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.

Waiver of the Attorney Client Privilege? Don't Bet On It. 

The recent case of McDermott v. Superior Court of Orange County, (Fourth Dist. Court of Appeal, Div. 3, 4/18/17), highlights the challenges attorneys face in our increasingly “digital” practice of law. The decision serves both as a guide for lawyers dealing with inadvertent disclosure of digital information, and a warning for those who fail to comply with the rules.

In McDermott, the Plaintiff received a confidential email from his attorney in connection with a dispute regarding control of a family business. The Plaintiff then forwarded the email, using his iPhone, to a non-attorney friend and the friend’s wife. Ultimately, that email was copied and re-produced to various parties and lawyers in connection with not only the existing dispute, but in subsequent legal proceedings as well.

Almost two years after the original email was forwarded, and after it had since been widely distributed, the Plaintiff brought a legal malpractice claim against the Defendants claiming various conflicts of interest existed in the underlying matters.  A prominent defense firm, retained to represent the Defendants in the malpractice case, was provided with a copy of the Plaintiff’s email from their clients; who had been early recipients of the email in the prior proceedings. When an objection was raised as to the privileged nature of the email, the Defense argued the attorney-client privilege had been waived due to, among other reasons, Plaintiff’s forwarding of the email to his non-attorney friend and wife. Having concluded the privilege was waived, the Defense refused to return the document and proceeded to utilize the email as evidence in the case.

The Plaintiff filed a motion seeking a judicial determination that the e-mail was privileged and eventually, filed a motion to disqualify defense counsel based on its “use” of the privileged email and refusal to return the document.  The Plaintiff asserted he never intended to initially forward the email to his non-attorney friends; he claimed he was 80 years old, suffered from multiple sclerosis which limited his dexterity, and that he was using an iPhone (the implication being that iPhones would be difficult and confusing for an elderly person with MS to use and thus the email was accidental.)  The trial court granted the motion finding the privilege had not been waived and further, disqualified defense counsel based on its failure to comply with the rules regarding inadvertent disclosure of privileged material.

In a lengthy and detailed opinion, the McDermott Court affirmed the orders, including the disqualification of the defense firm.  The Court confirmed the rule regarding how to handle inadvertently privileged material set forth in the seminal cases of State Comp. Ins. Fund v. WPS Inc. (1999) 70 Cal. App. 4th 644 and Rico v. Mitsubishi Motors Corp. (2007) and noted that those cases do not only apply to a scenario when privileged documents are inadvertently produced by opposing counsel. Instead, the Court held that “regardless of how the attorney obtained the documents, whenever a reasonably competent attorney would conclude the documents obviously or clearly appear to be privileged and it is reasonably apparent they were inadvertently disclosed, the State Fund rule requires the attorney to review the documents no more than necessary to determine whether they are privileged, notify the privilege holder the attorney has documents that appear to be privileged, and refrain from using the documents until the parties or the court resolves any dispute about their privileged nature.”  Notably, in response to the Defense firm’s arguments why the privilege had been waived, the McDermott Court stated: “[t]he receiving attorney’s reasonable belief the privilege holder waived the privilege or an exception to the privilege applies does not vitiate the attorney’s State Fund duties.”

The McDermott opinion is important and far more involved than this short summary suggests; the extensive opinion is worthy of careful review by attorneys both for its guidance as to the rules for handling inadvertently disclosed material as well as a warning for the unwary. One primary lesson, however, readily apparent from the Court’s opinion is that the State Fund procedures should be followed carefully in any scenario where privileged material may have been inadvertently produced; even if you believe the privilege has been waived or an exception applies. If there is a dispute, concern, or doubt regarding the privilege, the court should be involved sooner, rather than later. As stated by the McDermott court, “[i]n close cases, prudence requires following the State Fund procedures.”

-- Patrick J. Kearns 

**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.**