Wednesday, June 15, 2016

Protecting the Privilege In House

By Bill Siegel

The attorney-client privilege is the oldest of privileges protecting confidential communications between an attorney and her client and has been codified under the rules of evidence utilized in every state and federal court.  The purpose of the privilege is to ensure the attorney and client can candidly communicate with each other.  While the privilege is the prerogative of the client, as a practical matter, the “ownership” of the privilege may become important when a difference of opinion arises as to whether to assert or waive the privilege between two people who have the authority to assert it.

Thus, when a company has either in house or outside counsel, the first question to address is who is the client.  This deceptively easy question is, of course, the company, manifested through the company’s representative.  But does this include officers and directors?  Does it include affiliates or subsidiaries?  The difficult question becomes which individuals within the organization can speak for it so that the privilege is preserved.  Federal courts typically utilize a “subject matter test” which recognizes that facts necessary for securing legal advice are not necessarily known only by a limited control group within the company.  Nevertheless, once it is determined who may speak for and on behalf of the company, it needs to be communicated to all affected parties, including employees, so that they, too, know whether the privilege extends to them or  whether they need to retain separate counsel.  In this way, communications between counsel and the client may remain privileged.

But communication takes many forms.  Written communication may be in the form of emails or other electronic means.  Thus, when a dispute arises, it is important that emails state the proper purpose so that they reflect that legal advice is being requested.  And to avoid any confusion, the communication should only be between the sender and its legal counsel.  If other business people are included or copied, an issue may arise as to whether the communication is privileged especially if business issues are raised.  So, to be clear, business issues should be contained in separate emails.  

When sending emails, it is suggested that the sender specifically designate at the top of the email or within the subject matter reference that the communication is confidential and privileged.  In addition, it is important to ensure the privilege is recognized if it is anticipated that litigation may arise in jurisdictions other than the United States.  For example, the privilege is not necessarily recognized in the European Union.

Establishing policies can help employees recognize situations where the privilege may apply and the importance of preserving the privilege.  Employees may need to be instructed that communications pertaining to internal investigations are undertaken for the purpose of obtaining legal advice.  In the event of such an investigation, employees should also be advised that legal counsel will conduct or, at least direct, the investigation for the purpose of providing legal advice to the company.  Finally, just as important is the need for employees to be aware and fully understand the company’s document retention policies in order to protect documents deemed to be privileged.

By being proactive in the beginning, companies can avoid the dissemination of potentially privileged communications when confronted with legal issues or disputes.  

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