Source: http://attorneyclientprivilege.mcguirewoods.com/chapter.aspx?ch=14
Timestamp: 2019-04-21 12:46:00+00:00

Document:
"Can Inactive Lawyers Claim Privilege Protection for their Communications?"
Some lawyers deliberately or inadvertently let their licenses lapse, but still give advice to clients and prepare related documents. What privilege implications come from such a scenario?
In John Ernst Lucken Revocable Trust v. Heritage Bancshares Group, Inc., plaintiffs withheld as privileged their communications with Bill Peterson – who had given them advice "since the late 1990s, but [who] has not held an active attorney's license since 2001" (except for a short period several years earlier). No. 16-CV-4005-MWB, 2017 U.S. Dist. LEXIS 21299, at *1 (N.D. Iowa Feb. 15, 2017). After noting the lack of any Eighth Circuit authority, the court followed the generally accepted rule that the privilege can apply "where the person asserting the privilege had a reasonable but mistaken belief that the person with whom they were communicating was in fact a licensed attorney." Id. at * 3-4. The court ultimately rejected plaintiffs' privilege claim, noting that they had not produced any evidence "demonstrating [that they] had a reasonable belief Peterson was licensed to engage in the practice of law after 2001." Id. at *7. Among other things, the court pointed to Peterson's reference to himself as a "[b]usiness consultant." Id.
As other courts reaching the same conclusion have noted, a different approach would punish "the unsuspecting 'client' when it comes to light the imposter is not actually licensed." Id. at *5.
Not surprisingly, corporate board members realizing that a lawyer sits among them might turn to their colleague for legal advice. They may not understand that lawyers serving as board members hardly ever deserve privilege protection, but the lawyers should know that.
In Terrell v. Memphis Zoo, Inc., defendant Zoo withheld communications to and from one of its board members – “who is also Assistant General Counsel for AutoZone." No. 17-cv-2928-JPM-tmp, 2018 U.S. Dist. LEXIS 112385, at *13 (W.D. Tenn. July 3, 2018). The Zoo argued that the board member's role "was to provide 'legal advice and legal guidance to the other members of the board.'" Id. at *13-14. But the court rejected the Zoo's privilege claim, noting that the Zoo "has not demonstrated the existence of the required [attorney-client] relationship" between the Zoo and the board member. Id. at *14.
Corporations' board members and lawyers play very different roles. Absent unusual circumstances and an explicit understanding by the corporation and its board members, outside or in-house lawyers sitting on boards should never assume that their communications deserve privilege protection (unless they are acting as clients rather than as lawyers).
"Federal Court Applies Privilege Axioms That Many Clients Misunderstand"
Some clients who have not been adequately advised by their lawyers think that writing "privileged" on a document makes it so, or that copying a lawyer will assure privilege protection. These and other similar misunderstandings can doom protection for damaging documents whose authors have jumped to conclusions, needlessly self-criticized or engaged in harmful hyperbole – because they erroneously thought the privilege would protect those documents' from adversaries' access.
In Erickson v. Hocking Technical College, Case No. 2:17-cv-360, 2018 U.S. Dist. LEXIS 50075 (S.D. Ohio Mar. 27, 2018), plaintiff sought to depose a lawyer who had acted as defendant's General Counsel, HR Director and Risk Management Vice President. Among other things, defendant claimed that the privilege protected communications during meetings that the lawyer attended. The court rejected defendant's privilege claim, noting that the privilege did not protect the communications simply because the lawyer "subjectively believed that she was at the meeting in her capacity as counsel to gather information." Id. at *7. The court bluntly concluded that "the record contains no evidence reflecting that [the lawyer] was asked to attend in her capacity as a legal advisor rather than in her [other capacities]" (id. at *9); or that she provided or "was asked to provide legal advice" at the key meeting. Id. at *10. The court also held that a meeting participant's "Attorney-Client Privileged Information" label on an email "drafted three days after the at-issue meeting . . . does not operate to retroactively render the earlier, otherwise-unprivileged discussions subject to the attorney-client privilege." Id. at *6, *8.
As with other widely held but erroneous misconceptions, lawyers should advise their clients that asking a lawyer to participate in meetings does not assure privilege protection. If such lawyers provide legal advice, all the related documents should clearly reflect that – in their substantive content, not merely with a header or label.
"In-House Lawyers Should Avoid Being Employment Decision-Makers"
In-house lawyers obviously can play an important role when their corporate clients decide whether to terminate employees. But they should avoid being the ultimate decision-makers, or playing a business role in any termination decisions.
In Price v. Jarett, No. 8:15CV200, 2017 U.S. Dist. LEXIS 61066 (D. Neb. Apr. 21, 2017), terminated employee plaintiff sought to depose a Union Pacific in-house lawyer. The lawyer had served on a panel that another witness testified "would have to come to a 'unanimous consensus to move forward on [a] termination.'" Id. at *2 (alteration in original) (internal citation omitted). Union Pacific claimed that the panel did not meet as a group to decide on terminations, and that the lawyer's "role in evaluating Plaintiff's termination was solely to review whether there were legal implications of concern for Union Pacific." Id. But the court allowed the deposition to proceed, noting that the testimony "regarding the need for unanimous consent for termination indicates that [the lawyer] may have some non-cumulative, non-privileged factual information relevant to the case." Id. at *6.
In-house lawyers should assure that their clients do not face a similar circumstance – in which there is (as the Price court put it) "uncertainty surrounding the 'hat' [they are] wearing while serving" on such panels or in some other way involved in termination decisions. Id. at *7.
("The law is well-settled that '`the attorney-client privilege applies to 'in-house' counsel just as it would to any other attorney.' . . . Nonetheless, because a corporation's in-house counsel often wears more than one hat, courts look closely at claims of privilege asserted by corporate employees involving communications with in-house counsel.").
"Two Decisions Issued the Same Day Highlight Choice of Laws Issues: Part II"
Last week's Privilege Point described a Maine case applying the narrow pre-Upjohn "control group" standard for corporate communications. Harris Mgmt., Inc. v. Coulombe, 2016 ME 166, ---A.3d---. Illinois is by far the largest state that still follows the worrisome "control group" standard. Illinois federal courts sitting in diversity frequently apply that state's "control group" standard to strip away corporations' privilege protection.
But sometimes Illinois federal courts look elsewhere for privilege law. In In re Fluidmaster, Inc., the court noted that "[t]he parties agree that California law governs the attorney-client privilege issues now before the Court." Case No. 1:14-cv-05696, MDL 2585, 2016 U.S. Dist. LEXIS 154618, at *5 (N.D. Ill. Nov. 8, 2016). The court therefore applied several favorable California statutory law principles to the defendant corporation's privilege protection, including (1) communications "made in the course of an attorney-client relationship" are "presumed to have been made in confidence"; (2) the privilege's opponent must carry the burden of proving that the privilege does not apply; (3) "the privilege may extend to 'communications that merely transmit documents,' even if those documents are publicly available"; and (4) "no heightened [privilege] scrutiny exception [for in-house lawyers] exists in California's statutory regime." Id. at *6, *12, *46 (citations omitted). All of these positions represent a much more corporate-friendly privilege approach than the majority of case law nationally – and obviously much more favorable than Illinois' own harsh "control group" standard.
The Harris Management case should remind lawyers that pockets of unfavorable "control group" privilege law still exist, and the Fluidmaster case should prompt lawyers to look for ways to apply more favorable privilege law wherever they litigate.
The attorney-client privilege began in Roman times, and serves a grand societal purpose — encouraging clients to frankly disclose facts that their lawyers need, by assuring their communications' perpetual protection from third-party intrusion. However, the law has always disliked the privilege, because it hides the truth. Among other things, courts extend privilege protection only to communications whose "primary purpose" involves legal advice.
In the corporate context, clients and their lawyers must establish that their communications' "primary purpose" involved legal rather than business concerns. Nearly every court imposes a higher burden on in-house lawyers attempting to meet this standard. In Chandola v. Seattle Housing Authority, Case No. C13-557 RSM, 2014 U.S. Dist. LEXIS 132193 (W.D. Wash. Sept. 19, 2014), the court held that "[e]xtra scrutiny is required where in-house counsel is involved, as they often act in both a legal and non-legal business capacity." Id. at *5. The court warned that in-house lawyers must make a "'clear showing'" that their communications related primarily to legal rather than business concerns. Id. at *6 (citation omitted). The court ultimately decided to review withheld communications in camera.
Some courts take an even more hostile approach — presuming that in-house lawyers' communications do not meet the "primary purpose" standard. In-house lawyers should assure that communications they receive and send will help them make the commonly required "clear showing" that those communications primarily related to legal advice — keeping in mind that courts frequently review those communications in camera.

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