Disclosing privileged communications to third parties normally waives that fragile protection. But even without disclosure, clients relying on privileged communications or placing such communications "at issue" can also waive their privilege protection – sometimes in unpredictable situations.
In Jensen v. Charon Solutions, Inc., No. B276050, 2017 Cal. App. Unpub. LEXIS 8683 (Cal. Ct. App. Dec. 20, 2017), a successful malicious prosecution plaintiff recovered $400,000 in attorney's fees. The defendant appealed, claiming that the trial court erroneously allowed the plaintiff's lawyer to testify about the fees without producing his bills (except for the dates and amounts). Acknowledging that "descriptions of work redacted from the bills may well have been covered by the attorney-client privilege," the appellate court nevertheless reversed the fee award – holding that plaintiff had impliedly waived any privilege protection by seeking a fee award as damages. Id. at *28. As the court put it, "[t]he near-complete redaction was also fundamentally unfair because it precluded [defendants] from conducting any meaningful cross-examination of [plaintiff's] attorney." Id. at *29. The court remanded for a new hearing, "at which the privilege attaching to the attorney's bills has been waived." Id. at *32.
Courts take varying approaches to this issue. Among other things, some courts (1) allow lay or expert testimony alone to support litigants' fee claims; (2) allow limited redaction of specific privileged billing entries; (3) allow litigants to redact portions of bills, but then forego any fees for that work. In the most frighteningly extreme approach, one court held that a litigant seeking to make the adversary pay for the litigant's legal work must not only disclose the bills – but must also disclose the work itself. Next week's Privilege Point will address another type of even more worrisome implied waiver.
Last week's Privilege Point discussed the implied privilege waiver sometimes triggered by a litigant's attempt to recover attorney's fees. An even more counter-intuitive implied waiver involves what courts frequently call an "at issue" waiver.
In Outpost Solar, LLC v. Henry, Henry & Underwood, P.C., No. M2016-00297-COA-R9-CV, 2017 Tenn. App. LEXIS 841 (Tenn. Ct. App. Dec. 29, 2017), two companies sued their former lawyer for malpractice. The defendant sought to dismiss one of the plaintiff's claims, noting that it was filed after Tennessee's one year legal malpractice statute of limitations had run. The plaintiff responded to the statute of limitations defense by arguing that "it discovered the [malpractice] cause of action within the limitations period." Id. at *2-3. Defendant "then sought through discovery to have the former client produce communications from the client's new counsel." Id. at *1. The plaintiff claimed privilege protection – but the trial court found a waiver. The appellate court upheld the lower court's conclusion "that Plaintiffs put their privileged information at issue by pleading the discovery rule" – because "by pleading ignorance of this cause of action against Defendants, Plaintiffs have made 'what Plaintiffs knew and when Plaintiffs knew it' the dispositive issue of this case." Id. at *21-22.
Not all courts would take this draconian approach, but it makes some sense. And it would be easy for lawyers to overlook the privilege waiver risk of asserting ignorance in this setting – because the assertion does not disclose, explicitly rely on, or even refer to, any privileged communications. This is why "at issue waivers" represent the most frightening form of implied waiver.