We all know the purposes of the attorney-client privilege, the ethics doctrine of confidentiality and the opinion work product doctrine: to encourage clients to make full disclosures to their lawyers, so that the lawyers can give clients fully-informed advice; to assure clients that their lawyers will not make harmful or embarrassing disclosures even of non-privileged information; and to keep an attorney’s work and opinions from litigation opponents.
For these purposes to be served, lawyers must keep themselves and their organizational clients informed of changes to these confidentiality doctrines. This is crucial because confidentiality protection is most often lost inadvertently, through inattention or through misunderstanding of the law of privilege or work product. Maintaining a working knowledge of these doctrines has, however, become more difficult because of the increasing volume and nuance of relevant case law.
This article will spotlight several attorney confidentiality law developments in Minnesota, the Eighth Circuit and the U. S. Supreme Court: cases which have widened the organizational “circle of confidentiality;” exceptions to privilege rules, like the “joint defense,” “communicating agent” and “crime-fraud” doctrines; and waiver issues, like inadvertent production and work product waiver. First, however, let us recall the essentials of the confidentiality doctrines of attorney-client privilege, work product and the ethics duty of confidentiality.
Privilege, Work Product and Confidentiality: The Basics
The attorney-client privilege may be asserted against attempts to compel testimony which would reveal confidential communications seeking or giving legal advice. The privilege is created by state statute and federal common law. The ethics duty of confidentiality, created by Rule 1.6, Rules of Professional Conduct, requires attorneys to keep confidential (subject to certain exceptions) both privileged communications and other confidential information whose disclosure is apt to be detrimental to the client. Work product is recognized by Rule 26, Rules of Civil Procedure, and by common law. It applies to trial preparation material and attorney opinions.
Broadening the Circle of Confidentiality
The “circle of privilege,” that is the persons within (or even outside of) an organization who may be privy to confidential communications without losing protection, has widened in recent years. Knowing who is within the circle is crucial, because the presence of any person outside the circle can destroy the privilege. Thus, if a client’s friend or relative is present for attorney-client communications, the communications are not privileged. State v. Rhodes, 627 N.W.2d 74 (Minn. 2001). Several cases show the trend to broaden the circle of privilege.
Although Upjohn Co. v. U.S., 449 U.S. 383 (1981) and Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977), are not recent, they continue to be essential in identifying the corporate persons who are within the protected circle of confidentiality. These cases recognized that corporate counsel may obtain information from even low-level employees for the purpose of advising the corporation, and that information may be protected by privilege and work product. In Upjohn the IRS was unable to obtain completed questionnaires that had been sent by counsel to Upjohn employees who might have had knowledge of improper payments to foreign officials. So long as the purpose of the questionnaires was to facilitate legal advice, and so long as confidentiality and restricted access to the questionnaires were maintained, the documents were protected. In re Bieter Company, 16 F.3d 929 (8th Cir. 1994), recognized that even non-employee outside consultants could be within the circle of privilege, so long as they were regularly involved in assisting the company in important decision-making, including acting on the advice of counsel.
Knowing what is protected material is just as important as identifying who is a protected person. Two recent cases will help organizations protect types of documents that are regularly used by house counsel and outside counsel.
Kobluk v. Univ. of Minnesota, 574 N.W.2d 436 (Minn. 1998), recognized that the privilege protects a typical contemporary mode of attorney-client communications: the exchange of drafts of a letter to a third party. The court rejected the argument that because the author of each draft intended that it be final and that it be sent to a third party, the intent of confidentiality required for the privilege was lacking. Instead, the court found a “presumption of confidentiality” for attorney-client communications generally and found that the exchange of drafts was simply a modern mode of communication.
In re Spalding Sports Worldwide Inc., 203 F.3d 800 (Fed. Cir. 2000), held that the client’s communications with patent counsel, including technical information, were for the purpose of seeking legal advice and were protected by privilege — notwithstanding the client’s intent that counsel use the materials transmitted for the purpose of making public filings to obtain a patent. The holdings of the Federal Circuit regarding substantive patent law, including privilege issues directly related to patent law, are binding on all federal district and circuit courts. Spalding makes indisputable the proposition that patent attorneys provide counsel as other attorneys do, and are not mere scribes or conduits.
Three Privilege Exceptions: Communicating Agents, Joint Defense (aka “Common Interest”) and Crime-Fraud.
The circle of privilege also has been broadened by two exceptions (communicating agents and joint defense) and narrowed by a third (crime-fraud). The first two provide continued privilege protection notwithstanding disclosure of privileged information to a person other than the attorney or client normally. In the third, perverse purposes destroy otherwise privileged communications.
Communicating Agents. Agents of the lawyer or client may be privy to lawyer-client communications without the privilege being lost so long as the involvement of the agent facilitates the rendering of legal advice. Translators, accountants or other experts can all be communicating agents within the circle of privilege, but only if their true purpose is to facilitate legal advice. The fact that the attorney hires the agent will not by itself guarantee protection if the true purpose is to render, say, accounting or other technical advice. The presence of a public relations expert in an attorney-client litigation planning meeting can destroy the privilege if, as will often be the case, the expert’s presence is not to facilitate legal advice.
Joint Defense. The joint defense doctrine, like the communicating agent doctrine, allows a person other than attorney and client into the circle of privilege. Before discussing this doctrine, however, two confusions must be dispelled. First, joint defense differs from “joint clients” in that the former requires separate counsel and the latter involves just one lawyer. Second, joint defense is more properly called “common interest” because it is not restricted to defendants — although some courts have restricted the doctrine to litigation contexts. In any event, for the joint defense doctrine to apply, the parties must share substantial common interests, they must be separately represented and they must agree not to disclose to others their privileged information. In such circumstances they may share privileged information without waiving the privilege. Most courts would recognize the doctrine if, say, in a corporate acquisition context, buyer’s counsel, doing due diligence, asked the seller to share its counsel’s evaluation of certain claims or litigation against the seller.
For this doctrine to apply, the parties must truly share common interests. In re Grand Jury Subpoena Duces Tecum, 112 F.3d 910 (8th Cir. 1997), recognized the doctrine, but rejected Hillary Clinton’s claim to its benefits. The court reasoned that the matter at stake in the grand jury proceedings — whether Mrs. Clinton went to prison — was not a cognizable interest of the White House, with whose counsel Mrs. Clinton’s counsel had shared otherwise privileged information.
Crime-Fraud. The crime-fraud doctrine is an exception to the attorney-client privilege doctrine. Even though the formal requirements for the privilege are met, the law will not grant a privilege, because the communications are for perverse purposes — using the attorney to commit a crime or fraud. Two recent cases help explain how this doctrine will be applied.
The procedure for determining whether the crime-fraud exception applies often involves in camera judicial review of documents. But what is the threshold for the court undertaking that review? In Re BankAmerica Corp. Securities Litigation, 270 F. 3d 639 (8th Cir. 2001), provides a detailed analysis of when in camera review may be done and when the crime-fraud exception should be applied. This case emphasizes that the party seeking discovery must make “a specific showing that a particular document or communication was made in furtherance of the client’s alleged crime or fraud.” The attorney’s knowledge and intent are irrelevant, because “it is the client’s intent to further a crime or fraud that must be shown.” This case also makes clear that merely showing that a corporation consulted counsel at about the same time that it made allegedly fraudulent statements is not enough to apply the crime-fraud exception. Reversing a district court order that the documents in question be produced without in camera review, BankAmerica Corp. directed the lower court to consider whether a sufficient showing had been made for review and, if so, to undertake document-by-document review before determining whether the documents must be produced.
Another important crime-fraud issue is whether the exception applies to improprieties short of crime or fraud. Restatement Third, The Law Governing Lawyers, which has been cited in the Eighth Circuit and in Minnesota on other privilege issues, acknowledges a division of authorities but concludes, “[T]he prevailing view limits the exception to crimes and frauds.” However, Minnesota state courts appear to take a broader view. As State v. Philip Morris Inc., 606 N.W.2d 676, 691 (Minn. App. 2000), recently stated, “The critical inquiry is whether the attorney-client privilege has become unworthy of protection.” Similarly, Kahl v. Minnesota Wood Specialty, Inc., 277 N.W.2d 395, 399 (Minn. 1979), quoted with approval Wigmore’s comment that the privilege should not extend to protect any “deliberate plan to defy the law and oust another person of his rights... .”
Waiver Issues
Inadvertent Production
Parties enjoying the privilege need to be careful about protecting the confidentiality of privileged information. Two factors are apt to cause mistaken transmittals of privileged information: the relative ease of communication by fax and e-mail; and the huge volume of documents that need to be reviewed and (except for privileged items) produced in response to litigation demands.
What should be done when such a mistake occurs? ABA Formal Opinion 92-368 (1992) gives one view of the obligations of the receiving lawyer:
A lawyer who receives materials that on their face appear to be subject to the attorney-client privilege or otherwise confidential, under circumstances where it is clear they were not intended for the receiving lawyer, should refrain from examining the materials, notify the sending lawyer and abide the instructions of the lawyer who sent them.
The ABA opinion is not, however, the law, although a few courts have treated it as such. The receiving lawyer’s client duty — at least when the “inadvertent production” has been sufficiently careless to raise a question of possible waiver — may be to ask the client whether it wishes to seek judicial determination that a waiver has occurred. In any event, the case law in the Eighth Circuit and in Minnesota indicates that courts will be reluctant to find waiver by inadvertent production, unless the disclosing party has been exceptionally careless in its disclosures or in failing to retrieve disclosed documents.
Work Product Waiver and Protection Generally
Work product protection is generally thought to be inferior to privilege protection — after all, ordinary work product protection can be overcome on a showing of substantial need and undue hardship. There are doctrines, however, that make work production hardier than may be supposed, even hardier than privilege protection in some ways.
First, for work product to be created, attorney involvement is not required. Rule 26 explicitly protects materials prepared “by or for another party or by or for that other party’s representative.”
Second, “[O]pinion work product enjoys a nearly absolute immunity and can be discovered only in very rare and extraordinary circumstances.” In re Murphy, 560 F.2d 326, 336 (8th Cir. 1977). Opinion work product may be found even in “an attorney’s personal recollections, notes, and memoranda summarizing his conversations with potential witnesses.” U.S. v. Bonnell, 483 F.Supp. 1070, 1078 (8th Cir. 1979). Similarly, an attorney’s interview notes are protected. Baker v. General Motors, 209 F.3d 1051 (8th Cir. 2000). House counsel’s mere knowledge that certain documents exist can be opinion work product, where the knowledge arises from selection from voluminous documents. Shelton v. American Motors Corp., 805 F.2d 1323 (8th Cir. 1986).
Third, work product protection is less easily waived than privilege protection. With few exceptions, such as those discussed above, privilege is waived by disclosure to any third person. In the organizational context, Upjohn indicates that to maintain its protected status, privileged information should be disseminated within an organization only on a need-to-know basis. Work product protection is not so easily waived: “[D]isclosure of a document to third persons does not waive the work-product immunity unless it has substantially increased the opportunities for potential adversaries to obtain the information. Most cases have so held and have found no waiver from disclosure.” 8 Wright & Miller, Federal Practice and Procedure: Civil 2d § 2024 at 368-69 (1994).
Ethics Confidentiality Issues
Lawyers Board proceedings and publications have recently considered two interesting confidentiality issues arising under Rule 1.6, Minnesota Rules of Professional Conduct (MRPC).
Must Attorneys Regard Some Public Documents as “Secrets”? Would you want your attorney to talk about information that is embarrassing or detrimental to you, on the justification, “I can tell you about this — it’s in the court file?” Rule 1.6 forbids attorneys to disclose either privileged information or other information (“secrets”) whose disclosure would be detrimental to the client or which the client has requested be “held inviolate.”
Can information that is publicly filed be a “secret”? Some authorities have argued that there is so much information that, although publicly filed, is for practical purposes unknown to the public, such that a lawyer should not make further disclosure of the information where it would harm or embarrass a client. The Lawyers Board took this position in a recent disbarment case, In re Fuller, 621 N.W.2d 460 (Minn. 2001). Fuller, for his own purposes, had disclosed his client’s criminal record. A Supreme Court referee rejected the charge, reasoning that because the record was available to the public, it was not a “secret.” The referee’s holding is in accord with the majority of recent cases.
May a Lawyer-Witness Assert Rule 1.6 in Response to a Subpoena? When lawyers receive subpoenas for documents or testimony regarding a prior representation, they will normally look to the client to determine whether they should assert the attorney-client privilege as to any questions or document demands. What if the client wishes the attorney to decline to provide the information sought and instead to assert the attorney’s confidentiality duty under Rule 1.6, even if privilege does not apply to some of the items? A Senior Assistant Director at the Lawyers Board recently wrote, “If subpoenaed to a deposition or a hearing, the attorney could assert the attorney-client privilege or the ethical obligation in response to all questions seeking such information (and recall that the professional responsibility obligation of confidentiality is more extensive than the privilege).” Martin Cole, “The Self-Defense Exception to Client Confidentiality,” Minnesota Lawyer, April 1, 2002. This position appears to be incorrect as to the ethics obligation of confidentiality. MRPC Rule 1.6(b)(2) provides that a lawyer may reveal secrets when required by law; Rule 26, R. Civ. Proc., requires an answer to relevant discovery unless there is a privilege; and MRPC Rule 3.4(c) requires a lawyer to obey court rules. Similarly, U.S. v. Sindel, 53 F.3d 874 (8th Cir. 1995), held that Rule 1.6 did not protect non-privileged material from an IRS summons.
Conclusion
Because litigation is, in some measure, “a search for the truth,” and privileges conceal otherwise relevant facts, the law has always construed privileges narrowly. Nonetheless, the courts have recognized the importance of confidentiality for rendering legal advice as well as recognized certain realities of modern communication and litigation. At least for those well-informed on the protections and exceptions of the three confidentiality doctrines — attorney-client privilege, work product and the ethics duty of confidentiality — the protections of these doctrines are available, in some ways more broadly than ever before.