## Facts

- A bankruptcy trustee sued a law firm for alleged misconduct tied to a company’s efforts to go public and raise capital.
- During pretrial discovery, the parties could not agree on a joint protective order governing confidentiality and privilege issues.
- The law firm sought a court-ordered “clawback” provision addressing inadvertent production of attorney–client privileged or work-product materials in large-scale electronic discovery.
- The firm represented that discovery was document-heavy, with thousands of documents and emails to review, and that inadvertent production was likely.
- The trustee opposed a clawback order, arguing it would reduce incentives for careful privilege review and shift burdens and costs to the receiving party.

## Issues

1. Whether a protective order should include a clawback provision governing inadvertent production of privileged or work-product materials in extensive ESI discovery.
2. Whether, and how, a Rule 502(d) order should be structured to prevent waiver while preserving fairness, reasonable screening obligations, and the ability to challenge privilege claims.

## Decision

- The court granted the motion in part and ordered inclusion of a clawback provision in a protective order.
- The court relied on Federal Rule of Evidence 502(d) to provide non-waiver protection for inadvertent disclosures in this and other proceedings.
- The court rejected or limited proposed language that would have gone beyond protecting privilege or that would have unfairly shifted burdens or costs to the trustee.
- The court required a procedure allowing the producing party to give notice, the receiving party to sequester/return/destroy the material, and either side to seek judicial resolution of disputed privilege designations.

## Legal Principles

- Fed. R. Civ. P. 26(c) authorizes protective orders to manage discovery, including provisions addressing confidentiality and privilege in high-volume productions.
- Fed. R. Civ. P. 26(b)(5)(B) supplies the basic mechanism for handling produced material later claimed as privileged or trial-preparation material.
- Fed. R. Evid. 502(d) permits a court order that disclosure of privileged or work-product material does not constitute waiver in this or any other federal or state proceeding.
- A clawback order is a case-management tool for ESI-heavy discovery; it reduces waiver risk but does not excuse careless production or eliminate the need for reasonable privilege screening.
- Fairness requires preserving the receiving party’s ability to test and challenge privilege assertions, rather than treating a clawback provision as an automatic bar to disputes.

## Conclusion

The court approved a calibrated clawback provision under Rules 26 and Evidence Rule 502(d) to address inadvertent disclosures in large-scale ESI discovery, while limiting overbroad terms, maintaining expectations of reasonable privilege review, and preserving procedures to challenge asserted privileges.


Rajala v. McGuire Woods, LLP, No. 09-2291, 2010 U.S. Dist. LEXIS 73564 (D. Kan. July 22, 2010)