Header graphic for print
The In-House Advisor Published by Shepard Davidson & Renee Inomata

In-House Counsel and the Attorney-Client Privilege

Posted in Attorney-Client Privilege, Privacy & Data Security

Because the role of most in-house counsel goes well beyond that of providing legal advice, whether communications with in-house counsel are privileged is a much more nuanced issue than it is with respect to communications with outside counsel.

General Principles Applicable to all Claims of the Privilege

1.  Not all communications with attorneys are privileged; only communications for the purpose of obtaining legal advice are privileged.  Thus, even conversations between a CEO and his or her General Counsel about the most sensitive and confidential aspects of their business are subject to disclosure unless they are for the purpose of obtaining legal advice.

2.  Facts are never privileged; only the communication to/from an attorney can be privileged.  Thus, if a business person tells in-house counsel, “I told the customer that the product would be ready on Friday when I knew it would not be ready until Monday,” the business person can be forced to disclose what he said to the customer and what his state of mind was when he made that statement.  The privilege only would allow the business person to refuse to answer the question: “What did you tell your attorney about your communication with the customer?”

3.  The attorney-client privilege will be destroyed by the presence of a third person who is not “necessary” for the conveyance of the legal advice.  In this context, a person is only “necessary” if he or she is “nearly indispensable or serve[s] some specialized purpose in facilitating the attorney-client communications,”  Cavallaro v. U.S., 284 F.3d 236, 249 (1st Cir. 2002).  Thus, while a company may want its accountant present when in-house counsel is debriefing the company’s Executive Team on a litigation matter, the presence of that accountant could render the entire meeting discoverable.

Issues for In-House Counsel

Because the role of in-house counsel usually extends beyond (and often far beyond) merely providing legal advice, determining whether the attorney-client privilege will protect a past or future communication is even more murky.  As an initial matter, until 1981, company communications could be privileged only if the business person having the communication was a member of the company’s “control group,” i.e., those who were responsible for directing company action based on legal advice.  In the landmark Supreme Court case of Upjohn Co. v. United States, 449 US 383 (1981), the control group test was abandoned in favor of a fact-specific analysis focusing on whether the communication was for the giving of information to the attorney to enable him or her to provide legal advice.  As such, and as other more recent cases have held, communications can be privileged when they are between counsel and employees or even former employees.

In light of the foregoing, one strategy that many companies employ is to include in-house counsel in as many conversations and copy them on as many emails as possible so that there at least is an argument that a communication is privileged.  While this might sound like an obvious choice to make, there can be serious downsides to engaging in such a widespread practice.  For instance, if a meeting is not for the purpose of seeking legal advice, in-house counsel’s presence will create another witness who can verify and/or contradict the testimony of others as to what took place.  Likewise, a business person’s email to in-house counsel reciting a verbal communication with a customer does nothing more than create a non-privileged paper-trail as to what was said in that conversation.

In light of the foregoing, in-house counsel should constantly assess whether their involvement in a matter is as a business person, attorney or both.  Effectively doing so will help prevent the inadvertent disclosure of potentially privileged information.