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Attorney-Client Privilege for In-House Counsel (Part II)

Posted by attorney Matthew Kading

3. In Confidence

In-house attorneys can easily lose privilege if their communications are found not to be “in confidence."

A communication to an attorney is made in confidence if the client expressly states such an intention or the attorney reasonably concludes that the communication was intended to be confidential. The information conveyed to the attorney need not be confidential for the privilege to apply.

The presence of a third party who is not an agent of the attorney for the purpose of assisting the attorney in giving legal advice can eliminate the expectation of confidentiality. In addition, disclosure to a third party can waive the privilege unless the parties are linked by a common interest. Prevue Pet Prods. v. Avian Adventures, Inc., 200 F.R.D. 413, 417 (N.D. Ill. 2001).

“[T]he communication must originate in confidence and not be disseminated beyond those persons who need to know its contents." SEC v. Gulf & Western Indus., Inc., 518 F. Supp. 675, 681 (D.C. 1981); see also Duran v. Andrew, No. 09-730, 2010 WL 1418344, at *2 (D.D.C. Apr. 05, 2010) (“[C]ommunication must be made in confidence for the express purpose of securing legal advice.") (emphasis added).

The party seeking privilege must do more than demonstrate that the communication was made between the attorney and the client. Circumstances indicating an intention of secrecy must also appear. SEC v. Gulf & Western Indus., Inc., 518 F. Supp. at 682.

• Communications made to an attorney that the client expects will be revealed to others are not privileged. See, e.g., United States v. [Under Seal], 748 F.2d 871, 875 (4th Cir. 1984).

• Dissemination of confidential information to employees with decision-making power does not defeat the privilege. Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 442 (S.D.N.Y. 1995); Great Plains Mut. Ins. Co., Inc. v. Mutual Reinsurance Bureau, 150 F.R.D. 193, 198 (D. Kan. 1993) (citing cases).

• Disclosure of attorney confidences to corporate employees for purposes unrelated to the obtaining of legal advice from the corporation’s attorneys will vitiate the privilege. Bowne of New York City, Inc. v. AmBase Corp, 150 F.R.D. 465, 491 (S.D.N.Y. 1993); see also Orion Corp. v. Sun Pharm. Indus., Ltd., Nos. CIV.A. 07-5436, 08-5545, 2010 WL 686545 (D.N.J. Feb. 22, 2010) (holding that a party waived the attorney-client privilege by disseminating confidential presentations to 112 recipients because the party did not establish that the group was limited to individuals who needed to know the information; characterizing the individuals as “management" was not sufficient).

• Disclosure of attorney-client privileged material to the Chairman of the Board does not adversely affect the privilege even under the narrow “control group" test. Gottlieb v. Wiles, 143 F.R.D. 241, 247 (D. Colo. 1992). ?Accessibility: Privileged materials may even lose privilege if they are just accessible outside the privileged sphere, i.e. if insufficient precautions against waiver have been taken. As such, reasonable steps to preserve the confidentiality of privileged materials should be taken. See, e.g., Ciba- Geigy Corp. v. Sandoz Ltd., 916 F. Supp. 404, 411 (D.N.J. 1995) (citing cases).

  • Privilege waived where documents were treated like business records and accountant—an independent contractor—was given free rein to examine all records. In re Horowitz, 482 F.2d 72, 82 (2d Cir. 1973).

  • Privilege waived where documents were found in a public hallway outside attorney’s office, accessible to “any casual visitor." In re Victor, 422 F. Supp. 475, 476 (S.D.N.Y. 1976).

Query: How would a reservation or rights or non-waiver agreement affect the general rules regarding accessibility?

Mode of Communication: Whether a mode of communication will allow communication “in confidence" depends on whether the attorney has a reasonable expectation of privacy. Communication through U.S. Mail and on land line telephones is universally accepted as confidential. What about other forms of communication?

E-mail. The ABA has approved the use of encrypted email because it affords a reasonable expectation of privacy. But encrypted email may not pass muster. A.C.L.U. v. Reno, 929 F. Supp. 824, 834 (E.D. Pa. 1996), aff’d 521 U.S. 844 (1997) (“Unlike postal mail, simple e-mail is not ‘sealed’ or secure, and can be accessed or viewed on intermediate computers between the sender and recipient (unless the message is encrypted.").

Fax. Faxes generally warrant protection, but you may want to consider including a confidentiality statement to the cover sheet. See Cencast Servs., L.P. v. United States, 91 Fed. Cl. 496, 506 (Fed. Cl. 2010) (holding that a fax was a confidential communication seeking legal advice, and therefore was properly withheld from discovery).

Cordless and Cellular Phones. Authority is divided regarding whether cordless and cellular phone users have a reasonable expectation of privacy. Query: Is there a reasonable expectation of privacy on Instant Messaging? What about Skype?

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