Attorney-Client Privilege for In-House Counsel (Part I)
I. Establishing Privilege with In-House Attorneys. In theory, a corporation’s communications with its in-house attorneys should be entitled to the same privileges as the corporation’s communications with its outside counsel.
In practice, however, very real differences exist in how courts interpret and apply the attorney-client privilege and work product doctrine to an employee’s communications with its in-house versus outside counsel.
As the author of a leading treatise for corporate counsel has noted, there is a conflict between a basic premise of the attorney-client privilege, and the job description of the in- house counsel of a modern company. See John K. Villa, Corporate Counsel Guidelines, § 1.08 (2003).
“[C]ourts have generally limited the privilege to those confidential communications which necessarily occur in the course of requesting or giving legal advice." Id.
A. So what’s privileged?
Everything flows from the classic definition of the attorney-client privilege: The attorney-client privilege may be invoked with respect to:(1) a communication(2) made between privileged persons(3) in confidence(4) for the purpose of obtaining or providing legal assistance for the client. Restatement (Third) of the Law Governing Lawyers§ 68 (1998).
Courts have shown increasing willingness to find that communications between in-house attorneys and their clients do not meet these requirements:
- “A communication"
Usually, this first element of the attorney-client privilege is uncontroversial. Essentially any expression made to convey information constitutes a communication that may be privileged.
A few points of note:
• Mere transmittal of documents to an attorney does not itself make those documents privileged. Fisher v. United States, 425 U.S. 391, 403–04 (1976). Pre-existing documents that are transmitted to an attorney are privileged only if the documents themselves satisfy the requirements of the privilege. Id.;
• Instances where a lawyer acts as a conduit for a third-party’s message to the client are not privileged. See, e.g., Dawson v. New York Life Ins. Co., 901 F. Supp. 1362, 1366–67 (N.D. Ill. 1995)
2. “Between privileged persons"
A communication is not privileged unless it is between an attorney and her client. So who is who?
a. Who is the attorney?
Generally, courts define an attorney for purposes of the attorney- client privilege as “a member of the bar of a court." Allen v. West Point-Pepperell, Inc., 848 F. Supp. 423, 427 (S.D.N.Y. 1994); George v. Siemens Indus. Automation, Inc., 182 F.R.D. 134 (D.N.J. 1998);
Courts almost uniformly hold that an attorney need not be a member of the local bar in order for the attorney-client privilege to attach—the attorney merely needs to be a member of some bar. See, e.g., Paper Converting Mach. Co. v. FMC Corp., 215 F. Supp. 249, 251 (E.D. Wis. 1963).
Communications between the client and agents of the attorney who assist in the representation may also be protected by the attorney-client privilege. See, e.g., United States v. Kovel, 296 F.2d 918, 921–22 (2d Cir. 1961); Cavallaro v. United States, 284 F.3d 236 (1st Cir. 2002) (applying Kovel). But see United States v. ChevronTexaco Corp., 241 F.Supp.2d 1065, 1072 (N.D. Cal. 2002) (declining to extend the privilege where the accountant was hired merely to give additional legal advice about complying with the tax code even where doing so would have assisted the attorney in advising the client).
b. Who is the Client?
A key question for in-house (and outside!) counsel is whether a given corporate agent or employee is a “client" for purposes of the attorney-client privilege. Unfortunately, different jurisdictions apply different tests in answering this fundamental question.
i. Control Group Test
Under this test, the attorney-client privilege applies if the employee had an ability to control the decision, take a substantial part in the decision-making process, or was a member of a group that had authority to prescribe corporate action based on the attorney’s advice. See, e.g., City of Philadelphia v. Westinghouse Elec. Corp., 210 F. Supp. 483, 485 (E.D. Pa. 1962).
ii.Subject Matter Test
Under this test, a communication may be privileged where: (1) the employee makes the communication at the direction of his superiors; (2) the subject matter of the conversation concerns the performance by the employee of his duties of employment; and, (3) the corporation is seeking legal advice concerning such performance.
iii. Modified Subject Matter Test
Under the modified subject matter test, a communication is privileged if: (1) the communication was made for the purpose of securing legal advice; (2) the employee making the communication did so at the direction of her or his corporate superior; (3)the superior made the request so that corporation could secure legal advice; (4) the subject matter of the communication is within the scope of the employee’s corporate duties; and (5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know its contents. Diversified Indus., Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977).
iv. The Upjohn Test.
Under the Upjohn test, communications are privileged when (1) they are made to corporate counsel at the direction of the corporate superiors; (2) they concern matters within the scope of the employee’s corporate duties; (3) the information in the communications is not available from upper-level management; (4) the employees communicating with counsel are aware that they are being questioned in order for the corporation to receive legal advice; and (5) the communications are intended to be kept confidential and are not disseminated outside the corporation. Upjohn Co. v. United States, 449 U.S. 383 (1981); In Re Teleglobe Commc’n Corp., 493 F.3d 345 (3d Cir. 2007) (applying Upjohn). Federal courts follow Upjohn unless they are applying state law to a claim or defense, in which case they will follow that state’s privilege law. See Fed. R. Evid. 501.