Earlier this month, the Superior Court of Pennsylvania issued a decision that has broad implications for the manner in which Pennsylvania lawyers and their clients communicate with outside consultants, including environmental consultants. In BouSamra v. Excela Health, No. 1637 WDA 2015, 2017 PA Super 235 (July 19, 2017), the Superior Court held that a company waived the attorney-client privilege when it forwarded an email containing legal advice to one of its consultants, a public relations firm. The decision calls into question whether outside consultants should be involved in privileged legal discussions unless the consultant is actively involved in facilitating legal advice from counsel to client.

The underlying case involved a dispute between two cardiology practices, one of which was owned by the defendant Excela Health (“Excela”). In the lawsuit, the plaintiff contended that Excela spread false rumors about the plaintiff’s practice by, among other things, announcing at a press conference the results of a peer review study that concluded that the plaintiff had performed unnecessary procedures on patients.

During the litigation, a discovery dispute arose relating to Excela’s communications with its public relations firm, Jarrard, Phillips, Cate, & Hancock (“Jarrard”).  Excela had retained Jarrard to develop a media plan to implement the public announcement over the unnecessary procedures.  In the days leading up to the press conference, Excela’s outside counsel offered Excela’s general counsel, Timothy Fedele, legal advice regarding the press conference.  Mr. Fedele forwarded the email communication to Excela senior management and a contact person at Jarrard. Excela withheld this communication as privileged during discovery.

The issue on appeal was whether Excela waived the attorney-client privilege and work product protection when Mr. Fedele forwarded the email communication to Jarrard. The trial court granted the plaintiff’s motion to compel the production of the email communication, reasoning that the privilege was waived when the communication was shared with Jarrard because Jarrard was a third party.  Excela then filed an interlocutory appeal from the trial court’s privilege determination. 

The Superior Court of Pennsylvania affirmed the interlocutory order, holding that Excela waived the attorney-client privilege when it forwarded outside counsel’s email to Jarrard, a third party. The Superior Court relied on two findings in support of its holding. 

First, the Superior Court reasoned that Excela’s attorney-client privilege did not extend to encompass its “outside agent,” Jarrard. Although the court acknowledged that the attorney-client privilege may extend to an outside consultant when the consultant acts like the “functional equivalent of an employee of the client,” the court found that Jarrard did not meet this stringent standard because Jarrard had been retained only intermittently by Excela and in each instance Jarrard retained control as to how it completed tasks for Excela.  In so holding, the Superior Court appeared to limit the extent to which the attorney-client privilege may extend to an outside consultant retained by a company to aid it with a project. 

Second, the Superior Court reasoned that this was not a situation in which an outside consultant was being used by counsel to “assist in providing legal advice” to the client. The court explained that, in some circumstances, communications involving a consultant may be privileged when the consultant is “necessary or useful for purposes of dissemination of legal advice on the legal issue involved.”  In the court’s view, this was not one of those circumstances.  Excela, as opposed to its outside counsel, retained and communicated directly with Jarrard.  Further, Excela’s general counsel did not forward the email containing legal advice to Jarrard in order to solicit its input on the advice given.  Accordingly, the attorney-client privilege was waived.

Finally, the court also rejected Excela’s argument that the email communication was protected from discovery by the work product doctrine. The court explained that outside counsel offered legal advice in connection with a press conference, not anticipated or pending litigation.  Therefore, the email was not protected from disclosure by the work product doctrine.  

While the facts of this decision relate to communications with a public relations firm, the holding could logically apply to any outside consultant, such as a financial adviser, accounting firm, or an environmental consultant. In the absence of further guidance from the court, counsel would be wise to instruct clients to carefully monitor what legal advice, if any, outside consultants are made privy to.