A sharply-divided Washington Supreme Court has ruled that an organization’s attorney-client privilege doesn’t apply to communications between the company’s lawyers and its former employees. Although Newman v. Highland School District No. 203 adheres to a minority viewpoint, the implications are troubling, and the bright-line test that the state supreme court established in a case of first impression will require new cautions in cases where Washington state privilege law applies.

Talks with former coaches not within privilege

In Newman, parents of a brain-injured high-school football player sued the school district, alleging negligence. In preparing for trial, the school district’s lawyers interviewed the entire coaching staff, including several former coaches. When the interviews came to light at a former coach’s deposition, the plaintiffs sought discovery of the communications between them and the lawyers for the school district.

Holding that “everything changes when employment ends,” the court’s 5-4 majority ruled that “the privilege does not broadly shield counsel’s postemployment communications with former employees.”

The court said that once the employment is over, the principal-agent relationship is severed, and the former employees are like any other third-party fact witness. “The flexible approach articulated in Upjohn,” the leading case on corporate attorney-client privilege, “presupposed attorney-client communications taking place within the corporate employment relationship,” the court wrote.

Likewise, the Restatement (Third) of the Law Governing Lawyers § 73 cmt. [e] generally limits the privilege to the duration of a principal-agent relationship, the majority said. In addition, the court held, the rule promotes predictability and the “truth-seeking mission” of the trial process, which would be frustrated if the privilege were extended to cover post-employment communications with former employees.

“At odds” with Upjohn

The dissent in Newman disagreed with the majority’s adoption of a bright-line rule that would cut off the corporate attorney-client privilege at the termination of employment, and would exclude from its scope all postemployment communications with former employees, even when they have relevant personal knowledge regarding the subject matter. “[H]ad they remained employed, such communications with counsel would have been privileged” under the reasoning in Upjohn, the author of the dissent noted.

Upjohn’s functional framework does not look at the “formalities” of the employment relationship, said the dissenters; rather, the focus is on the purpose of the communications themselves and the benefits and goals of the privilege.

Therefore, the proper test, the dissent argued, is “Did the communications with the former employee, whenever they occurred, ‘relate to the former employee’s conduct and knowledge, or communication with defendant’s counsel, during his or her employment?'”

ACC: Majority doesn’t get it

The VP and chief legal strategist of the Association of Corporate Counsel, Amar D. Sarwal, quoted in Bloomberg BNA/ABA Lawyers’ Manual on Professional Conduct, called the Newman decision “troubling,” and “a bad idea for Washington, and bad for other courts to follow.” The decision reflects a “misunderstanding” of the way an organization gains and retains knowledge, which includes the knowledge of people who have left the organization, he said.

Practical implications

Washington’s supreme court got it wrong. Fortunately, its new bright-line rule is a minority viewpoint, and the privilege jurisprudence of most jurisdictions would follow Upjohn’s flexible approach. But even if you are not litigating a case in a Washington state court, Federal Evidence Rule 501 might point to Washington law as supplying the rule of privilege. Surmounting the challenge presented by Newman might involve exploring how an attorney-client relationship with an organization’s former employees might be extended or re-created for the purpose of communicating with them under the shield of privilege.