Nothing quite makes lawyers go bug-eyed a la the dramatic chipmunk than the word “malpractice[,]” eliciting a Pavlovian chill down the litigator’s spine. At two major recent public eDiscovery events (Legal Tech® New York 2013 and the Georgetown Law Advanced eDiscovery Institute) one prominent Judge in the eDiscovery world stated that failure to enter into a clawback order could constitute legal malpractice. Is it? Could it be?
First, you should know what a clawback order is. They are well-established best practices in commercial litigation, and some state rules are beginning to incorporate clawback language from the Federal rules. In short, Federal courts may enter confidentiality orders providing that disclosure of privileged or protected material in a litigation pending before the court does not constitute waiver in other state or federal proceedings. They also work, and can save a litigant’s bacon when a privileged document gets inadvertently produced (which can happen easier than you might imagine when dealing with millions of emails). While a Federal court could conceivably enter a standing order with clawback language and terms as a matter of course, typically one or both parties need to ask for a clawback order for a court to actually enter one.
Next, you should know what malpractice is. Legal malpractice is a state law claim. See e.g., Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., 666 F. Supp. 2d 749 (E.D. Mich. 2009); TattleTale Portable Alarm Systems, Inc. v. Calfee, Halter & Griswold, LLP, 2009 Ohio 1379, 2009 WL 790314 (“It is axiomatic that legal malpractice is a state-law claim . . . .”).
So the standard may vary by state, but for example, in Florida “ in a claim for legal malpractice, a plaintiff must plead and prove the following elements: (1) the attorney’s employment; (2) the attorney’s neglect of a reasonable duty; and (3) the attorney’s negligence was the proximate cause of the client’s loss.” Steele v. Kehoe, 747 So. 2d 931, 933 (Fla. 1999).
Thus, for failure to enter into a clawback agreement to constitute legal malpractice, there would need to be some harm resulting from the failure to enter into the clawback. It seems unlikely that failing to enter into a clawback would create a per se cause of action for legal malpractice anywhere in country where no harm is suffered, but what happens when privileged is waived for a key document and a client loses a case? Or how about if a client is forced to spend a large amount of legal fees litigating a privilege issue that may have been mooted by a timely clawback order?
Well, as we’ve written earlier, the clawback train has left the station. According to District Judge Browning of the District of New Mexico “clawback orders are staples of modern complex commercial litigation.” So is failing to enter into a clawback a neglect of a reasonably duty?
We don’t know the answer, but clawbacks are unusual birds in that while some litigators use them in every case that they can, many (likely a majority of commercial litigators in the United States) are completely oblivious that they exist. Their use is not common, and they are not yet well-known or part of the standard operating procedures that litigators use in every case. We think we may see some litigation about this in the future- a privileged document slips through, no clawback in place to save the day, the case is lost, and the client sues for malpractice.
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