Attorney-Client Privilege Is Not a Given: Here’s Why

 Ted Weitz A-C Privilege

By Ted Weitz

Attorney-client privilege – a client’s right to keep confidential communications with an attorney confidential – influences the way attorneys approach information and conversations every day. Too often, however, the intricacies of this concept are overlooked by business people who assume that all communications with an attorney earn the stamp of confidentiality. I recently discussed the complexities of attorney-client privilege at Priori’s roundtable Attorney-Client Privilege and the In-House Dilemma. Topics included how the waiver of privilege can arise, ways to assure the maintenance of privilege, and when attorneys have a duty to disclose. Below is an overview of what we covered: 

The Four Basic Elements of Attorney Client Privilege

When it comes to attorney-client privilege, there are at least these four basic elements.

1. Confidential Communications

In order for a communication, in any form, to be confidential, both parties to the conversation must take reasonable precautions to ensure confidentiality. That means that the manner in which the communication transpires and subsequently is preserved or stored must be reasonably secure. Examples of common office scenarios that risk such confidentiality include:  

  • Overbroad use of CCing on email communications. The typical corporate practice of having twelve CCs on each email means such email is not likely to be considered confidential.

  • Any large meeting at which attendance is not based on counsel’s considered determination that such attendees are needed for rendering legal advice is unlikely to be held to be confidential. This would include the CEO’s staff meeting, even if people ask for legal advice during the meeting.

  • Conversations in open office space or other open spaces where others can easily listen (e.g., the hallway), are not generally considered to be confidential.

  • Even a small, secure meeting held in a conference room may be deemed not confidential if minutes are prepared and subsequently distributed outside the group.

  • Storing documents where they are broadly accessible can also waive the privilege.

  • Clients disclosing legal advice once it has been received.

Navigating these office realities can be tricky for lawyers, who don’t want to disrupt office chemistry and business practices, but their obligation to maintain confidentiality when necessary isn’t optional. Lawyers should aim to take a balanced approach toward maintaining attorney-client privilege, but there are some ways business people can help: 

  • Work with lawyers to label truly confidential written communications as privileged and confidential or as attorney work product, but beware of overbroad labeling, which can undercut the credibility of the category.

  • Discuss ground rules with lawyers before a matter is disclosed in a press release, covered in a press conference, or discussed on an analyst call

  • Manage privacy settings and security thoughtfully if documents must be stored on cloud-based systems.

  • Assure that meetings that discuss privileged matters are held in secure settings.

2. Between an Attorney and His or Her Client

In the in-house context, one surprisingly common issue is whether the applicable in-house attorney is, in fact, licensed to practice law in the applicable jurisdiction. The consequences here are significant: the privilege may not attach to communications between the business client and that attorney. Common fact patterns giving rise to this issue include an in-house lawyer who (i) passed the bar but never completed the other mechanics and requirements of bar admission, (ii) is admitted in good standing in State A but moved to State B and does not comply with State B’s rules, (iii) doesn’t keep up with periodic renewal fees or other obligations (e.g., CLE), (iv) went inactive and neglected to resume active status, and (v) is working as non-US counsel to companies where either the company or the lawyer didn’t follow local requirements for such attorneys. 

3. Made in the Course of Legal Representation

Not every communication touched by a lawyer is privileged. Some or all of these communications might be discoverable depending on the capacity in which the lawyer is functioning in at the time of the particular communication. Remember, lawyers can play various roles depending on the circumstances, and not all of these roles are law-related; some are business-related. For example, in-house counsel, of course, can be involved in many aspects of a company’s activities, but there are risks posed by such a multifaceted role. To minimize such risk, it’s important to identify and document the role the counsel is playing in certain key communications. For example, if in-house counsel is the senior company representative on a license agreement negotiation, is that employee acting as a lawyer or a business person? In such a context, merely sending the company’s senior negotiator information does not automatically mean such a communication is privileged. If her title is “Senior VP of Business and Legal Affairs,” for example, that does not help. In such cases, simple terminology may help clarify the role. For example, instead of merely appointing a lawyer as a member of a task force, a CEO can appoint that lawyer “counsel to the task force”.

The next issue here is whether the party communicating to the lawyer is, in fact, the lawyer’s client. The answer depends partly on jurisdiction.

Additional complications arise in the investigations context within companies. Generally, outside counsel and in-house lawyers are hired to represent the business entity. But the interests of the employee interviewee may well be different from or directly adverse to that entity. In such cases, would those conversations be privileged? Lawyers should make it clear to the interviewee whom he or she represents, but know that even after that clarification is made, it is not at all clear whether all of those conversations will take place, and if they do, whether they will be privileged.

4. For the Purpose of Providing Legal Advice 

Documents and communications created independent of the process of seeking legal advice are not privileged and are fair game for discovery. Copying a lawyer on a document does not make it prilieged. Nor does communication with a lawyer imply that the underlying facts described are protected. A communication is not protected unless it meets the test above, and the underlying facts are not protected at all – the protection attaches only to the communication itself. Further, the routine practice of copying lawyers and labeling something as privileged not only does not necessarily make a communication privileged, but it also puts into question the assertion of privilege in matters where it properly belongs. 

How Long does the Privilege Last? 

Even communications that qualify as privileged may not remain so indefinitely. While privilege belongs to the client, which means the client may elect to disclose the communication at any time for any reason, there are certain situations, regardless of the wishes of the client, when attorney-client privilege must be waived.

One such situation is a shareholders’ derivative action. In these cases, the "fiduciary exception" to attorney-client privilege vitiates a business entity's attorney-client privilege in a lawsuit between a stockholder (or its equivalent) and the corporation. This principle allows stockholders to discover corporate communications otherwise protected under attorney-client privilege in order to demonstrate fiduciary breaches. Other situations in which privilege must be waived by the lawyer include:

  • to prevent reasonably certain death or substantial bodily harm;

  • to prevent the client from committing a crime;

  • to withdraw a written or oral opinion or representation previously given by the lawyer and reasonably believed by the lawyer still to be relied upon by a third person, where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud; and

  • when otherwise required by the applicable rules of professional conduct or to comply with other law or court order.

Finally, corporate proliferation of subsidiaries and ventures can add complications to previously settled attorney-client relationships in the in-house counsel context – and thus to the attorney-client privilege. While wholly owned subsidiaries present no real issue of conflict, once a subsidiary or affiliate is no longer wholly owned, the boundaries of attorney-client privilege may change.

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Ted Weitz with white space

About Ted Weitz: Ted Weitz has extensive experience as both in-house and outside counsel. After starting at a large law firm, he went in-house, working at companies ranging from startups to Fortune 50 companies, and eventually becoming general counsel of four different telecommunication and technology companies. He then returned to private practice, focusing on general corporate matters for emerging companies and on transactional work for entities of all sizes. He has also acted as advisor to companies on managing legal organizations and related functions and to universities and teaches at both Fordham and Rutgers Law Schools. 

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