Nov 22, 2019 3:36:23 PM

The Attorney-Client Privilege – What You Need to Know

One of the in-house lawyer’s most valuable tools is the attorney-client privilege and the ability of the client to ask pointed and raw questions for the purpose of obtaining legal advice.  If not utilized properly, however, this tool can turn into a ballistic missile aimed right at your company. The applicability and proper use of the attorney-client privilege is a very misunderstood area, especially in the in-house world.  Here is what is necessary to claim and preserve the attorney-client privilege:

1. What is the Attorney-Client Privilege? The attorney-client privilege protects from disclosure to third parties: (a) confidential communications; (b) between an attorney and client; (c) made for the purpose of obtaining or providing legal advice.  Unless all three of these prongs are met, the communication is not privileged.  It’s important that in-house counsel have a good understanding of how the privilege applies in the state (or country) where their headquarters is located and/or the state (or country) where the attorney practices if not the same as the headquarters. The discussion here is general to the United States and not specific to any state or other country.  Just know that the attorney-client privilege outside the U.S. can be very limited or may not exist at all.  

2. Why should I care? If you or the business get the privilege “wrong” there may be numerous long-term consequences for your company.  First, if people mistakenly think documents are privileged, they might be careless in how they write things down. Second, if you waive the privilege for one document, chances are high that you may have waived the privilege with respect to other documents covering the same subject matter. Third, overly aggressive use of the “privileged” label can cause judges to think that the company is attempting to hide documents and find that such documents should be turned over to the other side.  Any of these developments can severely jeopardize your chances of winning in litigation and could lead to a damages award to the other side.

3. How does it work? The attorney-client privilege applies in limited circumstances, in particular:

  1. Requests for legal advice from a client to an attorney.

  2. Requests for information from an attorney for information needed to formulate or provide legal advice.

  3. The legal advice actually given by the attorney.

Many lawyers (in-house and outside counsel) mistakenly believe anything they write for any reason is protected by the attorney-client privileged.  They are wrong.  Unless the communication meets the test of (a) – (c) it is not privileged.

4. Legal advice vs. Business advice. In order to invoke the attorney-client privilege the communication must deal with legal advice.  Legal advice is broader than just litigation-related communications, i.e., it covers all legal advice including transactional and regulatory.  Business advice, however, is never privileged and – for in-house counsel in particular – the line between the two can appear blurry.   To add to the fun, different judges see things differently with respect to what constitutes legal advice and what constitutes business advice.

5. Who can be in the loop? A key test of whether the privilege applies depends on who receives the communication. If a document that is otherwise privileged is shared with third parties, then the privilege is lost.  A third party is generally anyone other than (a) the company’s lawyers, (b) employees of the company with a “need to know,” (c) certain agents of the company and the attorney, and (d) any parties with whom the company has a joint defense or common interest agreement.  The key here is to limit distribution of privileged communications within the company to those with a “need to know” as the bigger the circle of recipients the greater the chance a court may rule the privilege does not apply. 

6. You must keep legal advice confidential. It is absolutely critical that you and the company keep legal advice confidential.  It cannot be passed along outside that company-- a common problem with business colleagues who do not understand the problems doing so can cause.  Likewise, everyone needs to be extremely careful when discussing or accessing privileged communications in public areas. Likewise, as much as you love your spouse or significant other, you cannot discuss privileged information with him or her.  And, as noted above, the more people in the loop on privileged communications the greater the chance that someone trips up on the confidentiality prong.  Bottom-line:  the fewer people receiving the legal advice the better.  Only those with a “need to know” should receive privileged communications.

7. “Confidential” does not mean privileged. A common misperception among the business is that all confidential information is privileged or if they label the communication as privileged they can keep the documents out of the hands of third parties.  First, labeling something privileged does not make it privileged.  It depends on whether the communication is for the purposes of obtaining or receiving legal advice.  If that is not the case, there are no magic words that transform an everyday business communication into a privileged communication.  Second, the business needs to understand that simply copying a lawyer on the communication does not make it privileged either.  The communication still needs to meet the test of asking for or providing legal advice.  Another vulnerable spot for privilege issues is attachments to emails.  Unless the attachment on its face or by its contents reflects that it is for the purpose of obtaining legal advice, a court may not view the attachment as privileged, and thereby separating the “privileged” cover note/email from the “non-privileged” attachment.

8. Waiving the privilege. Unfortunately, it is easy to waive the attorney-privilege.  If you disclose a privileged communication to a third party it is very likely waived.  You can also inadvertently waive the privilege.  This typically arises in the context of exchanging documents during the discovery process in litigation, especially when the parties are exchanging a large volume of documents.  Federal Rules of Evidence, Rule 502(d) provides a simple and effective mechanism to cure an inadvertent disclosure of privileged documents during discovery. Finally, there are issues around whether a party forced to disclose privileged communications in one jurisdiction due to a subpoena has waived the attorney-client privilege, or if a company can engage in a selective waiver of the privilege.  If you find yourself in any of these situations, you should engage experienced outside counsel to advise you.

9. Other privileges. The attorney-client privilege is not the only privilege available.  Though beyond the scope of this post, here are some short descriptions of others that may apply to your situation and are worth investigating:

  • The Attorney Work Product privilege.The attorney work product privilege protects from disclosure to third parties materials that are prepared by or for a party or its representative motivated by or in anticipation of litigation.  It does not protect documents prepared for  non-litigation related legal work. A key document used to determine if the Attorney Work Product privilege applies is the litigation hold. The privilege also applies to documents prepared by non-attorneys, if prepared at the direction or under the supervision of lawyers.

  • The “self-critical analysis” privilege. In some jurisdictions, the self-critical analysis privilege is a qualified privilege that encourages companies to honestly evaluate themselves in light of some problem or incident yet protects the company from that report or analysis from being used against it in litigation. Never begin an internal investigation with potential legal issues without consulting with counsel (in-house or external).  You will want to maximize the ability to claim privilege from the beginning, generally by having Legal run the investigation.

  • Joint Defense/Common Interest privilege. These privileges – really just extensions of the attorney-client privilege - allow separate companies with common legal interests to share privileged communications between them so long as the communications otherwise meet the test for attorney-client communications.

10. Best practices to preserve the attorney-client privilege.  There are several things you can do to ensure the best possible outcome with respect to protecting the privilege:

  • The most important thing you can do is to be sure to properly label communications that meet the test for attorney-client communications. The document/email should be labeled “Attorney Client Communication – For Purpose of Legal Advice.”

  • Be sure that the document/email clearly states that the person is seeking legal advice or that you (as attorney) are responding to a request for legal advice. Be sure that any attachment you are being asked to review is also properly labeled. This will give you a better opportunity to claim that the privilege applies to both communications.

  • If legal advice is being sought in any email or a memorandum, be sure that the business puts the lawyer in the “to” line vs. the “cc” line.

  • Limit circulation of legal advice and privileged communications internally to those that need to know.

  • Keep the communication confidential and do not permit the legal advice to be circulated outside the company.

  • Don’t claim the privilege when it’s not applicable.

  • Write smart regardless of your level of confidence that the attorney-client privilege applies.

  • Know the applicable laws in your state regarding the attorney-client privilege.

  • Understand that outside the United States privilege issues get tricky.

  • Train the business on all of the above and find teachable moments when you see something that jeopardizes the privilege.

*****

The attorney-client privilege is a valuable asset of your company.  Treat it as such.  Train yourself, your team, and the company on best practices.  Be constantly vigilant and in teaching mode on the issue -- and fight like hell to preserve and maintain the privilege when challenged. 

If you have questions about this blog or need assistance with a litigation matter, please reach out to info@hilgersgraben.com.


 

About Hilgers Graben

Hilgers Graben is a nationwide litigation boutique specializing in commercial and intellectual property litigation and discovery counsel services. The firm uses geo-arbitrage and innovation to provide superior litigation and discovery counsel services while driving down costs for its clients.  On average, the firm is 50% less expensive than Big Law.  The HG EDGE discovery counsel team has pioneered unique techniques and process improvements to dramatically drive down the cost of discovery.

Topics: Litigation, Attorney Client Privilege