BEWARE: COPYING YOUR IN-HOUSE COUNSEL ON EMAILS DOES NOT PROVIDE PRIVILEGE - Articles

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Posted by: Christy Gibson on Feb 14, 2014

AN ATTORNEY CLIENT PRIVILEGE PRIMER

By Tena T. Roberson

Deputy General Counsel and Chief Privacy Officer

BlueCross BlueShield of Tennessee, Inc

 

The existence of the privilege is not a given. It can be successfully invoked only if it has been validly created and further, after its creation, not been subsequently waived, so that even if did exist, it does not exist any longer. The privilege protects communications:

  • From a client;
  • To a lawyer;
  • Related to the rendering of legal advice;
  • Made with the expectation of confidentiality;
  • Not in furtherance of a crime or fraud;
  • As long as the privilege has not been waived.

Why does it Exist?

The reason for the existence of the privilege is to create the opportunity for a client to fully divulge all available information to his or her or its attorney, who cannot properly represent their clients without that knowledge. An attorney’s advice to a client to follow a certain course of conduct is only as good as the facts and circumstances known to the attorney.

There is a significant countervailing interest in a contested legal proceeding: knowing all the facts and learning the whole truth. Similar to an attorney’s advice, a decision by a judge, jury or investigator is only as good as the facts presented in evidence.

Due to the very nature of the privilege, the communication from the client to the attorney that may or may not be admissible evidence is generally revealing, perhaps self critical, or even outcome determinative.

Litigation can be won or lost depending upon whether or not the privilege prevents or allows facts from being introduced into evidence.

Because of these contradictory interests, the privilege is difficult to create, hard to maintain, and easy to lose.

Application of the Privilege in a Corporate Setting.

What is a Communication?

In addition to a verbal or written communication, the privilege can sometimes protect communications that the client has created with the intent of providing it to its attorney, even if the substance of that communication has not been communicated to the attorney. Mason C. Day Excavating v. Lumbermen’s Mutual Casualty Co., 143 F.R.D. 601, 607-609 (M.D.N.C. 1992) (plaintiff’s daily log was protected by the privilege because it was created by the plaintiff at the direction of the plaintiff’s lawyer to assist the lawyer in providing legal advice, while defendant’s similar log was not protected by the privilege because it was created in the ordinary course of business).

Who is the Client?

Parents, Subsidiaries and Affiliates.

Every state recognizes that a corporation can have an attorney client relationship with an attorney. In re Grand Jury Proceedings, 219 F.3d 175, 185 (2d Cir. 2000). Most courts protect communications by and among related companies, even if they are not wholly owned affiliates. Admiral Ins. Co. v. U.S. Dist. Ct., 881 F.2d 1486, 1493 n.6 (9th Cir. 1989).

Successors.

The privilege is an asset of the corporation, so that it transfers to any successor company in the event of a merger or acquisition or to the trustee in the event of a bankruptcy. Commodity Futures Trading Commission v. Weintraub, 471 U.S. 343, 349 (1985) (successor entity to corporation has the right to assert or waive the privilege with regard to communication by the predecessor corporation).

Former Subsidiaries.

When a parent corporation sells a subsidiary to another corporation, the new owner generally requests that the seller provide copies of documents relating to that subsidiary. What if those documents include communications to and from an attorney who represented both the corporate seller and the subsidiary when the two entities had a parent subsidiary relationship?

Can the new owner obtain the documents, or, can the former owner successfully assert the attorney client privilege and retain them?

In Fogel v. Zell, 212 B.R. 894, 1997 Bankr. LEXIS 1515 (Bankr. Ill. 1997), a parent and a subsidiary were both represented by the same lawyers. The subsidiary went bankrupt and a trustee was assigned to consider the claims of creditors of the subsidiary. The bankruptcy trustee, on behalf of a particular creditor, tried to obtain documents created during the time the lawyers represented both the parent and the subsidiary organizations. The parent organization objected to the request, asserting that the communications were privileged and did not have to be produced. The bankruptcy court found in the parent’s favor and enforced the privilege.

However, if the request for the communications is not for the benefit of a third party, such as a creditor, but for the subsidiary itself, then a different result occurs. In Santa Fe Trail Transportation Co., 121 B.R. 794, 1990 Bankr. LEXIS 2538 (Bankr. N.D. Ill. 1990), the same background facts existed as in Fogel: an in house attorney represented both a parent and its subsidiary and the subsidiary subsequently filed bankruptcy. In this case, the bankruptcy trustee sought documents from the parent corporation on behalf of the subsidiary. The parent organization’s attempt to avoid production of the documents based upon the privilege was unsuccessful.

Current Employees.

In an attorney client relationship in a corporate setting, the attorney represents the legal entity that is the corporation, not its individual officers, directors or employees. Avianca, Inc. v. Corriea, 705 F.Supp. 666, 680 n.4 (D.D.C. 1989), aff’d, 70 F.3d 637, (D.D.C. 1989).

Since a corporation is a legal fiction, it can only communicate to an attorney by and through a representative. There is an issue as to whether or not the corporation can speak only through its directors, officers, or exempt employees, or instead through any employee, at any level, including non-exempt employees. In Upjohn Co. v. United States, 449 U.S. 383 (1981), the Supreme Court held that employees of any level within a corporation are entitled to have privileged communications with the company’s attorney, provided that certain steps are followed:

  • The company’s lawyers have been asked to provide legal advice to their client, the company;
  • The employee has factual knowledge that the company’s lawyers require;
  • The information is not readily available elsewhere; and
  • The employees keep all of their communications with the company’s lawyers confidential, even within the company.

Former Employees.

It is generally held that the attorney client privilege applies to the company’s attorney’s communications with former employees of the company. In re Richard Roe, Inc., 168 F.3d 69, 72 (2d Cir. 1999).

Independent Contractors.

Most courts are reluctant to extend the privilege beyond current or former company employees so as to include the company’s independent contractors. Miramar Construction Co. v. Home Depot, Inc., 167 F.Supp. 2d 182 (D.P.R. 2001).

However, there is an indication of change, as courts have recently found independent contractors that function as corporate employees, such as those performing “outsourced” functions, to be the “functional equivalent” of employees. In re Copper Market Antitrust Litigation, 200 F.R.D. 213, 215, 219 n.4 (S.D.N.Y. 2001) (public relations advisors).

Who is a Lawyer?

For purposes of the privilege, communications with the attorney’s receptionist, secretary, paralegal, copy clerk, or other administrative staff are considered communications with an attorney. von Bulow v. von Bulow, 811 F.2d 136 (2d Cir.), cert denied, 481 U.S. 1015 (1987) (Claus von Bulow’s “steady companion” and an alleged journalist wrote an account of his criminal trials for murder in order to write and publish her own book, not to assist the attorney to provide legal services, even though she attended meetings with that attorney regarding trial strategy, so that the manuscript for the book is not protected by the privilege).

What is Legal Advice?

Defined.

This necessary element for proving and enforcing the privilege is typically problematic. The privilege only protects communications that either to the request for or rendering of legal advice.

There are five types of communications that meet this standard:

  • A client’s request for legal advice from a lawyer (it may be explicit or implicit, so that the   sending a draft document to a lawyer, without instruction, may be an implicit request for legal advice about that document);
  • A client’s communication to a lawyer of the facts the lawyer needs in order to give the legal  advice (this can also occur in the context of the initial request);
  • A lawyer’s request for the facts that the lawyer needs in order to give the legal advice;
  • A lawyer’s legal advice; and
  • A communication from a non-lawyer company employee to another non-lawyer company  employee discussing the collection of facts the lawyer needs to provide the legal advice or paraphrasing the legal advice that the lawyer has given the company. Long v. Anderson Univ., 204 F.R.D. 129, 134 (S.D. Ind. 2001).

Privilege for in-house counsel is complex. Educating your company on these matters can be critical so attorney privilege is not over or underutilized.