attorney/client privilege defined - the in-house counsel ... · pdf fileattorney/client...

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Attorney-Client PrivilegeFor In House Counsel and the

Use of Personal Electronic Devices and Social Media in the Workplacee

An Overview and DiscussionMay 19, 2011

Association of Corporate CounselWest Central Florida Chapter

Attorney/Client Privilege Defined

“The attorney-client privilege exists in order that one who is, or seeks to become a client, may consult freely with counsel without fear of compelled discovery ofwithout fear of compelled discovery of information communicated by him to the attorney whom he has employed, or seeks to employ.”

-Wigmore

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Attorney-Client Privilege Elements

1. Where legal advice of any kind is sought2. From a professional legal advisor in his/her capacity as

such3. Then the communications relating to that purpose4. Made in confidence4. Made in confidence5. Are received by counsel6. Are at the client’s insistence permanently protected7. From disclosure by the client or by the legal advisor8. Except if the client waives the privilege

- Wigmore, Evidence § 2291

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Courts condense Wigmore’s Elements into 4 Factors

1. Communication2. Made between privileged persons3. In Confidence4. For the Purpose of Seeking or Providing

Legal Assistance

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Dilemma for Corporate Counsel and the Courts

• Defining the scope of the privilege for in-house counsel is complicated by the fact that these attorneys frequently have multi-faceted duties that go beyond traditional tasks performed by lawyers.

• Courts faced with applying traditional attorney client• Courts faced with applying traditional attorney-client privilege issues to corporate counsel may generally apply a different privilege standard to communications involving corporate counsel than to outside counsel.

• Courts have employed a variety of factors to determine whether communications involving corporate counsel are privileged.

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Policy Justifications

1. Encourage clients to be completely truthful with their attorneys without the fear of disclosure so that the attorneys can give effective legal advice

2. By promoting a client’s freedom of consultation with an attorney the privilege fosters voluntary compliance with regulatory laws and facilitates effective administration of the laws

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Policy Justifications

“The purpose of the privilege is to encourage full and frank communications between attorneys and their clients and the privilege exists not only to the giving of professional advice to those who can act on it but also the giving ofthose who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice.”

Upjohn Co. v. U.S., 449 U.S. 383 (1981)—U.S. Supreme Court specifically addressing the attorney-client privilege in the context of a corporate client

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Corporate Attorney-Client Privilege

• Generally accepted that a corp. is entitled to same protection of confidential communications as an individual –See § 90.502 Fla. Stat. (2010)

• Shielding these discussions from discovery g ypromotes general compliance with the law

• Corp. commonly consult with in-house counsel on how to comply with the law– Employment Laws– Contracts

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Who May Raise the Privilege

• Complicated because the corporation can only communicate through its agents. Therefore, certain employees may claim the attorney-client privilege on behalf of theattorney client privilege on behalf of the corporation.

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I. Communication

• May be oral or written• Silence?• May not always protect attorney notes – may not

protect every communicationU S Postal Serv v Phelps Dodge RefiningU.S. Postal Serv. v. Phelps Dodge Refining

Corp., 852 F. Supp.156 (E.D.N.Y. 1994)– In-house counsel’s handwritten notes containing factual

info from individuals who may not be clients are not privileged

– Might be able to claim privilege if the conveyors of the info are agents of the client, empowered for that purpose.

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II. Privileged Persons

Generally: • The client• The client’s attorney• Communicating agents of the client

and/or the attorney• Agents of the attorney for purposes of the

representation

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Corporation as a ClientHow to Determine who is a Privileged Person

Control Group Test– Only individuals in the “control group” –

defined as those employees in a position to control or take part in the determination of pcorporate action in response to legal advice, could act as “the client” for purposes of the privilege

Philadelphia v. Westinghouse Electric Corp.,210 F. Supp. 483 (E.D.Pa. 1962)

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Corporation as a Client

Subject Matter Test1. Employee, not a member of the control group,

made a communication to the corporation’s attorney at the direction of a superior for the purpose of obtaining legal advice for the p p g gcorporation

2. The subject matter of the issue requiring attorney advice was within the scope of the employee’s dutiesHarper & Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir. 1970)

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Modified Subject Matter TestAdded: the communication was not disseminated beyond these persons who, based on the corporate structure, needed to know its contents- Diversified Indus Inc v Meredith 572 F 2d 596 (8thDiversified Indus., Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977)- Florida – Southern Bell Tel. & Tel. Co. v. Deason, 632 So. 2d 1377 (Fla. 1994)- Muro v. Target Co., 243 F.R.D. 301 (N.D. Ill. 2007) (E-mails containing privileged content sent by corporate counsel via a large list-serve were not privileged because not everyone on the list-serve could be identified)

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Ampicillin Test– Modified the Modified Subject Matter Test– Replaced “direction of corporate superior” with

a reasonable belief by the employee making h h hthe communication that the communication was necessary to the decision making process concerning a problem on which legal advice was sought

In re Ampicillin Litigation, 81 F.R.D.377 (D.D.C. 1978)

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Corporation as a Client cont’d

Upjohn Co. v. U.S., 449 U.S. 387 (1981)- Rejected the control group test – because it incorrectly

focused on who was communicating as opposed to the substance of the communicationExpanded the scope of attorney client privilege- Expanded the scope of attorney-client privilege regarding corporate communications

- Court stated that a determination of whether corporate attorney-client privilege existed was to be done on a case-by-case basis

- But did not draft rules for applying the privilege and set forth a case-by-case standard

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Element 3: In Confidence

• A communication is made “in confidence” if the client expressly so states or if the attorney reasonably so concludes– Courts look to:– Courts look to:

• Intent • Location• Means

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In Confidence

Complex issue in corporations because often communications must be filtered through many employeesBank Brussels Lambert v Credit Lyonnais (Suisse) y ( )S.A.,160 F.R.D. 437 (S.D.N.Y. 1995) (where decision making power of corporation is diffused among several employees the dissemination of confidential communications to such persons does not defeat the privilege)

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In Confidence: Presence of a Recording Device

• The presence of a recording device in an attorney-client meeting may destroy the attorney-client privilege. See U.S. v. Thompson, No. 07-p g p30010, 2007 WL 2700016 (C.D. Ill. Aug. 8, 2007) (a telephone conversation between an attorney and a client was not privileged when the client was aware that the telephone conversation might be recorded)

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Element 4: For Purpose of Seeking or Obtaining Legal Advice

To be privileged, communication must have been made primarily for the purpose of obtaining legal advice– Upjohn Co v U S 449 U S 383 (1981) –– Upjohn Co. v U.S., 449 U.S. 383 (1981) –

communication privileged and protected from compelled disclosure because made to secure legal advice

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“Primary Purpose” TestUnited States v. Chevron Corp., 1996 U.S. Dist. LEXIS 8646 (N.D. Cal. May 29, 1996)

• A party seeking to withhold discovery based upon the attorney-client privilege must prove that all of the communications it seeks to protect were made ‘primarily for the purpose of obtaining legal advice.

• No privilege can attach to any communication as to which business• No privilege can attach to any communication as to which business purpose would have served as a sufficient cause, i.e., any communication that would have been made because of a business purpose, even if there had been no perceived interest in securing legal advice.

• The party asserting privilege over documents must demonstrate that the communications that are sought to be protected were made primarily for the purpose of generating legal advice

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The “Professional Legal Capacity” Test

Georgia-Pacific Railroad Corp v. GAF Roofing, 1996 U.S. Dist. LEXIS 671 (S.D.N.Y. Jan. 24, 1996)

• The application of the attorney client pp yprivilege turns on whether the communication is given in the attorney’s capacity as a business advisor or office of the company or in the traditional role of lawyer.

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Transmission of Privileged Documents Within the Corporation• Generally, intra-corporate distribution of

legal advice received from counsel does not destroy the privilege

• Idea is that the corporation must be pproperly informed of legal advice and able to act appropriately– Premiere Digital Access, Inc. v. Central

Telephone Co., 360 F. Supp. 2d 1168 (D. Nev. 2005)

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Waiver of the Attorney Client Privilege

Generally, privilege waived if:1. A client communicates confidential

information to a third party2 A tt l fid ti l2. An attorney reveals confidential

information to a third party with the client’s consent

– Can be intentional or inadvertent

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Corporate Client• Usually assumed by courts that corporate management

acts on behalf of the corporation when issues of waiver are discussed. Therefore, usually, the privilege may only be waived by members of the control group– Commodity Futures Trading Comm’n v. Weintraub, 471 U.S.

343 (1985)U S v De Lillo 448 F Supp 840 (E D N Y 1978)– U.S. v. De Lillo, 448 F. Supp 840 (E.D.N.Y. 1978)

• The Board of Directors may waive the privilege– Tail of the Pup, Inc. v. Webb, 528 So. 2d 506 (Fla. 2d DCA

1988)• And an individual director cannot go against the board’s decision

– Wechsler v. Squadron, Ellendorf, Plesent, & Sheffield LLP., 994 F. Supp. 202 (S.D.N.Y. 1998)

• Unless the director is a whistleblower• But if the director is wrong, he or she can be sued for breach of the

director’s corporate duty

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Disclosure Within a Corporation

• If a member of control group conveys the attorney’s advice to any other member of the control group the privilege is not waivedwaived– Barr Marine Prods. Co., Inc. v Borg-Warner

Corp., 84 F.R.D. 631(E.D.Pa. 1979)

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Beyond the Control Group

• Upjohn suggests a need-to-know limitation on sharing privileged information with employees who are not members of the control groupcontrol group– Upjohn, 449 U.S. at 394-395

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Florida Follows the Need-to-Know Requirement

• Southern Bell Tel. & Tel. Co. v. Deason, 632 So. 2d 1377 (Fla. 1994)

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Waiver By Disclosure to Government

• Although government agencies carry big sticks, disclosure to it is like disclosure to any other third party.

• Courts reject notion of selective waiver: “[A] party may not waive the attorney-client privilege for its own benefit to a third party government agency, then hide behind the

i il i i il liti ti ” P l Fi fi ht R li fprivilege in civil litigation.” Pensacola Firefighters Relief Pens. Fund Bd. of Trustees v. Merrill Lynch, 2010 WL 503082 (N.D. Fla. Feb. 5, 2010).

• Few exceptions. See Diversified Indus., Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977); Saito v. McKesson HBOC, Inc., 2002 WL 31657622 (Del. Ch. Nov. 13, 2002), aff’d, 870 A.2d 1192 (Del. 2005).

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Some Protection On Scope: FRE 502

• Advisory committee decided not to propose a “selective waiver” provision, it did limit scope.

• When disclosure is “in a Federal proceeding or to a Federal office or agency,” waiver is limited to what is actually disclosed unless:actually disclosed unless:– Waiver is intentional;– Communications concern same subject matter; and– Communications “ought in fairness to be considered together.”

• Exception is for “unusual circumstances” in order to “prevent a selective and misleading presentation of evidence to the adversary.”

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Inadvertent Waiver

• Every state is different• There are three basic approaches:

– The Lenient Approach• There is no waiver as long as there has not been a knowing

d l l h f h land intentional relinquishment of the privilege

– The Intermediate Approach• The court examines several factors to determine whether the

disclosing party was reasonable in their actions

– The Strict Approach• Once a disclosure has occurred, the privilege has been

waived, regardless of intent

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Inadvertent Waiver

• Florida takes a middle of the road approach– Abamar Housing and Dev. v. Lisa Daly Lady

Decor Inc 698 So 2d 276 (Fla 3d DCADecor, Inc., 698 So. 2d 276 (Fla. 3d DCA 1997)• Inadvertent disclosure of privileged documents did

not waive privilege where demonstrated that reasonable precautions were taken to prevent inadvertent disclosure

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New Rule in Florida

• Fla. R. Civ. P. 1.285 governing inadvertent disclosure became effective 1/1/2011.

• Three principal provisions:– A party who inadvertently discloses may serve notice

within 10 days of discoverywithin 10 days of discovery.– Receiving party must return, sequester, or destroy, and

take steps to retrieve materials disclosed.– Receiving party may challenge privilege, including on

waiver grounds.• Rule does not address substantive question of whether

and when an inadvertent disclosure constitutes waiver.

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Limited Waiver-Florida

• Paradise Divers, Inc. v. Upmal, 2006 WL 2741494 (Fla. 3d DCA 2006) (not a complete waiver where party produced privileged documents relating to its “adviceprivileged documents relating to its advice of counsel” defense, but invoked privilege on other documents.

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Inadvertent Waiver: Factors for Reasonableness

• Some of the factors a court can look at to determine reasonableness in a middle of the road approach are:– The precautions taken to prevent an p p

inadvertent disclosure– The number of inadvertent disclosures– The extent of the disclosures– Any delay in measures taken to rectify the

disclosures– Any overriding interests in justice

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Inadvertent Waiver and Document Management Systems

• Victor Stanley, Inc. v. CreativePipe, Inc., 2008 WL 221841 (D. Md. May 29, 2008).– A corporation’s methods to prevent inadvertent

disclosure during discovery were not reasonable when th ti tt t d t t i ll i il dthe corporation attempted to retrieve all privileged documents from a data-base using a keyword search of 70 terms, but could not demonstrate to the court:

• The strategy behind choosing the keyword terms• The qualifications of the persons who selected the terms• That quality-assurance tests were intermittently conducted

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Exceptions to the Attorney–Client Privilege (Federal)

• Courts have recognized certain contexts in which the attorney-client privilege might be expected to exist but can be challenged by other means:challenged by other means:

1. Fiduciary Exception2. Crime or Fraud Exception

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Fiduciary Exception

• Garner doctrine – permits the piercing of the corporation’s privilege for the benefit of the corporation’s shareholders– Garner v Wolfinbarger 430 F 2d 1093 (5th– Garner v. Wolfinbarger, 430 F.2d 1093 (5th

Cir. 1970)• May expand beyond the derivative capacity

– Securities fraud – In re Diasonics Sec. Litig., 110 F.R.D.570 (D. Colo. 1986)

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Crime or Fraud Exception

• Broader reach than Garner doctrine1. Must be an ongoing or future-contemplated action2. If occurred, privileged, unless cover up is

contemplated3. Attorney’s advice must be sought by the client to help3. Attorney s advice must be sought by the client to help

effectuate the crime or post-commission cover-up– In re Grand Jury Investigation (Schroeder), 842 F.2d 1223 (11th

Cir. 1987) (exception applies even where the attorney is unaware of the client’s criminal or fraudulent purpose)

– In re Grand Jury Subpoena, 419 F.3d 329 (5th Cir. 2005) (waiver is limited to communications and documents in furtherance of the ongoing criminal or fraudulent conduct)

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Crime or Fraud Exception: Limitation

• Safe harbor provision of 18 U.S.C. § 1515(c) serves as absolute bar to prosecution for obstruction of justice where attorney provided bona fide legal services in connection with or anticipation of an official proceeding.

• Court will examine whether attorney acted in “good faith.”

– In U.S. v. Stevens, the court granted a Rule 29 motion to acquit an in-house attorney who was on trial for obstruction of a proceeding and concealment of documents, some of which had been withheld as privileged. A different court previously had ordered the production of the documents pursuant to the crime-fraud exception. However, the criminal court determined that the attorney had acted in the “course of her bona fide legal representation of a client and in good faith reliance of both external and internal lawyers for GlaxoSmithKline.” See Rule 29 Mo. Tr. 3-11, U.S. v. Stevens, No. RWT-10-694, (D. Md. May 10, 2011).

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Exceptions to the Attorney–Client Privilege (Florida)

• Florida (Fla. Stat. § 90.502(4)) recognizes the following exceptions to the Attorney-Client privilege:1. Crime-Fraud2. Testamentary- Caputo v. Nouskhajian, 871 So. 2d 266 ( Fla. 4th

DCA 2004) (communications between decedent and his attorney concerning decedent’s intent were not protected by the privilege where decedent’s brother and sister were both claiming same assets)

3. Breach of Duty- limited to issue(s) of breach4. Lawyer as Attesting Witness5. Joint Clients

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Discussion Questions

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ATTORNEY AS RECIPIENT

Your company is looking to expand its retail operations into a new market. The head of the business unit drafts a memorandum to the CEO outlining thememorandum to the CEO outlining the benefits and risks of expanding into a new territory. You are copied on the memorandum. The memo is later sought in litigation. Is it privileged?

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Not Privileged

U.S. Postal Serv. v. Phelps Dodge Refining Corp., 852 F. Supp 156 (E.D.N.Y. 1994)

• No privilege for documents that were:– Forwarded to in-house counsel– Copied to in-house counsel

Attorney’s handwritten notes where no indication that legal advice was– Attorney s handwritten notes – where no indication that legal advice was sought or given

“A corporation cannot be permitted to insulate its files from discovery simply by sending a ‘CC’ to in-house counsel”

Barr Marine Products Co., Inc. v. Borg-Warner Corp., 84 F.R.D. 631 (E.D. Pa. 1979)

• “It would seem obvious that business communications cannot be insulated from discovery by virtue of the mention of an attorney’s name, or their being directed to an attorney.”

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Attorney as Document Depository or Incidental Recipient

Med. Waste Techs v. Alexian Bros. Med. Ctr., Inc., 1998 WL 387706 (N.D. Ill. June 24, 1998) One cannot merely hand over documents to an attorney and have them be protected by the

l lattorney client privilege– Leading Florida Case – U.S. v. Lockheed Martin Corp.,

995 F. Supp. 1460 (M.D. Fla. 1998)• Records of interviews of employees not protected by attorney

client privilege where interviews were ordered and administered by corporation’s audit director and attorney was present merely to gather information

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IN-HOUSE COUNSEL AS BUSINESS ADVISOR

You are in-house counsel for a government agency that recently conducted a reduction in force (RIF). The agency is now being sued for age discrimination in connection with the RIF. You are not counsel of record. You were involved in organizing and implementing the RIF. You played a significant role in “framing” or communicatingplayed a significant role in framing or communicating the RIF to employees and the public. You played a key role in the agency’s preparation of RIF regulations. The plaintiff wants to depose you. The agency moves for a protective order preventing the deposition on the grounds that you are counsel for the agency and you participated in the early stages of the agency’s defense of this litigation.

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Not Privileged• Evans v. Atwood, No CIV. A 96-2746 (RMU), 1999 WL 1032811

(D.D.C. Sept. 9, 1999)• According to the court in Evans v. Atwood, in-house counsel’s role in

the challenged RIF was so significant that his testimony was necessary to the plaintiffs’ case. Further, he was not counsel of record in the litigation. Acknowledging the agency’s legitimate concerns about the attorney-client privilege, the court expressly reserved the agency’s i h bj i h i li d h i ilright to object to any questions that implicated the privilege.

• In a footnote, the court indicated that communications between in-house counsel and agency officials which are not strictly legal may not be protected by the privilege:

“Because an in-house lawyer often has other functions in addition to providing legal advice, the lawyer’s role on a particular occasion will not be self-evident as it usually is in the case of outside counsel.”

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In-House Counsel as Business Advisor

Business aspects of a decision by in-house counsel are not protected simply because legal considerations are involved– Hardy v New York News Inc 114 F R D– Hardy v. New York News, Inc., 114 F.R.D.

633 (S.D.N.Y. 1987)

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In-house Counsel – Legal Advice is Privileged, Business Advice is NotCourts have imposed a heavy burden on corporations seeking to protect communications with persons holding dual legal and non-legal roles.– In re Sealed Case, 737 F.2d 94 (D.C. Cir. 1984)

• Government sought testimony from in-house attorney who was also a company VP with responsibilities in addition to legal duties.

• Held: Company can only assert a privilege upon clear showing that advice was given in a professional legal capacity

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In-house Counsel – Legal Advice is Privileged, Business Advice is Not

In re Grand Jury Proceeding, 68 F.3d 193, 196 (7th Cir. 1995)“A client does not lose the privilege merely because his attorney services a dual role”because his attorney services a dual role

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Advice about Legal Consequences of Business Options is Generally Privileged

• In re Grand Jury Subpoena Duces Tecum (Marc Rich), 731 F.2d 1032 (2d Cir. 1984)– Privilege attached to legal advice concerning– Privilege attached to legal advice concerning

the mechanics and tax consequences of alternative business strategies

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INTERNAL AUDITSYou are an attorney employed by a corporation that undertook a major internal audit to review accounting performed on a large government contract knowing that issues existed concerning that accounting. The initial phase of the audit was conducted by an internal audit manager with no involvement by you. The second phase of the audit (root cause analysis) was initiated. During phase two, employee interviews were conducted and you participated in some of themsome of them.

After the completion of the audit, the audit manager drafts a report and recommendation. The R&R is sent to you only. You edit and revise the R&R and use it to give oral advice to company executives.

Subsequently, in litigation involving the accounting, the other side seeks to discover the employee interviews and report recommendation. Your corporation claims work product and/or subject to attorney client privilege for these attorney documents.

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NOT PRIVILEGED/PRIVILEGED• United States v. Lockheed Martin Corp., 995 F. Supp.

1460 (M.D. Fla. 1998)Employee Interview: In the Lockheed Martin case, the record did not support that the attorney planned or conducted the interviews. Instead, the record established that the interviews were the corporation’s effort and the pattorney attended and participated in some so that she could get a better sense of the situation. The interviews were not the attorney’s work product. Plus, the audit was conceived as part of Lockheed’s business activity, not in anticipation of litigation. R&R Privileged: Communication between audit manager and lawyer. Purpose was to advise executives about legal issues and contained attorney’s own analysis.

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Internal Investigations

Company conducts an internal investigation into allegations of improper accounting practices. The SEC and DOJ simultaneously begin investigating the same conduct, and ask for a report on the internal investigation. Company’s counsel agrees to meet, but confirms that no p y g ,documents will be provided. Counsel subsequently meets and discusses investigation, with an emphasis on witness interviews. Company executive is subsequently criminally charged, and subpoenas the interview memos and other documents regarding the investigation. Can he get them?

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Maybe• The good:

– United States v. Fago, 238 F.R.D. 3 (D.D.C. 2006) – Presentation to government did not waive work product protection as to undisclosed documents.

• The bad:– SEC v. Roberts, 254 F.R.D. 371 (N.D. Cal. 2008) – Presentation , ( )

to government waived attorney-client and work product privileges as to written material that was orally discussed with government.

• The ugly:– United States v. Reyes, 239 F.R.D. 591 (N.D. Cal. 2006) –

Presentation to government waived attorney-client privilege as to all interview memoranda; Argument that no written materials were provided was “specious” because the purpose was the transmission of privileged information.

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Some considerations

• Cases in the area turn on finely honed factual distinctions, and not possible to predict with certainty.

• If you need to present -- a “just the facts” presentation best limits the risk of waiver.

• FRE 502 provides downside protection.p p– United States v. Treacy, No. S2 08 CR 366(JSR), 2009 WL

812033 (S.D.N.Y. Mar. 23, 2009) (“Here, Akin Gump and its client, the Special Committee, have no adversary in this action, and there is no suggestion of ‘selective’ or ‘misleading’ conduct. To the contrary, all of the interview memoranda that were disclosed to the Government have now been provided to defendant. Accordingly, the instant case does not present any of the ‘unusual circumstances’ that would otherwise require a finding of waiver.”).

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WHO IS THE CLIENT: THE CORPORATION OR INDIVIDUAL EMPLOYEES?

Company hires regular counsel to conduct internal review of accounting practices in anticipation of SEC investigation, with the idea of sharing results with auditors, cooperating with regulators, and self-reporting if necessary. CFO is a part of the decision to conduct the review, and is simultaneously being represented by same counsel in an unrelated securities class action. The class action is subsequently amended to include the subject of the review. The CFO is then interviewed as a part of the review. Lawyers do not provide Upjohn warning, and there is no discussion of the civil suit. Later, lawyers advise CFO to retain independent counsel. Lawyers also disclose results of review, including communications with CFO to government. Government charges CFO. Can CFO assert the privilege?

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No, at least on these facts

• United States v. Ruehle, 583 F.3d 600 (9th Cir. 2009).– District court found privilege applied, and

referred company’s lawyers to barreferred company s lawyers to bar.– Appellate court reversed: No expectation of

confidentiality.• CFO was “no ordinary…employee”.• CFO was “intimately involved” in the review.• CFO knew there would be disclosure to third parties, even if

not government.

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Practical Issue

• Corporate employee consults w/corporate counsel regarding the employee’s own potential civil or criminal liability

What should In house counsel do?- What should In-house counsel do?- Who holds the privilege?

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Practical Issue: Employee Interviews

• Where risk that employee has personal liability, counsel is ethically required to warn employee that corporate counsel doesn’t represent employee in individualdoesn t represent employee in individual capacity – BEFORE questioning by corporate counsel

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Client- Corporation or Individual Employees?

An individual’s subjective belief that he was represented by corporate counsel is not sufficient to create an attorney-client relationship and no privilege may attach

In re Grand Jury Subpoena, 415 F.3d 333 (4th Cir. 2005) y p ( )(internal investigation-belief was not reasonable under the circumstances)

U.S. v. Evans, 113 F.3d 1457 (7th Cir. 1997) (presence of third party defeats attorney-client privilege even though client may harbor desire for confidentiality)

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Former Employees• You are counsel for Initech. You have been asked to prepare

Milton, a former Initech employee for his deposition in the Lumbergh/Swingline matter.

• During your deposition prep you discuss with Milton:1. Your communications with Milton when he was employed by

Initech regarding this matter;2 T f h h L b h/S l2. Testimony of other witnesses in the Lumbergh/Swingline matter.

• During the deposition, apposing counsel asks Milton about pre-deposition communication with you. You object on the basis of privilege.

• Later, after a break, opposing counsel asks Milton about any discussions with you during the break. Milton tells opposing counsel you are acting as his attorney for this deposition and case. You object on the basis of client privilege.

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Probably Not Privileged1. Privileged information obtained by the former employee while

employed by the Company (including information conveyed by counsel during that period) remains privileged. Peralta v. Cendant Corp., 190 F.R.D. 38 (D. Conn. 1999)

But Refused to extend privilege to deposition prep.• If conversation went beyond employee’s activities within the course of

her employment And “Discussion during a break as to how a question should be

handled. . . not shown to be entitled to any privilege.”Also – No privilege for pre-deposition communications despite claim that

company counsel was acting as her attorney. Wade Williams Distribution, Inc. v. American Broadcasting, No. 00 Civ. 5002(LMM), 2004 WL 1487702 (S.D.N.Y. June 30, 2004) (The mere volunteered representation by corporate counsel of a former employee should not be allowed to shield information which there is no independent basis for checking within the attorney-client privilege.”)

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Practical Suggestions

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Practical Suggestions for In-House Counsel to Protect the Privilege

A. Label Written Materials– Legal communications between employees

and in-house counsel should be labeled as “privileged and confidential”p g

– In-house counsel should assume the primary responsibility for the maintenance of documents regarding privileged communications

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B. Legal Advice– Corporation should seek advice from in-house

counsel that has legal ramifications– In-house counsel should avoid handling mattersIn house counsel should avoid handling matters

that are usually the responsibility of business executives

– Communicate business and legal advice in separate documents

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C. Corporate Meetings– Prior to meetings, in-house counsel should be

advised about the topics to be discussed• In-house counsel can alert corporateIn house counsel can alert corporate

representatives that some communications may not be protected

– Keep detailed records of the meetings• Assist in determining which communications

involved legal services and should be protected

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D. Internal Investigations– Hire outside counsel

• Avoids bias against in-house counsel by courts

– If in-house counsel investigates: interview– If in-house counsel investigates: interview employees within the control group and solicit information to be volunteered by other employees

– If you want to use the investigation defensively, be prepared to waive.

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• E. Avoiding Inadvertent Disclosures When Using a Document Management System During Discovery– When developing a data-base search, make sure to

k d f h d h h hkeep a record of how and why the search was developed

– Make sure the persons developing and conducting the search are qualified to do so

– Conduct intermittent quality assurance tests –periodically take a sampling of documents and manually review for privileged documents

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DISCOVERY ISSUES

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Social Media Discovery

• Stored Communications Act specifically prohibits electronic communication providers from disclosing the contents of electronically stored communications or identity of subscribers

• Rule 45 subpoenas not an exception

• Rule 34 production requests may provide some help, but relevancy rules apply

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PED DiscoveryPED Discovery

• Federal and state discovery rules are potentially behind the developing technology

dl h h l ll• Rapidly changing technology potentially becoming an increasingly important source of evidence in criminal and civil cases

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• PED data is easily overlooked• PED data more vulnerable to damage or

destruction than conventional ESI datadestruction than conventional ESI data• Volatile memory makes continued existence of

PED data less certain than conventional computer data

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• To the extent that data like IM is retained in the ordinary course of business, IM may, like email, constitute ESI and may be d bl


discoverable

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• Important to become educated about clients’ (both internal and external) uses of PED’s– who has them– how they are used


how they are used– what may be stored on them– whether data is backed up– where it can be retrieved, etc.

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26

Approaches to Preserving PED InformationApproaches to Preserving PED Information

• Freezing the device• Cloning the device• Forensic acquisition and• Forensic acquisition and

preservation of PED data

76

Approaches to Producing PED InformationApproaches to Producing PED Information

• Forensic PED expert• Manual acquisition• Direct review• Direct review

77

QUESTIONS

78