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How can a client feel secure from the potential risk of having sensitive information fall into the wrong hands? In an extremely complex and competitive business climate saturated by consultants, technical advisors and outside experts, the sophisticated business owner might pause to consider one of the fundamental advantages of retaining legal counsel. By its very nature, the attorney-client relationship affords a distinct, invaluable right to have communications protected from compelled disclosure to any third party, including business associates and competitors, government agencies and even criminal justice authorities.
ATTORNEY-CLIENT PRIVILEGE: DEFINITION
The attorney-client privilege is the oldest privilege recognized by Anglo-American jurisprudence. In fact, the principles of the testimonial privilege may be traced all the way back to the Roman Republic, and its use was firmly established in English law as early as the reign of Elizabeth I in the 16th century. Grounded in the concept of honor, the privilege worked to bar any testimony by the attorney against the client.1
As the privilege has evolved, countless policy justifications have played a role in its development. At its most basic, the privilege ensures “that one who seeks advice or aid from a lawyer should be completely free of any fear that his secrets will be uncovered.”2 Thus, the underlying principle of the privilege is to provide for “sound legal advice [and] advocacy.”3 With the security of the privilege, the client may speak frankly and openly to legal counsel, disclosing all relevant information to the attorney and creating a “zone of privacy.”4 In other words, shielded by the privilege, the client may be more willing to communicate to counsel things that might otherwise be suppressed. In theory, such candor and honesty will assist the attorney in providing more accurate, well-reasoned professional advice, and the client can be secure in the knowledge that his statements to his lawyer will not be taken as an adverse admission or used against his interest.5 Indeed, armed with full knowledge, counselors at law are better equipped to “satisfy all of their professional responsibilities, uphold their duties of good faith and loyalty to the client, and [contribute] to the efficient administration of justice.”6
For all of its policy considerations and justifications, the attorney-client privilege has a very real practical consequence: the attorney may neither be compelled to nor may he or she voluntarily disclose matters conveyed in confidence to him or her by the client for the purpose of seeking legal counsel. Likewise, the client may not be compelled to testify regarding matters communicated to the lawyer for the purpose of seeking legal counsel.7 So, what is the privilege and when does it apply?
Although there is no single authority on the attorney-client privilege, it has been defined as follows: “(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his [or her] capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his [or her] instance permanently protected (7) from disclosure by [the client] or by the legal adviser, (8) except the protection be waived.”8
One federal judge opined that “[t]he privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.”9
No matter how the attorney-client privilege is articulated, there are four basic elements necessary to establish its existence: (1) a communication; (2) made between privileged persons; (3) in confidence; (4) for the purpose of seeking, obtaining or providing legal assistance to the client.10
WHAT CONSTITUTES AN ATTORNEY-CLIENT RELATIONSHIP?
We begin our analysis of the privilege with the obvious: before the privilege exists, there must be an attorney-client relationship. As elementary as this concept seems, many clients assume the relationship exists and mistakenly rely upon the protection of the privilege, but the privilege does not exist until the relationship is firmly established. Generally speaking, the attorney-client privilege does not take hold until the parties have agreed on the representation of the client.
In the majority of cases, the determination that the attorney-client relationship exists is not a laborious undertaking, for more often than not, the attorney has expressly acknowledged representation of the client. Such an express acknowledgment may be demonstrated by an engagement letter, a fee contract, or even an oral agreement as to the scope of the representation. An attorney-client relationship may also be expressly acknowledged by the “appearance” of the attorney on behalf of the client, including filing pleadings in court for the client, drafting documents on behalf of the client, or appearing in court as the representative of a litigant.11
Unfortunately, it is not always so clear when an attorney-client relationship exists. Suppose Sally Smith contacted David Jones, an attorney, by telephone. During the course of the conversation, Smith explained to Jones that she is involved in a dispute with the Internal Revenue Service concerning a tax savings arrangement devised for certain business objectives. She discloses important facts and highly sensitive information during the conversation, then asks Jones for his legal opinion. Is the content of this conversation privileged? It depends.
An express contract is not necessary to form an attorney-client relationship; the relationship may be implied from the conduct of the parties. However, the relationship cannot exist unilaterally in the mind of the potential client absent a “reasonable belief” that the attorney-client relationship exists. The implied relationship may be evidenced by several factors, including, but not limited to, the circumstances of the conversation, the payment of fees to an attorney, the degree of sophistication of the would-be client, the request for and receipt of legal advice, and the history of legal representation between the alleged client and the practitioner. While this list of factors is illustrative, none of these factors, standing alone, will affirmatively establish the existence of an attorney-client relationship.12
In our example above, without more, a confidential relationship likely does not exist unless there is some history of former representation. Of course, if the conversation continued, and Jones proceeded to dispense legal advice, then Smith might have a reasonable belief that the relationship exists. This reasonable belief would be strengthened by evidence that Smith and Jones discussed payment, potential courses of action, and other details regarding the future handling of the matter.
The waters become more murky when the potential client is a business entity. In the corporate context, the attorney-client privilege exists between outside counsel and the corporation. Necessarily, however, the invocation of this right by a corporation is more complex than when an individual is involved, as a corporation is an artificial “person” created by law and is only able to act through a representative, including officers, directors and employees.
The courts have faced the daunting task of determining when the attorney-client privilege applies when a corporation is the client. For years, courts employed one of two “tests” to make this determination: the subject matter test13 and the control group test.14 The current trend, however, focuses on whether the matters discussed are encompassed by the corporate duties and responsibilities of the employee.
Take, for example, our hypothetical from before. Suppose that Sally Smith called not on her own behalf, but on behalf of her corporation, ABC Company (ABC). Smith is the president or chief financial officer of ABC, and discusses with Jones, the attorney, the tax exposure or potential liability of ABC. Because Smith is the president of the corporation, the privilege clearly extends to these communications. If, however, the call was made by Jane Edwards, the accounting manager, the answer becomes less clear. Based upon the current trend of the courts, Edwards’ conversations with the attorney are privileged so long as the issues she discusses with the attorney are directly related to her responsibilities within the company.
What is the result, however, when an employee such as Smith seeks advice in her individual capacity, as opposed to the corporate one? The courts will extend the attorney-client privilege to corporate officers, even as an individual, as long as there is clear evidence that the corporate officer communicated with counsel in the officer’s individual capacity concerning personal matters such as potential individual liability. Not surprisingly, the showing required of the corporate employee in this regard is a more stringent one. Moreover, even if the requisite showing is made, certain information might create a conflict of interest for the corporate attorney. In that case, the corporate attorney must end the conversation and advise the corporate employee to seek separate counsel.15
One final consideration arises in the context of in-house counsel. A communication relating to corporate legal matters between a corporation’s in-house counsel and the corporation’s outside counsel is normally subject to the privilege.16 However, when the communication is between a representative of the corporation and the in-house counsel, the distinction is less clear. Because in-house counsel often wears several hats, courts have struggled with the application of the privilege.17 The privilege would extend to any legal advice rendered, but it does not protect communications that are strictly business-related.18 Problems arise when the communication contains both legal and business advice, and the courts take different approaches in determining whether or not to apply the privilege. At the very least, it appears that the court will first attempt to determine what role in-house counsel plays within the company — that of a lawyer or that of a corporate executive. From there, many courts will examine the content of the communication, and this examination will yield varying results.19 As such, the in-house lawyer should be careful to separate his legal advice from his business opinions.
Assuming that the attorney-client relationship is well-established, is every communication protected? That also depends. The basic attorney-client privilege protects client communications with the attorney. It also extends to responsive communications from the lawyer to the client. However, the communication need not be so overt as an oral or written action. On the contrary, the slightest action or inaction, such as an affirmative nod or complete silence, may constitute a communication. 20
For example, suppose that Smith is speaking with Jones, her attorney, about a matter involving a recent sale of stock that is under investigation by the SEC. Jones asks Smith whether she received any confidential, nonpublic information prior to the sale of her stock, and Smith silently nods her head in the affirmative. Although no words were exchanged, this communication between Smith and her attorney is clearly protected by the privilege.
Nevertheless, a client cannot protect certain facts from disclosure simply by communicating them to her lawyer. If information may be gathered from another source besides the privileged communication, then the underlying information itself is not privileged.21 Stated differently, the attorney-client privilege “protects communications made to obtain legal advice; it does not protect the information communicated.”22 Clients and attorneys alike must bear this important fact in mind: merely conveying something to an attorney will not prevent the underlying facts from compelled disclosure, if they can be discovered from a non-privileged source.23
WHEN THE ATTORNEY-CLIENT PRIVILEGE MAY BE WAIVED
Since the client, and not the attorney, holds the privilege, the client holds the ultimate authority to assert it or waive it.24 When the client is a corporation, the privilege is commonly viewed as a matter of corporate control. In other words, corporate management or the “control group,” including the officers and directors, decide whether to assert or waive the privilege.25 If and when there is a change in the control of the corporation, ownership of the privilege is a spoil that passes to the successors; it does not remain with the former corporate management.26
The issue of waiver arises most commonly when a communication is witnessed by a third party or where the client does not intend the communication to be confidential. The mere presence of a third party will likely prevent the creation of the attorney-client privilege.
Continuing with our hypothetical characters, suppose that Smith and her stockbroker meet with Jones to discuss the suspect sale of stock. Jones represents Smith in connection with the sale, but not the stockbroker. During the course of the meeting, Smith discloses sensitive information. Under this scenario, the privilege is likely waived and the information conveyed does not enjoy protection from disclosure.
What if the communication is disclosed to a third party after a privileged exchange between attorney and client? Has the privilege been waived? Possibly. Unlike a client’s constitutional rights, which can only be intentionally and knowingly waived, the attorney-client privilege may be waived by a careless, unintentional or inadvertent disclosure.27
EXCEPTIONS TO THE ATTORNEY-CLIENT PRIVILEGE
There are some public policy exceptions to the application of the attorney-client privilege. Some of the most common exceptions to the privilege include:
- Death of a Client.The privilege may be breached upon the death of a testator-client if litigation ensues between the decedent’s heirs, legatees or other parties claiming under the deceased client.
- Fiduciary Duty.A corporation’s right to assert the attorney-client privilege is not absolute. An exception to the privilege has been carved out when the corporation’s shareholders wish to pierce the corporation’s attorney-client privilege.
- Crime or Fraud Exception.If a client seeks advice from an attorney to assist with the furtherance of a crime or fraud or the post-commission concealment of the crime or fraud, then the communication is not privileged. If, however, the client has completed a crime or fraud and then seeks the advice of legal counsel, such communications are privileged unless the client considers covering up the crime or fraud.
- Common Interest Exception.If two parties are represented by the same attorney in a single legal matter, neither client may assert the attorney-client privilege against the other in subsequent litigation if the subsequent litigation pertained to the subject matter of the previous joint representation.
In addition to these more traditional policy exceptions to the application of the privilege, recent events remind us that the privilege is not at all absolute. In the wake of the events of September 11, 2001, for example, Congress enacted, in swift fashion, the USA Patriot Act, allowing for, among other things, increased authority to conduct searches and monitor activity without judicial intervention.28 The USA Patriot Act led to a number of new rules and executive orders from the Bush Administration, including the widely criticized Bureau of Prisons Rule.29 This rule “authorizes the Attorney General to order the [Bureau of Prisons] Director to monitor or review communications between inmates and lawyers for the purpose of deterring future acts that could result in death or serious bodily injury to persons or property.”30 All that is required before such monitoring can begin is a “reasonable suspicion . . . that a particular inmate may use attorney-client communications to facilitate acts of terrorism.”31 Although the long-term effects of this new rule cannot be known, one is reminded that the privilege itself is not immune from the political climate in which we live.
MATTERS NOT PROTECTED BY THE ATTORNEY-CLIENT PRIVILEGE
Not all components of the attorney-client relationship are protected by or encompassed within the attorney-client privilege. For example, the existence of the attorney-client relationship or the length of the relationship are not privileged bits of information.32 In fact, the general nature of the services performed by the lawyer, including the terms and conditions of the retention, are generally discoverable.
The factual circumstances surrounding the communications between an attorney and a client, such as the date of the communication and the identity of persons copied on correspondence, are likewise not privileged. Participants in a meeting with an attorney, the length of a consultation and the documents evidencing same (e.g., calendars, appointment books) are not necessarily protected from compelled disclosure.33 As for the fee arrangement between an attorney and a client, these documents are typically discoverable, except where such discovery would produce confidential communications with the client.34
THE PRIVILEGE: CLOSING THOUGHTS
While the attorney-client privilege is firmly established as a legal doctrine that protects confidential communications between lawyers and their clients, its application is not absolute. The circumstances of the communication, its content and even subsequent actions relating to the privileged communication must be carefully considered to preserve the integrity of the privilege.
- Edna Selan Epstein, THE ATTORNEY-CLIENT PRIVILEGE AND THE WORK-PRODUCT DOCTRINE 2 (4th ed. 2001). ↩
- United States v. Grand Jury Investigation, 401 F. Supp. 361, 369 (W.D. Pa. 1975). ↩
- Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). ↩
- Cathryn M. Sadler,The Application of the Attorney-Client Privilege to Communications Between Lawyers Within the Same Firm: Evaluating United States v. Rowe, 30 ARIZ. ST. L. J. 859, 859 (1998). ↩
- Paul R. Rice,Attorney-Client Privilege: Continuing Confusion About Attorney Communications, Drafts, Pre-Existing Documents, and the Source of the Facts Communicated, 48 AM. U. L. REV. 967, 969-70 (1999). ↩
- Bufkin Alyse King, Preserving the Attorney-Client Privilege in the Corporate Environment, 53 ALA. L. REV. 621, 622 (2002) (citing Upjohn, 449 U.S. at 391 (quoting Model Code of Prof’l Responsibility EC 4-1 (1980))). ↩
- Selan Epstein,supra note 1, at 3. ↩
- 8 JOHN HENRY WIGMORE, EVIDENCE IN TRIALS AT COMMON LAW § 2292, at 554 (McNaughton 1961 & Supp. 1991). ↩
- United States v. United Shoe Mach. Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950 ↩
- RESTATEMENT OF THE LAW GOVERNING LAWYERS § 118 (Tentative Draft No. 1, 1988). ↩
- For example, the Georgia Code specifically provides that “prima facie, attorneys shall be held authorized to represent properly any case in which they appear.” O.C.G.A. §15-19-7; see alsoNewell v. Brown, 187 Ga. App. 9, 369 S.E.2d 499, 501 (1988) (noting in dicta that “if an attorney signs an acknowledgement of service [on] behalf of an alleged client, the attorney is then estopped to deny his lack of authority to act”). ↩
- Randolph Evans, PRACTICAL GUIDE TO LEGAL MALPRACTICE PREVENTION 45-49 (Institute of Continuing Legal Education in Georgia, 2002). ↩
- The subject matter of the communication was the primary focus of the “subject matter” test. Under this test, courts had to determine (a) whether the purpose of the communication at issue involved seeking and rendering legal advice to the corporation, (b) whether the employee’s superior had insisted that the communication be made by the employee, and (c) whether the subject matter of the communication to the attorney was within the scope of the duties of the employee in question. Thus, under this test, if the subject matter of the communication to the attorney involved the duties of the employee to the corporation, the attorney-client privilege would cover said communication, irrespective of the corporate rank of the employee that made the communication. SeeHarper & Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir. 1970),aff’d by an equally divided court, 400 U.S. 348 (1971). ↩
- The “control group” was defined by courts as including those employees who were in a position of control such that they could play a substantial role in determining what action the corporation would take upon receiving the legal advice. See,g.,City of Philadelphia v. Westinghouse Elec. Corp., 210 F. Supp. 483, 485-86 (E.D. Pa. 1962). ↩
- Selan Epstein,supranote 1, at 110-13. ↩
- Mary Thompson & Bridget Rienstra,In-House Counsel . . . and the Preservation of Privilege, 35 HOUS. LAW. 21, 22 (1998). ↩
- SeegenerallyThompson & Rienstra, supra note 16; see also Amber Stevens,An Analysis of the Troubling Issues Surrounding In-House Counsel and the Attorney-Client Privilege, 23 HAMLINE L. REV. 289 (1999). ↩
- SeegenerallyStevens, supra note 17, at 303-09. ↩
- Id. ↩
- See,g.,United States v. Andrus, 775 F.2d 825, 852 (7th Cir. 1895) (holding that in a criminal case, silence may constitute an admission of guilt). ↩
- SeeUpjohn, 449 U.S. at 395-96 (noting that the attorney-client privilege protects only the disclosure of communications from client to attorney, not the disclosure of the underlying facts by those persons who communicated with the attorney). ↩
- Rice,supranote 5, at 979 (citations omitted). ↩
- Id. ↩
- Id. ↩
- See,g.,Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 349 & n.5 (1985) (stating that “the power to waive the corporate attorney-client privilege rests with the corporation’s management and is normally exercised by its officers and directors.”) ↩
- See,g.,O’Leary v. Purcell Co., Inc., 108 F.R.D. 641, 644 (M.D.N.C. 1985). ↩
- Id. at 263-65. ↩
- USA Patriot Act of 2001, Pub. L. No. 107-56, 115 Stat. 272. ↩
- SeegenerallyAvidan Y. Cover, A Rule Unfit for All Seasons: Monitoring Attorney-Client Communications Violates Privilege and the Sixth Amendment, 87 CORNELL L. REV.1233 (July 2002). ↩
- Id. at 1235. ↩
- Id. ↩
- See,g.,Savoy v. Richard A. Carrier Trucking, Inc., 178 F.R.D. 346, 350 (D. Mass. 1998). ↩
- Selan Epstein,supranote 1, at 66-67 (citations omitted.) ↩
- See,g., United States v. Keystone Sanitation Co., 885 F. Supp 672, 675 (M.D. Pa. 1994). ↩