What is a "Clawback" Agreement?

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[author: Cynthia Augello]

We recently talked about how judges may deny overly broad discovery requests and the effect of performing ineffective searches on data. Well, what happens if a party creates the perfect search, reviews the documents that are responsive to those searches, and inadvertently produces something that should have been marked as privileged?

In general, the duty to disclose does not apply to privileged information, such as documents or emails sent between a client and their attorney. CPLR § 3101(b). However, when reviewing a large amount of electronically stored information (“ESI”), sometimes mistakes happen and you may inadvertently produce protected material. In these cases, a “clawback” agreement can help to reclaim those documents. A clawback agreement outlines the procedures a party must follow to protect against waiver of privilege or work product protection due to the inadvertent production of information.

In July of 2011, the New York State Bar Association (“NYSBA”) released a guide entitled “Best Practices in E-Discovery in New York State and Federal Courts,” which we provided on the blog here. In regard to privileged information, under Guideline No. 11,

Counsel should conduct searches using technology tools to identify ESI that is subject to the attorney-client privilege, the work product immunity and/or material prepared in anticipation of litigation. Counsel should document its privilege searches and verify the accuracy and thoroughness of the searches by checking for privileged ESI at the beginning of the search process and again at the conclusion of the process. To avoid the situation in which an inadvertent production of privileged ESI may possibly be deemed a waiver of the privilege, counsel should consider, as appropriate, entering into a non-waiver agreement and having the court incorporate that agreement into a court order.

As you can see, the last sentence of the Guideline recommends that counsel enter into a non-waiver agreement (also known as a clawback agreement) and have the court incorporate that agreement into an order. Absent a court ordered agreement, the waiver protection may not extend to other actions or subsequent litigation, but if the agreement is incorporated into a court order, then any inadvertently produced ESI will not be deemed a waiver of privilege/protection because the disclosure is not voluntary.[1] Typically, when drafting a clawback agreement, it is essential to include that:

  • Inadvertent disclosure or production of ESI that is protected by privileged or work-product protection does not constitute a waiver.
  • Upon request of the party who inadvertently produced the information, the opposing party must return, destroy, or otherwise do not use the information in any such way.
  • If a party receives privileged or protected ESI, that party must notify their opponent in a timely manner.
  • The parties must provide the names of every person who had access to the privileged or protected ESI and take reasonable steps necessary to secure the return the ESI it may have disseminated to third parties.

Including provisions that address these issues helps ensure that the e-discovery process becomes slightly more liberal as parties do not have to worry about accidentally producing a privileged or protected document.[2]

If you or your company has any questions or concerns regarding the e-discovery process or clawback agreements, please email Cynthia Augello at caugello@cullenanddykman.com.

A special thanks to Sean R. Gajewski, a law clerk at Cullen and Dykman LLP, for help with this post.


[1] Jennifer F. Beltrami, “Are Clawback Agreements Being Used to Their Full Extent?,”ABA, Section of Litigation, April 30, 2012, available at http://www.cozen.com/admin/files/publications/ABA%20Clawback%20Article.pdf.

[2]New York offers an additional protection against the production of privileged or protected information if the parties fail to sign a clawback agreement. That is, under New York’s Rules of Professional Conduct, if a lawyer receives a document that may be privileged and the lawyer “knows or reasonably should know that the document was inadvertently sent,” the lawyer “shall promptly notify the sender.” Rules of Professional Conduct, R. 4.4(b).