The interpretation and application of the attorney-client privilege and the work-product protection are some of the most difficult—and contested—areas of any lawsuit. But a clear understanding of the doctrines, combined with a few preventative measures, can both preserve the right to invoke the doctrines and possibly save significant litigation costs.
- Who is the Client?
When dealing with corporate entities, the most important privilege issue is often determining exactly who is the client. In most cases, the entity is the client—not the entity’s owners, officers, or employees. Thus, counsel must use care when discussing sensitive issues with the client’s representatives. Two common situations present challenging privilege issues in this context. The first involves gathering information from a large corporate client, and the second involves representation of small, closely-held entities.
- The Large Corporate Client – Where Do I Get the Information?
Since not all communications with a corporate client’s employees fall within the attorney-client privilege, counsel must use care when gathering information from the client’s employees. In general, the attorney-client privilege will extend to communications with lower-level employees if the information sought is (1) available to the employee in the usual scope of his employment and (2) not readily available from a higher-level employee. Thus, counsel should strive to limit his contacts to the highest-level employees from whom he can extract the necessary information.
- Closely-Held Entities – Beware of Conflicts Among Equity Holders.
Small, closely-held entities present a different challenge. In dealing with small entities, attorneys often speak directly with one or more equity holders. Counsel must remember that he represents the entity—not the individual(s)—and that under the laws of many states, each owner of a closely-held entity has a right to the communications between the entity’s attorney and other equity holders. Counsel should be particularly cautious when conversations with an equity holder venture into areas that may have a negative impact on another owner. And in some jurisdictions, an attorney who represents a partnership also represents each individual partner. Such situations may give rise to serious conflict-of-interest issues if the entity takes actions contrary to the interest of any of the partners.
- The Work-Product Protection – Did We Anticipate Litigation?
A common misperception about the work-product protection is that it covers any document an attorney prepares. This is not the case. Instead, to fall within the work-product protection a party or its representative, including its counsel, must have prepared the item in question “in anticipation of litigation or for trial.” FED. R. CIV. P. 26(b)(3)(A).
Federal appellate courts have interpreted the phrase “anticipation of litigation” differently. For example, the Fifth Circuit has held that a document falls within the work-product protection if the primary motivating purpose behind creating the document was to aid in litigation. The test in the Second Circuit, on the other hand, is whether the document in question was prepared or obtained because of the prospect of litigation. And the Ninth Circuit applies perhaps the most complicated test, by taking into account the facts surrounding the creation of the document and asking whether the document’s litigation purpose so permeates any non-litigation purpose so that the two purposes cannot be discretely separated from the factual nexus as a whole.
Thus, the applicability of the work-product protection depends on the jurisdiction of the dispute. And the work-product protection is not absolute; even if the protection applies, the opposing party may still obtain the document if it can show that it has a substantial need for the material and that it cannot, without undue hardship, obtain the material by other means.
- Waiver – It’s In the Client’s Hands
The client holds the attorney-client privilege. As a result, the client can involuntarily waive the privilege by acting in a manner inconsistent with the privilege. For this reason, it is a good idea to advise clients with less litigation experience on the privilege and the consequences of waiver.
One common scenario: the client, eager to persuade the opposing party that his position is the real winner, forwards an email from counsel to the other side to demonstrate the strength of his position. The result: waiver of the privilege with respect to at least the email, and possibly its entire subject matter and all documents discussing such subject matter. Another scenario: the client’s in-house counsel communicates with in-house counsel for a third party regarding pending litigation, thinking that since they are both attorneys, the communication is privileged. The result: absent a common litigation interest, waiver occurs with respect to the communication and possibly its entire subject matter. Clients must understand these risks and take care to avoid undesired waiver.
Privilege logs present another pitfall regarding waiver of the attorney-client privilege or work-product protection. While over-disclosure is not desired, it is important to remember that the party that withholds otherwise discoverable material bears the burden of establishing the basis for the withholding. Accordingly, a privilege log must make an express claim of the reason for the withholding and describe the item withheld in sufficient detail to allow other parties to assess the claim. Failure to put forth an adequate privilege log can, in and of itself, result in waiver. Thus, counsel must convince the reluctant client that adequate disclosure in a privilege log is essential to preserve the attorney-client privilege or the work-product protection.
- Email – A Common Cause of Self-Inflicted Wounds
Although email has increased the efficiency of legal practice and enhanced client communications, it is a constant source of headaches with respect to the attorney-client privilege. The tips below may help the unwary client—or attorney—avoid an inadvertent waiver of the privilege.
- Use Labels in the re: Line – Simple labels like “Attorney-Client Privileged Information,” “CONFIDENTIAL,” or “DO NOT FORWARD” can remind the recipient of the sensitive nature of the email. Also, these labels may be useful in a future dispute over whether the sender and recipient intended the information to be confidential or privileged.
- Consider a Memo or Phone Call – Highly sensitive information is often best communicated in a memo or a phone call. This approach greatly decreases the chance that the information will find its way into the wrong hands, and many clients often appreciate a more personal form communication regarding highly sensitive issues.
- Use Auto-Signatures – Automatic email signatures are helpful for at least two reasons. First, it clearly marks the email as a communication from an attorney. Second, the signature provides consistent search terms that can be invaluable in sorting large volumes of electronic documents during the gathering, review, and production processes of litigation discovery.
One final point is that it is the contents of the communication between attorney and client that is protected by attorney-client privilege rather than the underlying facts, which facts may be discoverable by other means and are not protected by the privilege.