An attorney working as in-house counsel must have a solid understanding of the attorney-client privilege. The application of the attorney-client privilege may differ for in-house counsel in several ways that are important for the attorney to bear in mind.
The attorney-client privilege protects confidential communications made during an attorney client relationship from disclosure. Cal. Ev. Code § 954. The federal attorney-client privilege in a corporate setting protects communications among employees and corporate counsel in order to obtain information not otherwise available to upper management, where the employee is communicating with an attorney at the direction of a superior in order to secure legal advice for the company, if the subject matter of the communication falls within the duties of the employee and the communication is intended to be confidential. Upjohn Co. v. United States, 449 U.S. 383 (1981).
In California, the dominant purpose test is used to determine whether a corporate employee is making the communication at the request of the employer, and to examine the intent of the employer and employee. D.I. Chadbourne v. Sup. Ct., 60 Cal.2d 723 (1964). When determining whether any particular communication is privileged, the number of hands through which it passed is also relevant. Id.
Legal or Business Advice?
An important consideration in determining whether a particular communication is privileged involves whether the dominant purpose was to give legal advice or business advice. Generally, the attorney-client privilege is not applicable where the attorney merely acts as a negotiator or to provide business advice. Aetna Cas. & Sur. Co. v. Sup. Ct., 153 Cal. App. 3d 467 (1984). Courts will look at whether the communication was made in furtherance of the attorney client relationship, while taking into consideration that an attorney may be hired to address business affairs, but also give legal advice during the course of the representation, and that such advice should be protected notwithstanding the original purpose for which the attorney was employed. Kaiser Foundation Hospitals v. Sup. Ct., 66 Cal. App. 4th 1217 (1998). Sending a carbon copy (or “cc”) of an otherwise non-privileged communication to an attorney does not necessarily render the communication privileged. See, e.g., In re Google, Inc., 462 Fed. Appx 975 (Fed. Cir. 2012).
In-house attorneys operating in an international setting need to bear in mind that while U.S. courts generally extend privilege protection to foreign attorneys, some courts recognize foreign privilege law, such as the law of the European Union, and do not extend privilege protection to communications between companies and their in-house attorneys. Akzo Nobel Chem. Ltd. V. European Comm’n, Case C-550/07 P, 26 Law. Man. Prof. Conduct 584 (Euro. Ct. Justice, Sept. 14, 2010).
An in-house attorney should also carefully consider the attorney-client privilege in connection with internal investigations. For example, the investigation of insurance claims and the analysis of coverage was protected. Aetna, supra, 153 Cal. App. 3d at 476. The report of outside counsel hired to investigate complaints of discrimination and harassment, who was specifically directed not to provide legal advice, was privileged where the attorney provided a legal service. City of Petaluma v. Sup. Ct., 47 Cal. 4th 723. When interviewing a constituent of the company in a criminal investigation, a warning may be appropriate to remind the constituent that the attorney is representing the company, and not the constituent, and that information provided will be turned over to the company, and may even be produced to a third party. United States v. Ruehle, 583 F.3d 600 (9th Cir. 2009); see also Cal. Rules Prof. Cond. 4.3.
In some investigations, the company may ultimately rely on the investigation to defend litigation. In such a circumstance, the attorney-client privilege and work product doctrine will be waived. Wellpoint Health Networks, Inc. v. Sup. Ct. 59 Cal.App. 4th 110, 128 (1997). In other situations, the report may be intended to be turned over to outside auditors or a government agency, such as the SEC or DOJ. See, e.g., Ruehle, supra, 583 F.3d 600.
If a particular document is not covered by the attorney-client privilege, it may still be protected by the work product doctrine. Hickman v. Taylor, 329 U.S. 495 (1947); Fed Rule Civ. P. 26 (documents and tangible things prepared in anticipation of litigation or for trial); Fed. R. Crim. P. 16. California’s work product protection is broader in scope, and may protect recordings and notes regarding witness interviews, even if they are not created in anticipation of litigation. Cal. Code Civ. P. 2018.030; Coito c. Sup. Ct., 54 Cal.4th 480 (2012).
It is important for in-house counsel to understand the application of the attorney-client privilege in a variety of contexts.
Carole Buckner is a Partner at Procopio, Cory, Hargreaves & Savitch LLP, and the firm’s general counsel.