Civil Practice – Discovery – Attorney-Client Privilege – Email Production – Outside Consultant

Blythe v. Bell (Lawyers Weekly No. 12-15-0797, 22 pp.) (James L. Gale, J.) 2012 NCBC 42

Holding: In response to an order compelling discovery, defendants (1) hired an outside consultant, (2) instructed him to search company computers using search terms suggested by plaintiffs and to segregate files with the extension “hickorylaw.com,” (3) failed to review the documents produced by the consultant, and (4) produced to plaintiffs a hard drive with 3.5 million unsearchable emails and (unattached) attachments. Defendants failed to undertake reasonable precautions to prevent the inadvertent disclosure of attorney-client communications; therefore, the privilege has been waived as to those communications produced in the discovery responses.

The court denies defendants’ motion for an order compelling the return of privileged documents.

N.C. case law addressing problems inherent in electronic discovery, including waiver arising from inadvertent disclosure of privileged information, is not yet well developed.

A federal balancing test considers five factors, but this case hinges on the first factor: the reasonableness of the precautions taken to prevent inadvertent disclosure.

To avoid finding a waiver, a court should be satisfied that reasonable efforts necessary to protect against potential inadvertent disclosure were undertaken. Generally, the degree of those efforts should increase as the potential volume of documents to be produced increases. The sheer volume of documents produced by defendants would suggest the need for more than minimal efforts to be taken prior to production to protect against the production of privileged communications.

Electronic discovery and the associated need to review for privilege can include extraordinary expense, such that a litigant may make a considered choice to relax efforts to avoid that expense. While such choices may be informed and reasonable ones, those choices must at the same time absorb the risk of a privilege waiver. Protections to guard against privilege cannot be deferred by first addressing the risk of waiver only after a production has been made.

Defendants’ efforts prior to production to guard against disclosure of privileged communication were limited, and included (1) hiring Computer Ants as an outside consultant to copy, search, and produce relevant non-privileged e-mails and attachments; (2) instructing Computer Ants to identify documents responsive to a list of search terms; (3) instructing Computer Ants to remove all e-mails containing the extension “hickorylaw.com” from the documents produced; and (4) then producing the hard drives prepared by Computer Ants without any review or sampling or other quality assurance effort to assess whether the consultant’s efforts had been successful in eliminating privileged communications.

The extent of defendants’ efforts to guard against potential production of privileged communications prior to producing two hard drives in January and March 2012 were not commensurate with the value of the privilege which defendants now urge in their effort to protect against waiver. Efforts by a consultant demand a degree of oversight that is absent here.

Because defendants did not maintain copies of the hard drives produced to plaintiffs, the record remains somewhat unclear as to how the documents on the two hard drives were organized. But it appears that whatever efforts Computer Ants followed did not isolate all privileged communications and the issue is not a simple one of just returning one library from the disks produced.

The unsearchable format of the hard drives forced plaintiffs’ counsel to index the documents, convert them into a searchable format, and load the documents again into a document review platform, with the result that, hundreds of potentially privileged documents exist in multiple places that cannot be easily returned or destroyed, so that plaintiffs cannot effectively and comprehensively review defendants’ production without coming across potentially privileged documents.

Counsel cannot altogether delegate the need to guard against production of privileged communications to an outside consultant. Defendants’ arguments on this point are compromised by the testimony of Computer Ant’s owner, Thomas Scott, that he was given no guidance that would provide him any basis on which to determine whether or how documents on the production hard drive related to the case. Under those circumstances, it is more difficult to establish reliance on the expert as a reasonable advance precaution to guard against privilege waiver.

Motion denied.