A recent decision by the California Court of Appeal in Behunin v. Superior Court, 9 Cal. App. 5th 833 (2017), is a reminder that a party’s communications with an attorney and a third party consultant must be reasonably necessary for the attorney’s representation of the client for the attorney-client privilege to apply.
Behunin concerned a dispute over an unsuccessful Indonesian real estate deal involving Nicholas Behunin and Michael Schwab (the son of Charles Schwab, the founder of his namesake brokerage firm). As part of their business, the parties allegedly cultivated a relationship with the family of former Indonesian president Muhammad Suharto. When the investment failed, Behunin sued the Schwabs based on their alleged promises to fund the venture.
Once the lawsuit was filed, Behunin’s attorney hired a PR consultant to engage in a social media campaign against the Schwabs to generate negative publicity in order to create leverage for a settlement. This included creating a website (www.chuck-you.com) which allegedly used the same design as the Schwabs’ investment website, and linked the Schwabs to Suharto and the crimes committed by his regime. The Schwabs in turn sued Behunin and his attorney for defamation and related claims.
In discovery, Behunin and his attorney argued that their communications with the PR firm were protected by the attorney-client privilege. After the trial court ordered the production of the communications, Behunin filed a writ petition with the Court of Appeal which requested an immediate stay of the order.
The Court of Appeal denied Behunin’s petition. In a case of first impression in California, the court relied on analogous federal cases to determine that the attorney-client privilege can be waived for communications that are disclosed to PR consultants. Behunin failed to show that the communications with his attorney in which the PR firm participated were “reasonably necessary” to accomplish the purpose for which his attorney was retained, i.e., to provide legal advice to Behunin and to represent him in the lawsuit. It was immaterial that Behunin and his attorney intended for the communications with the PR firm to be privileged. Also important was the fact that the only involvement Behunin’s attorney had was to hire the PR firm and to act as a liaison between it and Behunin. While the court acknowledged that hiring a PR firm may sometimes be necessary to accomplish the purpose of an attorney’s representation and may be a legitimate litigation strategy, the court explained that it would go too far to extend the attorney-client privilege to all communications with the PR firm.
Although the Behunin court did not explicitly state when communications with a PR firm may be “reasonably necessary” for an attorney to provide legal advice and representation, comparable federal cases provide some guidance. For example, when a PR consultant is necessary to clarify or to improve comprehension of communications between an attorney and a client, or when a PR consultant is the “functional equivalent” of an employee since he or she regularly works with the party and its attorneys to prepare press releases. We encourage our clients who hire a PR firm, or any other consultant not directly connected to the litigation, to be cautious and assume that all communications with their attorney and the consultant are discoverable.