The attorney-client privilege and the power of the client to ask pointed and explicit questions for the purpose of receiving legal advice are one of the most important assets of the in-house lawyer. However, if not used correctly, this method will transform into a ballistic missile aimed right at your company. A somewhat misunderstood field, particularly in the in-house world, is the applicability and proper use of the attorney-customer privilege. In order to prevent typical errors and make the best legal argument for claiming the right, there are a variety of items that counsel and the client need to remember. Because certain courts look with a skeptical eye at in-house counsel’s allegations of privilege, it is now more important than ever to get this right.
The Right of the Attorney-Client Privilege protects third parties from disclosure: (a) personal communications; (b) between an attorney and a client; (c) made for the purpose of receiving or offering legal advice. If all three of these conditions are satisfied, the correspondence is privileged.
The object of the privilege is to encourage clients to freely address problems in order to receive legal advice from both in-house and outside counsel without fear of exposure to third parties of such communications. In a special case, the attorney-client privilege parameters depend on the statute of the state where the contact took place. It is also important for in-house attorneys to have a clear knowledge of how the right works in the state (or country) where their headquarters are based and/or the state (or country) where, if not the same as the headquarters, the attorney practices.
If you or the corporation get the “wrong” privilege, there can be various long-term repercussions for your firm. Second, if people falsely feel that records are privileged, they may be sloppy with how they write information down, believing that in the organization the record would never be noticed. Also, once you revoke one document’s right, there is a strong chance that you would have waived the privilege in reference to other documents addressing the same subject matter. Third, excessive use of the “privileged” mark can lead judges to conclude that the organization is seeking to withhold records and find that those documents should be handed over to the other side, including those genuinely privileged. Any of these changes will seriously jeopardize the chances of succeeding in arbitration and may lead to the payment of penalties to the other party, as well as the publication of highly compromising records that the organization claimed were privileged.
Many attorneys (in-house and outside counsel) erroneously assume that something they write for some purpose is protected by the attorney-client privilege. They’re mistaken. It is not privileged, because the correspondence passes the test of (a)-(c). That said, it is up to you to guarantee that your correspondence is privileged, or that you write the paper with the expectation, if at all debatable, that it will be used by third parties, including any opponents of the business.
Legal advice is wider than all correspondence relating to lawsuits, i.e., it includes all legal advice, including transactional and regulatory advice. Business advice, though, is never privileged and the distinction between the two can seem fuzzy, especially for in-house counsel. To add to the enjoyment, in terms of what constitutes legal advice and what constitutes business advice, different judges see it differently, i.e. what one judge sees as safe legal advice, another judge may see as purely business advice and open to discovery. You need to be continually aware of the scope of the organization contact to consider whether you are or are not giving legal advice and, whether you are, take the extra step to clearly notice that you are offering legal advice in the correspondence.
It depends on who gets the communication, a crucial indicator of whether the privilege extends. When a text is exchanged by third parties that is not privileged, then the privilege is surely lost. In general, a third party is someone other than (a) the counsel of the company, (b) the company’s staff with a “need to know,” (c) some company agents and attorneys, and (d) any party with which the company has a mutual protection or shared interest arrangement. The key here is to restrict the dissemination within the business of privileged communications to those with a “need to know” since the greater the circle of users, the greater the risk that a court can rule that the privilege does not extend. It can be difficult often to decide which third parties count as the company’s proper “agents.” The right will be wasted if you do it wrong. The right can be waived, for instance, by exchanging privileged correspondence with third party contractors/consultants, public relations companies, insurance agents, and other third parties.
It is utterly important that you and the company retain private legal advice. As a professional, you need to retain “situational awareness” at all times and take special care to not be overheard and not reveal your laptop computer to prying eyes if you have to address or view confidential details in a public location. If it is not feasible, the discussion or job can actually be postponed before you can get to the private area. Likewise, you should not share privileged details with him or her as much as you value your partner or significant other.
Bottom-line: the better the less persons who receive legal advice. Privileged correspondence can only be given to anyone with a “need to know” (and you should spend time thinking this issue through before sending out any privileged communication).
A widespread misunderstanding in companies is that all sensitive material is privileged or that they should keep the documents out of the hands of third parties if they mark the correspondence as privileged. This is not right, as we have seen, and the fact that a non-disclosure agreement or some form of secrecy agreement is in effect would not privilege a record or maintain the privilege if it is leaked to a third party. Some business owners often assume that if they actually have an attorney as an email client, then the email material is privileged. It is really important that you take the time to educate your fellow lawyers and business associates on this subject. Second, it doesn’t make it privileged when naming anything privileged. It depends on whether it is for the purposes of providing or seeking legal advice that the contact is. There are no magic words that turn ordinary business contact (sensitive or not) into privileged communication if that is not the case. Also, the organization wants to realize that it is still not privileged to automatically copy a lawyer on the correspondence (or invite a lawyer to a meeting). The interaction also has to satisfy the test of demanding or giving legal advice. Another weak spot for privilege problems is email attachments. Whether the attachment on its face or its contents suggests that there is a significant danger that a judge will not treat the attachment as privileged for the purpose of receiving legal counsel and thereby isolate the “privileged” cover note/email from the “non-privileged” attachment and triggering the company’s headaches.
Sadly, the attorney-privilege can be conveniently waived. It is very likely to be waived if you reveal confidential contact to a third party. You may also waive the right unintentionally. This usually happens during the discovery process of litigation in the sense of exchanging documents, particularly where a significant number of documents is exchanged by the parties.
With regard to the method of discovery, though it is costly and painful, it is very important that in-house counsel be strongly active in all lawsuit record creation and that there is a comprehensive strategy planned to find and retrieve privileged information. In comparison, corporations see authorities such as bank regulators asking that the attorney-privilege be waived as part of the decision to conclude or terminate an investigation in respect of certain records (e.g. internal investigations).
Privilege of the Attorney Work Product. The privilege of the Attorney Work Product preserves evidence prepared by or for a client or its agent influenced by or in expectation of litigation from exposure to third parties. It should be remembered that it would not cover records written for business dealings or other legal work relating to non-litigation (which may still fall under the attorney-client privilege however). Litigation hold is a crucial paper used to assess if the Attorney Work Product right exists. In general, records prepared after the creation of a litigation holding are secured and which are otherwise inspired by or in expectation of the litigation. Documents created before a litigation hold is in effect might be covered, so if you argue litigation was anticipated, you can see the issue that happens, but you have not placed a litigation hold in place. The right often extends to papers prepared, whether prepared under the guidance or supervision of lawyers, by non-attorneys.
Privilege of “self-critical” study. In some countries, the right of self-critical analysis is an eligible privilege that allows firms to objectively assess themselves in light of an issue or event, and prevents the business from being used against it in lawsuits against the study or analysis.
Privilege of Mutual Defense/Common interest. These protections allow independent companies with similar legal interests to exchange protected correspondence between them, basically only extensions of the attorney-client privilege, as long as the communications otherwise follow the attorney-client communications test.
In order to secure the privilege, there are many measures you (and your business colleagues) should do to ensure the best possible result:
The next crucial thing you should do is to make sure the emails that fulfill the test for attorney-client communications are appropriately labelled. For purposes of legal counsel, the document/email should be called “Attorney Client Communication.”
If any email or memorandum needs legal counsel, make sure the organization places the lawyer in the “to” section vs. the “cc” line. It is impossible to argue that since it appears that the lawyer is not the principal beneficiary of the correspondence, the right extends.
Limit the internal dissemination of legal advisory and confidential messages to those who need to hear.
Keep the correspondence private and do not authorize legal opinions outside the organization to be shared.
If it is not applicable, don’t assert the right. Your messages are not all privileged. You will blow the chances of keeping genuinely privileged records secure if you or your subordinates mistakenly mark anything as’ attorney-client correspondence’ and, very honestly, a prosecutor would not trust you when there are thousands or hundreds of incorrectly classified documents on the ten true privileged documents.
Regardless of your degree of faith that the attorney-client protection applies, write wise. You should always expect that whatever you write will inevitably end up in your opponents’ hands.
Train the company on all of the above and find educational moments when you see something that jeopardizes the opportunity even when the privilege is not used appropriately.