Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association.

The Attorney-Client Privilege and the Engagement Agreement

“Legal advice” is often seen as the line of demarcation between an attorney-client communication that is privileged, and one that is not. Was the attorney rendering legal advice? the question goes.  If yes, the communication was privileged. 

So what happens when a client hires an attorney, but the agreement specifically states that the attorney will not render legal advice? According to the recent City of Petaluma v. Superior Court, those communications are privileged as well, as long as the attorney is still providing a “legal service.” 

The City hired outside counsel to investigate the facts of an EEOC claim by an employee. The agreement between City and outside counsel specified that there was an attorney-client relationship, but that the outside counsel would not render legal advice.  Instead, counsel would conduct an impartial investigation of the complaint, interview witnesses, collect and review pertinent information, and report what counsel believed happened.  Counsel promised to arrive at findings “based on an impartial and professional evaluation of the evidence,” and that they would use their “employment law and expertise” to assist in determining the issues to be investigated and conduct impartial fact-finding.  The City attorneys would then provide advice to the City based on the results of the investigation.

When the employee sought the communications between outside counsel and the City, the trial court held that counsel was acting as a fact finder and not an attorney who was providing legal advice. Thus, the court held the privilege did not apply.

The Court of Appeal reversed.  The court cited to Evidence Code section 951 for the proposition that the “client” in an attorney-client relationship is “a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity ….” (Emphasis in original.) Thus, according to the court, “[t]he rendering of legal advice is not required for the privilege to apply.” 

Thus, the prelegal factual investigation provided by outside counsel was privileged, because the outside counsel was providing legal services. The court reasoned that counsel “was retained to provide a legal service because she was hired to act as an attorney in bringing her legal skills to bear to assist the City in developing a response to Waters’s EEOC complaint and the anticipated lawsuit.  The retention agreement not only expressly specified that it created an attorney-client relationship, but it also provided that Oppenheimer would use her expertise in employment law to arrive at findings based upon her ‘professional evaluation of the evidence.’”  The court distinguished the relationship from one where the attorney is merely a fact-finder whose sole task would be to gather information and transmit it to the City. “Instead, she was expected to use her legal expertise to identify the pertinent facts, synthesize the evidence, and come to a conclusion as to what actually happened.”  Thus, the attorney was rendering legal services, and the privilege applied.

More striking than the case’s outcome is the fact that the trial court originally held no privilege applied, and the Court of Appeal originally denied the City’s petition for writ of mandate. It was only after the Supreme Court granted a writ of review that Court of Appeal issued an order to show cause, ultimately finding the privilege applied. The extra time and legal fees spent on this issue are likely traceable to the words in the engagement agreement, specifying that the attorney would not render “legal advice.”  In this case, the words were apparently meant to limit the scope of services from including advising the client on its best path forward. Unfortunately, the words “legal advice” are also commonly used to mark the outer limits of the attorney-client privilege – as the client and their attorneys found.

But “advice” can include not just future paths, but advice on what the present could entail.  For instance, an attorney could render advice on what the attorney believes a jury would find.  An engagement agreement defining the scope of an attorney’s services to preclude avoid giving advice on best paths forward can be drafted without denying that legal advice will be rendered at all. While the opinion in City of Petaluma makes denying providing “legal advice” less dangerous to the attorney-client privilege, attorneys who would prefer to avoid being deemed to be “merely a fact finder” may wish to avoid that type of exclusion.

-- Leah Strickland

Discussing City of Petaluma v. Superior Court, Slip Op., Case No. A145437 (1st Dist., Div. 3, June 30, 2016).

**No portion of this summary is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**