The sophisticated company owner should pause to consider one of the inherent benefits of keeping legal advice in an increasingly dynamic and challenging business environment polluted with consultants, professional advisors and outside experts. The attorney-client arrangement, by its very existence, grants every third party, including corporate partners and rivals, government officials and even criminal justice departments, a separate, precious privilege to have correspondence shielded from forced disclosure.
The attorney-client privilege has a very specific practical effect with all its policy considerations and justifications: the attorney must not be forced to nor may he or she willingly report matters communicated to him or her by the client for the purpose of receiving legal advice. Similarly, for the reason of seeking legal representation, the defendant will not be required to appear on matters communicated to the lawyer.7 Then, what is the right and when does it apply?
Although there is no single attorney-client privilege authority, it has been described as follows:
when legal advice of some sort is obtained;
by a competent legal advisor in his [or her] capacity as such;
by correspondence related to that reason;
rendered in trust;
by the client;
in his [or her] capacity is indefinitely shielded;
from disclosure by [the client] or the legal adviser;
except where confidentiality is waived.
One federal judge holds that the right extends only if:
the alleged holder of the privilege is or is attempting to become a client;
the person to whom the disclosure was made; (a) is a member of the bar of a court or its subordinate; and (b) serves as a lawyer in connection with that disclosure;
the disclosure involves the fact of which the solicitor was informed;
No matter how the right of the attorney-client is expressed, four fundamental elements are required to determine its existence:
communication between protected persons;
to pursue, receive or give legal assistance to the client.
We begin our privilege study with the obvious: there must be an attorney-client partnership before the privilege occurs. As simple as this definition is, many clients believe that the partnership exists and falsely depend on the privilege’s security, but once the relationship is fully defined, the privilege does not exist. Generally speaking, once the parties have settled on the client’s representation, the attorney-client right does not take hold.
In most cases, the decision that an attorney-client partnership exists is not a laborious process and, more often than not, the client’s representation has been specifically accepted by the attorney. A letter of engagement, a fee contract, or even an oral arrangement as to the extent of the representation may show such an express recognition. The “appearance” of the solicitor on behalf of the defendant, or filing pleadings in court for the client, writing papers on behalf of the client, or appearing in court as the agent of a litigant, can often explicitly recognize an attorney-client partnership.
To form an attorney-client partnership, an express contract is not required; the relationship can be inferred by the actions of the parties. Nevertheless, in the mind of the prospective defendant, the arrangement does not occur arbitrarily without a “reasonable belief” that the attorney-client relationship occurs. Several considerations, including, but not limited to, the circumstances of the conversation, the payment of fees to a solicitor, the degree of maturity of the potential client, the order for and receipt of legal counsel, and the experience of legal service between the alleged client and the practitioner, will explain the inferred partnership. Although this list of considerations is illustrative, the presence of an attorney-client partnership can not be defined affirmatively by any of these factors, standing alone.
The courts have faced the difficult challenge of deciding whether the right of attorney-client extends when the client is a business. However, the invoking of this right by an organization is inherently more complicated than where an entity is involved, since a company is an artificial “person” created by statute and can only operate by a delegate, including officials, directors and staff. For years, courts used one of two “tests” to make this determination: the test of the subject matter 1and the test of the control group. However, the new pattern centers on whether the issues addressed are protected by the employee’s corporate roles and obligations.
The courts will expand the right of attorney-client to corporate officers, except as an employee, as long as there is sufficient proof that the corporate officer consulted with attorneys in the individual capacity of the officer on personal issues such as alleged individual responsibility. Not unexpectedly, in this regard, the presentation expected of the corporate worker is a more rigorous one. In addition, even though the necessary demonstration is made, such details can present a conflict of interest for the corporate counsel. The corporate attorney must interrupt the conversation and instruct the corporate employee to seek separate representation in that situation.
In the sense of in-house lawyers, one more consideration emerges. A correspondence relating to corporate legal matters between the in-house attorney of a corporation and the outside counsel of the corporation is generally entitled to the privilege. However, the difference is less apparent where the communication is between a representative of the corporation and the in-house counsel. Because in-house counsel frequently holds many hats, courts have failed to enforce the protection. The privilege will extend to all legal advice provided, but it would not cover communications that are purely business-related.