Troutman Sanders LLP: Breaking the Seal: Does Using Third-Party eDiscovery Vendors Raise Privilege and Work Product Issues?

Troutman Sanders LLP: Breaking the Seal: Does Using Third-Party eDiscovery Vendors Raise Privilege and Work Product Issues?

We’re not breaking news when we tell you that the exponential growth of electronic documents generated by clients has complicated the discovery process. Reducing this massive volume of information down to the relevant information needed to resolve a dispute requires the use of technology for collecting, filtering, processing, analyzing and producing electronically stored information. Attorneys now have to deal with metadata, servers, and social media in order to litigate the merits of cases. Ethics rules have been modified to require lawyers to understand the risks and benefits of technology. And preservation sanctions have alerted attorneys to the need to understand the difference between an email server and a locally-archived PST file. Attorneys should not try to lead double lives as data processors and litigators. Given the real need to properly handle these issues, consulting technology and litigation support providers is common and necessary. But does involving these third-party resources create a risk to the attorney client privilege or work product protections?

As long as the technology provider is working at the direction of counsel to assist with the provision of legal services, work created by the technology provider, as well as communications involving the provider, should be protected from disclosure.  As the Supreme Court stated in United States v. Nobles [enhanced opinion available to subscribers], the work product rule protects material prepared by an attorney’s agent for that attorney. In Compulit v. Banctec, Inc. [enhanced opinion], the District Court for the Western District of Michigan held that “a law firm does not waive its client’s privilege by contracting with an independent contractor, such as [the computer-assisted litigation support provider], to provide a necessary service that the law firm feels it needs in order to effectively represent its clients.” That Court also held that to the extent law firms shared privileged communications with the technology provider, those communications retained their privilege character.

Moreover, some of the most important principles governing attorney client privilege and work product protections also attach to agents via the tenets of agency law. Section 8.05 of The Third Restatement of Agency Law states that

“[a]n agent has a duty (1) not to use property of the principal for the agent’s own purposes or those of a third party; and (2) not to use or communicate confidential information of the principal for the agent’s own purposes or those of a third party.”

The Comments for Section 8.05 actually discuss attorney-client privilege within this context:

For example, in the context of a lawyer-client relationship, confidential client information encompasses all information, not generally known, that relates to representation of the client… An agent’s duty of confidentiality extends to all such information concerning a principal even when it is not otherwise connected with the subject matter of the agency relationship.

Furthermore, the American Bar Association’s Model Rules were amended in 2012 to reflect the changing role of technology in legal practice and specifically recognized the need for reliance on such technology providers in supplying legal services. The Comments to Model Rule of Professional Conduct 5.3 state that

a lawyer may use nonlawyers outside the firm to assist the lawyer in rendering legal services to the client. Examples include the retention of an investigative or paraprofessional service, hiring a document management company to create and maintain a database for complex litigation, sending client documents to a third party for printing or scanning, and using an Internet-based service to store client information.

Extending protections to third party technology providers assisting with litigation makes sense and furthers the underlying goals of these protections.  However, these protections can be waived by the same types of actions that waive the attorney client privilege or work product protections generally – including disclosure or reliance upon selective materials. As we first discussed in 2012, some courts have held that disclosures of communications and work product generated by third party technology vendors made in defense of eDiscovery practices may waive protections related to the entire subject matter of the disclosure. Federal courts in two notable cases, In re Intel Corp. v. Microprocessor Antitrust Litig. [enhanced opinion] and In re Delta/Airtran Baggage Fee Antitrust Litig. [enhanced opinion] found both attorney-client privileges and attorney work product protections were waived by counsel relying upon protected information in defense of discovery disputes. In the In re Delta case, the Court held that disclosing emails between counsel and the client as well as affidavits from counsel in defense against challenges to Delta’s efforts to preserve, collect and produce data resulted in a waiver as to specific topics. Delta’s failure to seek protection from the Court prior to such disclosure was a factor weighed against protection.

With the increasing emphasis on cooperation in the discovery process, parties must be careful to avoid disclosure of work product and communications with their technology service providers to avoid risk of waiver. Attorneys using a third party to assist with these technical tasks also are obligated by the Model Rules to “make reasonable efforts to ensure that the services are provided in a manner that is compatible with the lawyer’s professional obligations” – including protecting client privileges.

A few tips for maximizing protections when relying on third party vendors for technical assistance with eDiscovery:

  • ensure the engagement letter or contract includes sufficient confidentiality provisions;
  • understand the practical steps taken by the provider to protect your client’s confidential documents and work product;
  • ask your technology provider what steps they take to ensure client data is secure (including specific information regarding certifications, audits and testing of such procedures);
  • request information regarding your provider’s data breach response and notification procedures;
  • ensure access to client data is limited to appropriate personnel; and
  • before disclosing any eDiscovery work product or information provided to or by your provider, seek protection from the Court (or get agreement from opposing parties) that such disclosure does not waive any protections as to other documents, communications, and work product.

These issues may get more complicated if you sharing the services of a hosting vendor with co-counsel or even your adversary to save costs. Who holds the privilege then? Is your work in the database protected just because it is not visible to the other parties? These questions have not been addressed by courts, but all parties should want to protect the confidentiality of these relationships and should be able to construct meaningful protections by agreement and practical implementation.  Clients, attorneys, and attorneys’ agents have both built-in protections and concrete mechanisms available to help ensure that the client can benefit from leveraging appropriate technological resources without sacrificing essential protections.

For more information, please contact Marlee Waxelbaum or Alison Grounds.

About Troutman Sanders

Troutman Sanders is an international law firm with offices in North America, Europe and Asia. Founded in 1897, the firm’s heritage of extensive experience, exceptional responsiveness and an unwavering commitment to service has garnered strong, long-standing relationships with clients across the globe. These clients range from multinational corporations to individual entrepreneurs, federal and state agencies to foreign governments, and non-profit organizations to businesses representing virtually every sector and industry.

Troutman Sanders lawyers provide counsel and advice in practically every aspect of civil and commercial law related to the firm’s core practice areas: Corporate, Finance, Litigation, Public Law and Real Estate. With more than 50 practice groups focused on specific aspects of these areas, the firm is defined by its considerable knowledge base and proactive approach to addressing legal and business challenges.

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