We posted here about the in-house firm counsel privilege, and the New York case that held late last year that the privilege didn’t apply where a malpractice plaintiff was seeking to discover all relevant communications of his former lawyers.
The opinion in Stock v. Schnader Harrison Segal & Lewis LLP is in the New York Court of Appeals, and on April 22, a group of 74 law firms submitted a motion for leave to file a joint amicus brief in support of the appellee law firm. (Disclaimer: Thompson Hine LLP, the sponsor of this blog, is one of the 74 firms.)
No different privilege rule for law firms
In Stock, the New York County commercial division court ordered a law firm to turn over 24 documents to a plaintiff who was suing the firm for malpractice. Without extensive analysis, the court agreed with the malpractice plaintiff that the firm lawyers did not expect their communications with the firm’s general counsel to be kept confidential from the client. The court also said that the plaintiff had “a right to disclosure from his fiduciaries of communications that directly correlate to his claims of self-dealing and conflict of interest.”
The firms seeking to file the amicus brief are all based in New York or have a significant office there, and each has one or more lawyers who provide legal advice to the firm on conflicts and ethics.
The firms urged the First Department of the Appellate Division to uphold the existence of a privilege covering consultations with in-house lawyers at law firms, “even when the consultation relates to a matter concerning a current client of the firm.”
The amicus firms argue that New York’s privilege statute does not justify treating law firms any differently from any other person or entity, and that a law firm consulting with its in-house counsel can be a “client,” like other entities whose employees or partners consult with in-house counsel.
Recent decisions in Georgia and Oregon upholding the firm-counsel privilege have viewed the absence of statutory exceptions in the state evidence code as a factor in concluding that the privilege should cover in-house consultation.
The amicus firms also cited the 2005 New York State Bar Association opinion that analyzed the issue under the prior disciplinary rules and concluded that a law firm consulting with its own in-house counsel on ethics issues did not raise a conflict of interest even with a current client. The ABA Ethics Committee reached a similar conclusion three years later, in ABA Opinion 08-453 (subscription required).
The “fiduciary exception” that the lower court in Stock mentioned also does not defeat the attorney-client privilege, the amicus firms argued, because the New York cases applying the exception distinguish between a fiduciary who seeks legal advice for the benefit of a beneficiary, as opposed to the fiduciary’s own benefit. A fiduciary who consults counsel about the fiduciary’s own liability or ethical duties should have the benefit of privilege available, as anyone else would.
New York’s importance as a leading center for national and international legal practice makes the decision of the court of appeals in Stock worth watching. If the state is added to the list of those upholding the in-house firm counsel privilege, it could influence other jurisdictions as well. We’ll keep you posted.