Court: File Sharing Waives Privilege

If you're uploading files to a file sharing website, you may as well just leave them on a park bench where everyone can see them.

That's not just a flippant phrase about the risks of file sharing, that's what the judge said in a case pending in a federal district court in Virginia. Magistrate Pamela Mead Sargent said an insurance company's decision to upload files online was "the cyber world equivalent of leaving its claims file on a bench in the public square and telling its counsel where they could find it."

"It is hard to image an act that would be more contrary to protecting the confidentiality of information than to post that information to the world wide web," she said.

Wave Goodbye to Privilege

The dispute arose in litigation between Harleysville Ins. Co. and Holding Funeral Home over a fire loss. The insurer's employee put the case file on the file-sharing service Box Inc., and emailed a link to the company's investigator.

The email came out in discovery, and the funeral home's counsel accessed the insurer's file using the link in the email. The insurance company learned about it later, leading to the privilege issue and a motion to disqualify defense counsel.

The magistrate ruled that the insurer waived the privilege, but said the defense counsel should have notified plaintiff's counsel and the court before accessing the file. The court denied the motion to disqualify, but ordered the defense counsel to pay costs for the disqualification motion.

Accidental Disclosure

Professor Alberto Bernabe of the John Marshall Law School said some jurisdictions are divided on the issue of whether accidental disclosure automatically waives the privilege.

According to the ABA BNA Lawyers' Manual on Professional Conduct, however, lawyers should "think twice before putting confidential documents in a file-sharing site without password protection."

"The case is also a reminder that lawyers generally aren't free to secretly exploit inadvertently disclosed materials even if they believe the disclosure waived any privilege claim," the manual says.

Related Resources:

• The Risks of E-Mail Communication (ABA)
• Encrypted Documents Might Not Be as Secure as You Thought (FindLaw's Technologist)
• Technology Is Quickly Reshaping Workers' Compensation Claims (FindLaw's Technologist)