The recent case of McCarthy v Wells Fargo Bank, N.A., 2013 Bankr. LEXIS 589 (Bankr. E.D. Va. 2013) demonstrates how financial institutions must take steps to protect confidential records in their possession under the application of the attorney-client privilege. In McCarthy, Wells Fargo Bank, N.A. was sued by a chapter 7 trustee for receiving a preferential transfer of $8 million dollars. The trustee served discovery requests on the bank that required producing emails, documents between in-house and out-side counsel, and some documents that merely passed through legal counsel’s office. The bank produced some of the documents but ended up tendering almost 800 documents to the court for an in camera inspection by the judge.

As a general proposition, communications between a client and lawyer are privileged from disclosure if the primary purpose of the communication is to secure a legal opinion or service, or assistance in a legal proceeding and were held with the intent that they remain confidential. United States v. Robinson, 121 F.3d 971, 974, 976 (5th Cir. 1997). The privilege extends only to those disclosures necessary to obtain informed legal advice which might not have been made without such a privilege. Navigant Consulting, Inc. v. Wilkinson, 220 F.R.D. 467, 473 (N.D. Tex. 2004). The attorney-client privilege does not embrace or protect everything that arises out of the attorney-client relationship and, therefore, not all documents in the hands of legal counsel are protected by the privilege simply because the attorney possesses them. AHF Cmty. Dev., LLC v. City of Dallas, 258 F.R.D. 143, 146 (N.D. Tex. 2009).

In McCarthy, after examining the documents at issue, the Court found that the following documents need not be produced under the attorney-client privilege: (1) communications between the bank and its personnel and outside counsel; (2) documents that seek, give, legal advice from or by the bank’s in-house counsel; and (3) communications between a corporation's in-house counsel and its employees.

The Court found that following documents were not covered by the attorney-client privilege: (1) an email that is copied to a law firm; (2) emails to in-house counsel to schedule a meeting or telephone call; (3) statements between non-lawyers to other non-lawyers reflecting an opinion such as “I don't believe the loan can be called based on what we know today” because these statements were not legal advice and were not a request for legal advice from an attorney; (4) emails relating to charge off of a loan because this was purely a business function; (5) emails within a bank department (not to or from legal counsel) as to who might be responsible for the deficiencies in loan documentation; and (6) a bank employee’s statement that legal counsel had received a response from another lender. The Court found that the statement coming through bank’s legal counsel office did not protect the statement with attorney client privilege.

In Texas, a party seeking records from a financial institution must comply with Section 59.006(b) of the Texas Finance Code which provides that the financial institution shall produce a record in response to a request only if it is served with the record request not later than the 24th day before compliance is required and pays the financial institutions reasonable costs of complying with the request. A bank receiving a request for documents that pertain to borrowers not related to litigation should protect the confidential information by removing information or references to information in the document prior to producing to opposing counsel.