How Corporate Counsel Can Preserve Attorney-Client Privilege

Most organizations don’t provide even a rudimentary education in the basics of the attorney-client privilege to executives and others who rely on in-house and outside counsel relative.

The inevitable lack of understanding of privilege may result in no privilege where one is needed, and other evidentiary issues.

In-house counsel should provide their core constituents with a general primer on the attorney-client privilege prior to and independent of a specific privilege issue arising. Here are some of the more salient components of the recommended training.

“Executive” is used interchangeably here with “constituents” to include other core stakeholders such as the director of HR.

Employer Representation

Every in-house lawyer knows they represent the employer and not the CEO, the CFO, or the director of HR—unless they represent that individual in a particular matter. However, not every executive knows this. Instead, it is not uncommon for executives to think of—and refer to—-in-house counsel as “my lawyer.”

As part of the recommended training not related to any specific matter, in-house counsel should explain that they represent the entity and not any individual executive. The middle of a dispute is not the best time the executive should hear this reality for the first time.

But what happens if there is a hot issue and the executive refers to in-house counsel as “my lawyer” notwithstanding the prior training? Should they be corrected in the moment?

The purist answer: yes. The realistic answer: it depends.

For example, if you correct an executive in front of opposing counsel, you might need a recruiter when your embarrassed boss eliminates the source of their embarrassment. In this scenario, you could have waited and reminded them later, one on one, that you don’t represent them.

But if you don’t correct an executive before a grand jury, you may later need your own lawyer. Far from hypothetical, expect the executive to argue that you suggested that you represented them by not correcting them but then did not take the steps necessary to protect them before the grand jury.

Privilege issues cannot be painted with a broad brush.

Scope of Privilege

Some executives believe that everything they share with in-house counsel is privileged. However, communications are privileged generally only if the constituent is seeking or receiving legal advice.

Educate your constituents in advance as to the scope of the privilege as defined above. Further, make clear in training that the privilege does not extend to business or personal communications with counsel.

Focus on documentation, too. For example, educate your constituents not to reflexively put a “cc” to counsel on a business e-mail. A cc to in-house counsel on a business communication may effectively make them a witness.

Similarly, you cannot make privileged what is not by slapping a privilege appellation on the communication. This may serve only to make the label questionable where it should not be. If everything is privileged, then nothing is privileged, or so it will be argued with some force.

Confidentiality

There are two general principles regarding confidentiality and privilege.

First, make clear that in-house or outside counsel retains the right to disclose what is told to them. This includes the right to disclose to, among others, the board of directors and senior executive leadership.

Second, the executive cannot disclose with others what they discuss with counsel. Yes, there is no mutuality.

The lack of mutuality can be a hard pill to swallow for many executives if not explained carefully. That is why it is best to explain it during an orientation program before any particular issue arises.

Even if you raise the issue up front, there may be times when you will need to remind executives of this reality. For example, if an executive asks you to keep something strictly confidential, you may need to remind the executive before they make the disclosure that you cannot promise absolute confidentiality.

Just as important, you need to be clear on the scope of what the executive must retain as confidential. The privilege covers what is discussed with counsel, not the underlying facts of what occurred.

The following example illustrates the point and should help to avoid an obstruction charge based on a refusal by the executive to cooperate in a government investigation.

“If a government official asks you whether you heard John Doe say X, you must answer truthfully and completely. What you cannot disclose is that I asked you the question and the answer you gave me.”

Waiver

The company “owns” the privilege so only it can waive it. But what an executive does could bind the company and that includes waiving the privilege.

As part of training, share with your constituents what could result in the waiver of the privilege. For example, disclosing the advice with non-employees, such as family or friends, sharing with employees outside the control group, or asserting legal advice as defense for what was done.

In this last example, it is not just in court. It could be in an argument with an adverse party. There is a big difference between, “I am comfortable with our legal position” and “My lawyer told me you have no claim because ... .” The waiver associated with the latter may create the claim.

By now, you may be thinking, will the executives remember all of this and more? The answer is “no,” and that’s why refresher training needs to be conducted periodically. The privilege becomes a peril in the absence of periodic training.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Jonathan A. Segal is a partner with Duane Morris. A former litigator, his practice focuses on maximizing legal compliance and minimizing legal risk with an eye on culture. Areas of concentration include Covid-19, diversity and inclusion, harassment and civility, wage and hour compliance, workplace investigations, pay equity, and employment, severance, and business protection agreements.