Some estimates place the annual cost of the discovery phase in litigation at more than $42 billion a year. Many large companies report annual discovery costs of over $2 million. A large portion of such discovery costs are attributable to discovery disputes – for example, over whether documents or testimony should be provided to an opposing party despite the assertion of the attorney-client privilege. Many discovery disputes concerning claims of privilege can be avoided, however, by a clearer understanding of the times when it is, and more importantly, is not, appropriate to assert the privilege. Similarly, a better understanding of the attorney-client privilege will help you, and your attorney, win a discovery fight should you be forced into one.
Basics of Attorney-Client Privilege
The attorney-client privilege exists to enable a client to give complete and honest information to her attorney so the attorney can be fully advised in providing advice to the client. To invoke the privilege, one must establish (1) the existence of an attorney-client relationship; and (2) that a confidential communication was involved. Stated differently, one must establish that the communication occurred in the course of an effort to obtain legal advice or aid, on the subject of the client’s rights or liabilities, from a professional legal advisor.
What the Attorney-Client Privilege Is Not
Attorneys and clients alike often make broad, blanket claims of privilege, in an attempt to protect information they do not want disclosed, to gain an upper hand in litigation, or to simply save time and attempt to cut costs in producing documents and creating a privilege log. However, not every communication between an attorney and client is a confidential communication entitled to protection from disclosure. Rather, the attorney-client privilege is often strictly confined to its narrowest possible limits by courts, which often conclude that communications are privileged only if the statements do in fact reveal, directly or indirectly, the substance of a confidential communication by a client or the legal advice provided by the attorney.
Understanding the breadth of the privilege requires an understanding of what is not privileged. For example, Courts have concluded that the following are not protected by the attorney-client privilege:
- The underlying facts relevant to a dispute, even if relayed in the course of a communication with counsel;
- The subjects discussed with counsel;
- Communications made by an agent of the client to the attorney concerning the client’s business;
- Communications from attorney to the client relating the date, place, and time of a court appearance or deposition;
- Communications from attorney to the client relaying a court ruling, filing of a pleading, or discovery responses or requests;
- Communications regarding attorneys’ fees and a client’s identity; and
- Communications between an attorney and a third party at a client’s request.
Attorneys often wrongly assert the attorney-client privilege to prevent the disclosure of information and communications covered by these topics. For example, in depositions, attorneys often ask deponents what facts they discussed with their attorneys in deciding to take a particular action. In many cases, this kind of question draws an objection and instruction not to answer the question on the basis of the attorney-client privilege. It is likely, however, the privilege would not apply to a question such as this because it asks for facts, not communications.
Likewise, parties often serve what are frequently referred to as “contention interrogatories,” which ask for all the facts supporting a party’s particular claim or defense. For example, a serving party may seek all the facts and supporting basis for the responding party’s claim that a complaint is barred by waiver. In response, many attorneys object and indicate that the interrogatory seeks information protected by the attorney-client privilege when in fact it does not.
To keep discovery costs low, parties must avoid such sweeping and overbroad privilege objections. Making such objections puts the client at risk of being the subject of a discovery dispute and incurring additional fees, including potentially having to pay the attorneys’ fees of the opposing party who obtains a court order invalidating a claim of privilege. Similarly, it is important that clients understand that information in the categories addressed above is not protected from disclosure. This sets proper expectations, and avoids surprises in litigation when clients are required to produce documents or provide testimony they believed would always be protected by the privilege.
To Whom Does the Privilege Apply?
In order to determine whether or not a communication is privileged, one not only needs to analyze the content of the communication but also the parties involved in the communication. In the era of emails and text messages, privileged communications are often forwarded to colleagues, subordinates, or other individuals outside the scope of the attorney-client relationship in an organization. Such actions may waive the privilege.
The scope of the attorney-client privilege inside an organization varies somewhat from state to state, but typically if (1) the communication was made for the purposes of securing legal advice; (2) the employee making the communication did so at the direction of his corporate superior; (3) the superior made the request so the corporation could secure legal advice; (4) the subject matter of the communication is within the scope of the employee’s corporate duties; and (5) the communication is not disseminated beyond those persons who need to know its contents, the communication will be privileged and therefore protected from disclosure to opposing parties.
Issues concerning the scope of the attorney-client privilege within an organization often arise in the context of communications with corporate or in-house counsel. Communications with these attorneys must be analyzed carefully to determine if the reason for the communication was to seek legal advice or simply to keep counsel up to date on a developing matter or business issue, for example. Courts also typically require that the matters discussed with corporate counsel fall within the compass of the employees’ corporate duties. Likewise, many corporate attorneys wear more than one hat – engaging in some attorney work and some non-attorney work. Communications with individuals who have dual roles are rarely considered privileged because the prerequisites necessary to form an attorney-client relationship between an employee and corporate counsel are typically lacking.
Maintenance of the privilege within an organization is further complicated by the fact that the presence of a third party to a communication often waives the privilege. For example, the presence of an independent contractor can invalidate a claim for privilege. However, some courts have sustained privilege claims even when a third party is present or becomes a party to the communication, if that third party’s presence is necessary for the client to obtain informed legal advice. Under such circumstances, courts are increasingly likely to uphold the privilege if the party seeking to invoke it can justify the need for the third party on the communication.
Once privileged documents have been properly identified, a privilege log must be created. The cost incurred in creating a privilege log in complex litigation is often substantial. Despite the cost, it is imperative for companies to take this obligation seriously – failure to create a proper privilege log at the outset will only lead to costs multiplying as attorneys review for a second, third, fourth, or fifth time the same documents and attempt to defend their claims of privilege.
A valid privilege log must assert privilege claims on a document-by-document or conversation-by-conversation basis. The log should also contain the grounds for claiming privilege as well as the date, author, recipients, and type of document. Additionally, the log must contain a description of the communication with counsel sufficient to enable opposing counsel and the court to determine that the communication is privileged without actually revealing the confidential and privileged information. It is this last requirement that creates the largest landmine for parties.
Many courts have held that it is insufficient to describe a communication simply as “communication between attorney and client for the purposes of receiving or giving advice.” Such descriptions are provided routinely, however. This description is invalid because it tells the reader nothing about the underlying conversation. Vague descriptions invite further disputes, and therefore, increase litigation costs. Detailed descriptions indicating the subject matter discussed avoid such disputes, reduce costs, and accordingly should be encouraged.
Attorneys and clients must avoid overbroad assertions of privilege. Narrowly tailoring privilege objections to protect against the disclosure of the substance of privileged communications avoids unnecessary discovery fights, promotes cooperation and resolution of lawsuits, and most importantly, decreases the costs of litigation. Further, recognition of improper privilege claims enables attorneys to readily defeat baseless claims of privilege, which can serve to increase leverage and efficiency in litigation.
Reprinted with permission from the Fall/Winter 2016 issue of USLAW Magazine, an in-depth bi-annual publication designed to address legal and business issues facing commercial and corporate clients.