Legal Definitions - Hydraflow test

The Hydraflow test is a legal standard used by courts to determine whether an accidental sharing of a confidential document, protected by attorney-client privilege, means that the privilege is lost. When a document that was meant to remain private between a client and their lawyer is inadvertently disclosed to an opposing party or a third party, a court applies the Hydraflow test to decide if the privilege has been "waived" (given up). This test involves evaluating several key factors to reach a fair decision, aiming to strike a balance between protecting privilege and ensuring fairness in litigation.

When applying the Hydraflow test, a court considers:

• The reasonableness of precautions taken to prevent the inadvertent disclosure: This factor examines how careful the disclosing party was in trying to prevent the accidental release of the document. Did they have appropriate systems, procedures, and review processes in place to identify and withhold privileged materials?
• The number of disclosures involved: The court looks at whether this was a single, isolated incident involving one document, or if multiple privileged documents were accidentally shared.
• The extent of the disclosure: This considers how widely the document was shared. Was it sent to just one person, or was it distributed more broadly, perhaps to an entire legal team or made publicly accessible?
• The promptness of any efforts to remedy the disclosure: How quickly did the disclosing party act once they realized the mistake? Did they immediately try to retrieve or "claw back" the document and inform the recipient of the error?
• Whether justice would be best served by permitting the disclosing party to retrieve the document: Considering all the circumstances, would it be fair to allow the disclosing party to get the document back and maintain its privileged status, or should the privilege be considered waived? This factor allows the court to consider the overall equities of the situation.

Examples:

• Scenario 1: High Precaution, Quick Remedy

  Imagine a large pharmaceutical company involved in a complex product liability lawsuit. Their legal team uses sophisticated e-discovery software and employs a dedicated team of attorneys and paralegals to meticulously review hundreds of thousands of documents for privilege before production. Despite these extensive precautions, a single email containing attorney-client privileged communications is accidentally included in a batch of non-privileged documents sent to the opposing counsel due to a software glitch during the final review stage.

  Within an hour of the documents being sent, the legal team's IT department identifies the error. The lead attorney immediately contacts opposing counsel, explains the mistake, and requests the immediate return and deletion of the specific privileged email. In this situation, a court applying the Hydraflow test would likely find that the privilege was not waived. The company took highly reasonable precautions, only one document was disclosed, the extent of disclosure was limited to one opposing counsel, and the efforts to remedy the disclosure were exceptionally prompt. Justice would likely favor maintaining the privilege given the diligent efforts made.

• Scenario 2: Moderate Precaution, Delayed Remedy, Broader Disclosure

  Consider a mid-sized construction company involved in a breach of contract dispute. Their in-house legal department is preparing documents for litigation. They have a standard, but not exhaustive, document review process. While compiling a large production, an attorney accidentally includes a folder containing several internal legal strategy memos, clearly marked "Confidential - Attorney-Client Privileged," in the production set. These documents are then uploaded to a shared online discovery platform accessible by multiple attorneys, paralegals, and consultants on the opposing side.

  The error isn't noticed until three weeks later when a paralegal on the opposing side references one of the memos during a deposition. When the disclosing party realizes the mistake, they immediately request the documents be returned. Under the Hydraflow test, a court would weigh the factors. While some precautions were taken, they might not be considered "reasonable" enough given the sensitivity of the documents and the method of disclosure. Multiple privileged documents were disclosed, and the disclosure was to a broader group via a platform. The delay of three weeks in discovering and remedying the error would also be a significant factor. In this scenario, it's more likely that a court might find the privilege to have been waived, especially if the opposing side had already extensively reviewed and potentially relied on the information.

• Scenario 3: Low Precaution, Extensive Disclosure, Significant Delay

  A small consulting firm, without prior litigation experience, is responding to a subpoena for documents. Their CEO, attempting to manage costs, personally gathers all relevant files from company servers and uploads them directly to a publicly accessible cloud storage service, sharing the link with the requesting party's attorney. The CEO does not consult with their outside counsel about the document production process, nor do they implement any review for privileged material. Among these files are hundreds of emails and internal reports that clearly fall under attorney-client privilege, including communications with their outside counsel about litigation strategy, settlement offers, and legal advice.

  The requesting party's attorney accesses and downloads all the documents. Six months later, during a court hearing, the requesting party's attorney presents a privileged legal strategy memo as evidence. Only then does the consulting firm's outside counsel realize the extent of the disclosure. In this extreme case, applying the Hydraflow test, a court would almost certainly find that the privilege has been waived. There were virtually no reasonable precautions taken, a large number of privileged documents were disclosed extensively and publicly, and the efforts to remedy the disclosure were extremely delayed. Justice would likely not be served by allowing the privilege to be clawed back after such a widespread and prolonged disclosure due to a complete lack of care.