands of "pages" of documents, meta-data and data-enabled doughnuts.

Over the summer, I had an article published by the Bankruptcy Section of the State Bar of Texas concerning the proposed rule called: Bankruptcy Secrets and the Proposed Federal Rule of Evidence 502. Some of the highlighted concerns originally covered in that article are alive and well in S.2450.

Without reproducing the article (the link above should be good), the overriding purpose of the proposed rule is purportedly the protection of the attorney-client privilege while controlling the spiralling costs of litigation due to electronic review necessary to protect privilege. Without naming names, there are those outside of the profession (and perhaps inside the profession) that view the bill as an Omnibus Lawyer Malpractice Shield... and Consumer Protection Act. For the foreseeable future though, it is likely that the Rule's cost savings in document review is likely to be eaten up by the cost of litigating (again) if waiver was intentional or disclosure was inadvertent.

As my article also notes, there is cause for concern as to what exactly the Rule will protect for a disclosure "made in a Federal proceeding or to a Federal office or agency...". Will this include disclosures made to creditor's committees? What about PACER filings that the transmitting counsel believes is redacted, only to find that 12 year-olds have stopped fixing blinking VCR clocks and have moved on to bigger and better things?

Another interesting, though perhaps academic, point is FRE 502(d) regarding court orders and protection of privilege. The rule specifies that a court can order that "privilege... is not waived by disclosure connected with the litigation pending before the court...". In my single failed attempt publish a law review article regarding bankruptcy shortly after the Seminole Tribe opinion was handed down, I reviewed numerous opinions, articles, and bathroom wall graffiti parsing out the true nature of a bankruptcy proceeding as anything other than litigation.

There are also some interesting issues regarding the Rule's interplay between state and federal "proceedings", but those we can leave for another day.

What ought not be left unsaid is what effect the rule may have in terms of the time and attention attorneys give to meeting their ethical obligations to protect and hold dear the secrets of their clients. Just because the new rule may may provide some added protections for the attorney-client privilege, does not necessarily mean that the fundamental relationship between the attorney, the client and the client's secrets has changed. Assuming the rule is elevated to the status of more than just a bill, it ought never become a crutch in taking adequate measures to protect the client's secrets.