The Attorney-Client Privilege When Non-Party Experts Are Part of the Communications

It is not unusual for business people and/or in-house counsel to consult with accountants or other non-party experts when contemplating a potential business transaction. As the defendants in The C Company, Inc. v. Hackel recently learned, however, trying to protect such communications from disclosure based on the attorney-client privilege can be difficult, if not impossible.

In The C Company, attorney Todd Goldberg represented Michael Hackel and Dining-In, Inc. in connection with a 2008 transaction with The C Company and Nicholas Cercone. During negotiations, an employee of The C Company emailed a draft agreement to the company’s outside accountant, and asked him to evaluate the tax implications of the contemplated transaction. The accountant provided that advice, after which Attorney Goldberg and the accountant exchanged their own emails so that Attorney Goldberg could better understand the accountant’s viewpoint. After litigation related to the transaction was filed by The C Company and Cercone, they sought to discover all of the foregoing communications, and the defendants took the position that such communications were protected by the attorney-client privilege. In analyzing the matter, the Superior Court Judge began by stating that:

Massachusetts recognized the so-called “derivative” attorney-client privilege. Under this doctrine, the attorney-client privilege can shield communications of a third party, including an accountant, who is employed to facilitate communications between the attorney and client and thereby assist the attorney in rendering legal advice to the client. The privilege does not apply unless the communication with the accountant is made for the purpose of the client obtaining legal advice from the lawyer. If what is sought is not legal advice but only accounting service[s] … or if the advice sought is the accountant’s rather than the lawyer’s, no privilege exists.

While the Judge specifically noted that the accountant’s tax advice might have helped Attorney Goldberg re-draft the transaction document – and that the accountant’s advice was, in part, legal – those facts were not enough to cloak the communications in the attorney-client privilege. Rather, and relying on a decision by the Supreme Judicial Court of Massachusetts, the Judge confirmed that “the attorney-client privilege does not apply where [an] accountant provides additional legal advice about complying with the tax code even where doing so would assist the attorney in advising the client.”

Had Attorney Goldberg consulted with a tax attorney, instead of an accountant, the result in this case might have been different. I say “might” because even communications with a tax attorney only would be privileged if they were for the purpose of giving or receiving legal advice (as opposed to non-legal tax/financial advice). Further, if you are contemplating having attorney-client communications with a non-lawyer/client, remember that they only will be privileged if the non-lawyer/client’s involvement is necessary for the provision of legal advice. If you cannot make that claim, the communications cannot be protected by the attorney-client privilege.





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