Attorney-CIient Privilege Issues for In-house Counsel

Attorney-CIient Privilege Issues for In-house Counsel

Brian McCormacBrownWinick

666 Grand Avenue, Suite 2000Des Moines, IA 50309-2510

Telephone: 515-242-2431Facsimile: 515-323-8531

E-mail: [email protected]

Agenda

• Overview of the Attorney-Client Privilege and Work Product Doctrine

• Issues for In-House Counsel

• Tips for Protecting Privilege

Attorney-Client Privilege

• What is it?– A privilege to protect confidential

communications between attorney and client for the provision of legal advice from disclosure or discovery.


• Why have it?• The United States Supreme Court has

stated that by assuring confidentiality the privilege encourages clients to make "full and frank" disclosures to their attorneys, who are then better able to provide candid advice and effective representation – Upjohn Co. v. United States, 449 U.S. 383,

389 (1981)

http://en.wikipedia.org/wiki/Upjohn_Co._v._United_States


• It protects some of the most probative evidence from discovery.

• “Its benefits are all individual and speculative; its obstruction is plainly concrete.” WIGMORE ON EVIDENCE § 2291 (McNaughton ed. 1961).

• Because the attorney-client privilege can have a justice obstructing effect, it has been construed narrowly. See, e.g., Fisher v. United States, 425 U.S. 391, 403 (1976).

• Burden for establishing privilege is on the party seeking to avoid disclosure


• History– One of earliest references is in Roman law.

Cicero, while prosecuting the governor of Sicily, could not call the governor's advocate as a witness, because if he were to have done so, the governor would have lost confidence in his own defender.

– Long history in English common law– Widely adopted in American jurisprudence


• Source:– Generally privilege issues are matters of state

law– Federal common law– International law


• Classic elements:– Communication– Between attorney and client– Confidential– For purpose of obtaining or providing legal

advice– Privilege must not have been waived

• Each element can be very fact-intensive


• Communication– Can be written or oral– Can be between attorneys– Certain categories of documents generally not

privileged:• Fee agreements• Billing records, except to the extent they reveal

privileged communications• Attorney notes (but often protected by work

product doctrine)


• Between Attorney and Client– Client– Client’s attorneys– Agents of either party

• Communicating agents of client• Attorneys’ staff• Consultants hired by attorney


• In a corporation, who can communicate on behalf of the corporate client and maintain the privilege?

• Two tests:• Control Group• Subject Matter


• Control Group Test• Only employees in a position to control corporate

action• Generally officers and directors• Very restrictive• Not workable in reality• Disfavored, but may still be the law in some

jurisdictions


• Subject Matter Test– Communications made by employee to counsel at the

direction of a superior to obtain legal advice– Information needed by counsel not available to control

group– Communication covered matters within employee’s

duties– Employee must know the purpose of the

communication is to obtain legal advice– Communication must be confidential

• Iowa follows the subject matter test. Keefe v. Bernard, 774 N.W.2d 663 (Iowa 2009)


• Confidential– Watch out for waiver– How widely can attorney communications be

forwarded?– Administrative staff?– Use of consultants, accountants?


• Seeking or providing legal advice– Business advice vs. legal advice is the key

issue– Analysis is usually very fact specific– Routine tasks will not be privileged just

because performed by an attorney (e.g., simple loan or security documents)

– Business vs. legal distinction could lead to some parts of documents being privileged while others are discoverable


• Not Waived– Waiver can be unintentional

• Circulating privileged communication too widely• Inadvertent disclosure• Be careful with internal investigations.

– Individual employees should not be represented by corporation’s counsel.

– Appropriate warnings should be given to witnesses during investigations.

Attorney-Client Privilege• Not Waived

– “Selective Disclosure”• Diversified Indus. v. Meredith, 572 N.W.2d 596 (8th Cir. 1978)• Facts: Diversified hired an outside law firm to conduct an

investigation into allegations of corporate bribery. The firm provided a report to the board of directors. The SEC received a copy of the in response to a subpoena. Later, a private litigant sought both the report and the minutes of the board meeting where the report was presented.

• Holding: Diversified's disclosure of the report in a separate and non-public SEC investigation resulted in only a "limited waiver" of the attorney-client privilege. Accordingly, neither the report nor the board minutes had to be produced. The Diversified court reasoned, "[t]o hold otherwise may have the effect of thwarting the developing procedure of corporations to employ independent outside counsel to investigate and advise them in order to protect stockholders, potential stockholders and customers.“

• Other circuits have rejected selective disclosure doctrine

Work Product Doctrine

• What is it? Qualified protection from discovery for materials prepared in anticipation of litigation.

• First recognized by the Supreme Court in 1947 in Hickman v. Taylor.

• Now codified in Fed. R. Civ. P. 26

• Iowa R. Civ. P. 1.503


• Facts in Hickman v. Taylor– Defendant's tugboat sank in Delaware River, killing five of nine

crew members. Defendant’s attorney privately interviewed the survivors and witnesses and took statements from them and prepared memos with an eye toward the anticipated litigation. Plaintiff filed a wrongful death action against the owners of the tugboat. Plaintiff sought to compel production of signed statements and memoranda prepared by defendant’s counsel. Defendant granted names of those who had provided statements, but refused to produce documents.

– The trial court ordered defendant to produce the documents and ordered the imprisonment of defendant for refusing to do so. Defendant appealed to the Third Circuit, which reversed the production order.

http://en.wikipedia.org/wiki/Delaware_River

Work Product Doctrine• Supreme Court affirmed the Third Circuit, stating:

– "it is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. Proper preparation It of a client's case demands that he assemble information, sift what he considers to be the relevant go from the irrelevant facts, prepare his legal theories and plan his strategy without undue and needless interference.... This work is reflected of course, in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways....“

– "Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten. An attorney's thoughts, heretofore inviolate, would not be his own. Inefficiency, unfairness and sharp practices would inevitably develop in the giving of legal advice and in the preparation of cases for trial. The effect on the legal profession would be demoralizing. And the interests of the clients and the cause of justice would be poorly served."


• The work product doctrine protects two categories of materials:– Opinion work-product, defined as the mental

impressions, conclusions, opinion or legal theories of an attorney, has according to the Fifth U.S. Circuit Court of Appeals been provided by courts with an almost absolute protection from disclosure.

– Disclosure of ordinary work-product is permitted if the party seeking it shows that it has substantial need for the materials to prepare its case and cannot without undue hardship obtain their substantial equivalent by other means.


• Key issue in most work product cases is whether materials were prepared “in anticipation of litigation.”

• Fact-specific inquiry and the test varies from circuit to circuit.

Issues for In-House Counsel

• Notes of business meetings not privileged just because an attorney is in attendance

• Similarly, emails are not necessarily privileged because a lawyer is copied

• Marking a document or email “privileged” does not automatically make the attorney-client privilege attach

Issues for In-House Counsel

• Some courts have found that when an in-house attorney conducts a negotiation, s/he is acting in a business capacity and related communications are not privileged.

• Some courts recognize a presumption that a lawyer working in a corporate legal department gives legal advice while a lawyer in a business role does not

Issues for In-House Counsel• Don’t assume that the privilege applies equally

in international jurisdictions.• European Court of Justice recently held that the

attorney-client privilege does not protect advice given by in-house counsel from discovery in investigations brought by the European Commission. Azko Nobel Chems. v. Comm’n of European Communities (2010).

• Azko court declined to extend this ruling to outside counsel because they are more “independent” and “not bound to the client by a relationship of employment.”

Tips for Protecting Privilege

• Train employees on best practices regarding privilege and confidentiality

• Limit communications to those with a “need to know”– Consider disabling “reply all” or “forward” feature on

attorney communications

• If a transaction may give rise to litigation and in-house counsel investigates the facts, mark relevant documents “prepared in anticipation of litigation”

Tips for Protecting Privilege• If a document is privileged or contains legal

advice, mark it “Attorney-Client Privilege”. Do not overuse—could result in an adverse finding.

• If in-house counsel conducts a factual investigation into a transaction likely to give rise to litigation, mark created documents “prepared in anticipation of litigation”

• Train employees to mark requests for legal advice as such. Counsel should mark requests for information as “requested for the purpose of rendering legal advice.”

Tips for Protecting Privilege• In-house attorneys with legal and business titles

should consider using only their legal title on legal communications. Can use “Esq.” after name to further highlight legal nature of communication.

• Sequester legal and business communications where possible

• Document security– Electronic: password protected database– Paper: locked in secure area

• Corporate document retention policy should address protection of privileged documents.

Tips for Protecting Privilege

• Have business units lead negotiations

• In Europe, consider entering into contractor arrangements with attorneys to avoid Azko.

• USE THE PHONE!

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Attorney-CIient Privilege Issues for In-house Counsel

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