Attorney-CIient Privilege Issues
for In-house Counsel
Brian McCormac
BrownWinick
666 Grand Avenue, Suite 2000
Des Moines, IA 50309-2510
Telephone: 515-242-2431
Facsimile: 515-323-8531
E-mail: mccormac@brownwinick.com
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.
Attorney-Client Privilege
• 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)
Attorney-Client Privilege
• 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
Attorney-Client Privilege
• 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
Attorney-Client Privilege
• Source:
– Generally privilege issues are matters of state
law
– Federal common law
– International law
Attorney-Client Privilege
• 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
Attorney-Client Privilege
• 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)
Attorney-Client Privilege
• Between Attorney and Client
– Client
– Client’s attorneys
– Agents of either party
• Communicating agents of client
• Attorneys’ staff
• Consultants hired by attorney
Attorney-Client Privilege
• In a corporation, who can communicate on
behalf of the corporate client and maintain
the privilege?
• Two tests:
• Control Group
• Subject Matter
Attorney-Client Privilege
• 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
Attorney-Client Privilege
• 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)
Attorney-Client Privilege
• Confidential
– Watch out for waiver
– How widely can attorney communications be
forwarded?
– Administrative staff?
– Use of consultants, accountants?
Attorney-Client Privilege
• 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
Attorney-Client Privilege
• 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 nonpublic 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
Work Product Doctrine
• 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.
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."
Work Product Doctrine
• 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.
Work Product Doctrine
• 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 attorneyclient privilege attach
Issues for In-House Counsel
• Some courts have found that when an inhouse 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 inhouse 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!
Website: www.brownwinick.com
Toll Free Phone Number: 1-888-282-3515
OFFICE LOCATIONS:
666 Grand Avenue, Suite 2000
Des Moines, Iowa 50309-2510
Telephone: (515) 242-2400
Facsimile: (515) 283-0231
616 Franklin Place
Pella, Iowa 50219
Telephone: (641) 628-4513
Facsimile: (641) 628-8494
DISCLAIMER: No oral or written statement made by BrownWinick attorneys should
be interpreted by the recipient as suggesting a need to obtain legal counsel from
BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not
attempt to solve individual problems upon the basis of general information provided
by any BrownWinick attorney, as slight changes in fact situations may cause a
material change in legal result.