Opinion ID: 2516664
Heading Depth: 2
Heading Rank: 3

Heading: the attorney-client privilege in the governmental independent contractor setting

Text: With the foregoing principles in mind, we now turn to the ultimate question presented in this case: whether the attorney-client privilege protects communications between a governmental entity's counsel and the entity's independent contractor. Specifically, we must consider whether the purposes supporting the attorney-client privilege  including the attorney's need to gather relevant information in order to provide sound legal advice  are supported by applying the privilege to protect communications between governmental counsel and persons who, though not formally employed by the governmental entity, have the kind of significant relationship with the entity that makes it appropriate to consider them functional employees for the purposes of the privilege. Although this Court has never considered whether the attorney-client privilege applies in the governmental independent contractor setting, the Eighth Circuit has analyzed a nearly identical question in In re Bieter, Co., 16 F.3d 929 (8th Cir.1994). The question presented in Bieter was whether communications between a client's independent contractor and the client's counsel or communications merely disclosed to the independent contractor necessarily fell outside of the scope of the attorney-client privilege because the contractor was neither the client nor an employee of the client. Bieter, 16 F.3d at 934. Because we find this opinion to be persuasive, we will discuss it in some detail. Bieter was a partnership formed to develop a parcel of farm land. The partnership retained an independent contractor to provide advice and guidance regarding commercial and retail development in the area. The contractor worked out of Bieter's office and interacted daily with the principals of the partnership to attempt to develop the parcel of land. Bieter, 16 F.3d at 933. A contract between the parties clarified that the contractor was expressly not an agent, employee, or partner of Bieter. Id. at 933-34. However, according to the independent contractor, he was viewed by government officials, potential tenants, the media, and others as a representative of Bieter. Id. at 934. Ultimately, Bieter confronted various obstacles to the land development and resorted to legal action. Id. at 930. During discovery, respondents sought disclosure of certain documents that Bieter claimed were protected by the attorney-client doctrine. A magistrate held that the materials were not protected because they had been disclosed to the independent contractor, and the district court summarily affirmed the order. Id. at 931. To determine whether the attorney-client privilege protected the communications at issue, the Bieter court considered two distinct questions. First, it examined whether the independent contractor's relationship to the client was the type that justified the application of the privilege. Concluding that it did, the court next considered whether the communications satisfied the test it had set out in Diversified Indus., Inc. v. Meredith, 572 F.2d 596 (8th Cir.1977), to analyze the applicability of the privilege in the corporate-employee context. Bieter, 16 F.3d at 938. In analyzing these questions, the court relied on its earlier decision in Diversified, as well as the United States Supreme Court's decision in Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981) that had both analyzed a similar question: whether the attorney-client privilege protects communications between a corporation's employees and corporate counsel. The Eighth Circuit concluded: [I]t is inappropriate to distinguish between those on the client's payroll and those who are instead, and for whatever reason, employed as independent contractors. Such a distinction is consistent with neither the Supreme Court's decision in Upjohn nor our decision in Diversified.  Bieter, 16 F.3d at 937. Since the Upjohn Court emphasized that [t]he lawyer-client privilege rests on the need for the advocate and counselor to know all that relates to the client's reasons for seeking representation if the professional mission is to be carried out, Bieter reasoned that refusing to apply the privilege to protect communications between a client's independent contractor and the client's counsel would frustrate the very purpose of the privilege as explicated by Upjohn. In other words, a failure to extend the attorney-client privilege to the independent contractor context would limit the ability of the lawyer to ascertain needed facts for sound representation. Thus, the Bieter court concluded `at times there will be potential information-givers who are not employees of the corporation but who are nonetheless meaningfully associated with the corporation in a way that makes it appropriate to consider them `insiders' for purposes of the privilege.' Bieter, 16 F.3d at 936 (quoting John E. Sexton, A Post Upjohn Consideration of the Corporate Attorney Client Privilege, 57 N.Y.U. L.Rev. 443, 490 (1982)). Accordingly, the Eighth Circuit ruled that the attorney-client privilege should extend to relationships where the information-giver is an employee, agent, or independent contractor with a significant relationship to the corporation and the corporation's involvement in the transaction that is the subject of legal services. Bieter, 16 F.3d at 937 (quoting Sexton, 57 N.Y.U. L.Rev. at 487). In sum, since the privilege exists to protect not only information communicated from attorney to client, but also information provided to the attorney so that he may give sound legal advice, the Eighth Circuit reasoned that no principled basis existed to distinguish between a client's employee and its independent contractor. Both may have extremely sensitive and important information that must be communicated to the lawyer in order for him to provide effective representation. Bieter, 16 F.3d at 937. Thus, the court held that the Diversified test applied not only in the corporate employee context, but also in the independent contractor context. Id. at 937-38. In applying these legal principles, the Bieter court first held that the client's relationship with its independent contractor justified application of the privilege. The contractor had been involved on a daily basis with the partnership's principals and on behalf of the partnership in the unsuccessful development that served as the basis for the litigation. Moreover, the contractor had been intimately involved with the sole objective of the partnership: to develop the parcel of land. Importantly, as the partnership's sole representative at meetings with potential tenants and other officials, he likely possessed information that no one else knew. Thus, the Bieter court concluded that the contractor was in all relevant respects the functional equivalent of an employee. Bieter, 16 F.3d at 938. Next, the Bieter court applied the Diversified test, which it had originally developed to determine whether communications between a corporation's employees and corporate legal counsel were protected. The test provides that the attorney-client privilege protects communications if: (1) the communication was made for the purpose of securing legal advice; (2) the person making the communication did so at the direction of his superior; (3) the superior requested that the communication be made so that the client could secure legal advice; (4) the subject matter of the communication was within the scope of the representative's duties; and (5) the communication was not disseminated beyond those persons, who because of the structure of the client's operations, needed to know its contents. Bieter, 16 F.3d at 938-39. The court held that each of these elements were satisfied, and therefore, the privilege applied to communications made between the client's independent contractor and the client's attorney and that the disclosure of otherwise privileged documents to the independent contractor in the course of his confidential communications with counsel did not destroy the privilege. Id. at 939-40; see also Energy Capital Corp. v. United States, 45 Fed. Cl. 481, 491-92 (Fed.Cl.2000) (adopting the rule recognized in Bieter, but ruling that it could not decide whether the relationship between the client and its agents met the Bieter requirements because the plaintiff failed to present appropriate facts); In re Copper Mkt. Antitrust Litig., 200 F.R.D. 213, 219 (S.D.N.Y.2001) (following Bieter and concluding that client's independent public relations firm was the functional equivalent of an in-house public relations department and therefore communications between it and the client or client's counsel were protected by the attorney-client privilege); McCaugherty v. Siffermann, 132 F.R.D. 234, 239 (N.D.Cal.1990) (finding attorney-client privilege inapplicable for other reasons, but relying on Upjohn and concluding that because independent consultant acted within scope of employment and under direction of supervisor, no principled reason existed to distinguish between the independent consultant and an employee for purposes of the attorney-client privilege). But see Miramar Constr. v. Home Depot, Inc., 167 F.Supp.2d 182, 185 (D.P.R.2001) (refusing to apply the attorney-client privilege to protect communications between corporate counsel and the corporation's former independent contractor). We find the Bieter court's analysis persuasive and conclude that there are circumstances when the attorney-client privilege protects communications between a governmental entity's independent contractor and the entity's counsel. Moreover, this conclusion comports with our reasoning in Gordon v. Boyles, 9 P.3d 1106 (Colo.2000) and Nat'l Farmers Union Prop. & Cas. Co. v. Dist. Court, 718 P.2d 1044 (Colo.1986). Because we have concluded that the attorney-client privilege protects communications made to the attorney in order for him to provide sound legal advice, Gordon, 9 P.3d at 1123; Nat'l Farmers, 718 P.2d at 1049, we agree with the Bieter court that a formal distinction between an employee and an independent contractor conflicts with the purposes supporting the privilege. An independent contractor with a meaningful relationship to the governmental entity may possess important information needed by the attorney to provide effective representation. Accordingly, we hold that for the attorney-client privilege to apply in the context at issue, the information-giver must be an employee, agent, or independent contractor with a significant relationship not only to the governmental entity but also to the transaction that is the subject of the governmental entity's need for legal services. Thus, the type of relationship between the client and the information-giver must be closely analyzed to determine the application of the privilege. [5] If the party seeking to protect the communications satisfies the first part of the test, we also hold that the entity must show three additional elements. First, it must demonstrate that the communication was made for the purpose of seeking or providing legal assistance. We use the term assistance rather than the Bieter court's term advice because we believe the term advice could be read too narrowly. See Sexton, supra at 490 (The term advice though understandable, overlooks the fact that attorneys perform professional services that often do not entail advice to the client  for example, the administration of an estate or the litigation of an antitrust matter.); see also Restatement (Third) of the Law Governing Lawyers § 68 (2000) (delineating the general attorney-client privilege and stating that for it to apply the communication must be made between privileged persons in confidence for the purpose of obtaining or providing legal assistance for the client) (emphasis added). Second, we hold that the entity must show that the subject matter of the communication was within the scope of the duties provided to the entity by its employee, agent, or independent contractor. Although the Bieter court also required the party seeking to apply the privilege to show that the person making the communication did so at the direction of the superior and that the superior requested that the communication be made so that the client could secure legal advice, we believe these two elements of the Bieter test do not comport with the purposes underlying the privilege. We agree with Sexton's analysis that employees, agents, and independent contractors should not be discouraged from independently communicating with the attorney. Furthermore, we agree that a requirement that communication with the attorney be authorized by a superior, if taken literally, would bar application of the privilege to communications with former employees. . . even former employees who were directly involved in matters under investigation by the attorney. Moreover, there may be times when an attorney may speak with the independent contractor, agent, or employee directly, without obtaining the superior's consent or direction. Sexton, 57 N.Y.U. L.Rev. at 499-500. If we were to require that the information-provider do so only at the direction of his superior this would conflict with our reasoning that the attorney-client privilege protects communications necessary to provide the factual basis on which to provide sound legal assistance. Finally, we hold that an entity seeking to apply the privilege in the independent contractor context must show that the communication was treated as confidential and only disseminated to those persons with a specific need to know its contents. In fact, we have emphasized that the `privilege applies only to statements made in circumstances giving rise to a reasonable expectation that the statements will be treated as confidential.' Gordon, 9 P.3d at 1123 (quoting Lanari v. People, 827 P.2d 495, 499 (Colo.1992)).