Protecting Confidential Legal Information
Copyright (c) 2007 Jenner & Block LLP. All Rights Reserved.
By Jerold S. Solovy and Robert L. Byman and Michael T. Brody and David M. Greenwald and Blair R. Zanzig and Marek H. Badyna and Kristen L. Mercado and Adam A. Hachikian
In 2007, we have again updated our reference, Protecting Confidential Legal Information: A Handbook for Analyzing Issues Under the Attorney-Client Privilege and the Work Product Doctrine from the 2005 edition of the handbook. This work began as a modest outline in the early 1980's addressing issues raised by the United States Supreme Court's decision in Upjohn Co. v. United States, 449 U.S. 383 (1981). With each revision, it has grown in both breadth and depth. The 2006 edition is no exception.
In preparing the 2007 edition, we continued to strive to make the Handbook relevant to practitioners. This year, we have expanded our coverage of issues related to electronic discovery, particularly with reference to cost shifting and the proposed changes to rules 16, 26, and 34 of the Federal Rules of Civil Procedure. See Section I.E.1.b., Electronic Mail and Other Electronic Data: Cost Shifting. We also continue to monitor the implementation of Internal Revenue Code § 7525, which purports to extend the common-law attorney-client privilege to "federally authorized tax practitioners" providing "tax advice." See Section I.B.2.c., Accountants As Privileged Parties.
We also note the continuation of several trends we observed in prior versions of the Handbook. For example, despite the admonition in Upjohn that, for the purposes of the attorney-client privilege, in-house counsel should be treated on an equal footing with outside counsel, courts have generally continued to express skepticism regarding in-house counsel's assertion of the privilege on the basis that in-house counsel has mixed business and legal roles in the corporation. See Section I.B.2.a., In-House vs. Outside Counsel, and Section I.D.2., Cases of Mixed Purpose. Courts have also continued to reject "selective waiver" for "voluntary" disclosures to government agencies, finding that disclosure of otherwise privileged material to the government generally constitutes waiver and may lead to compelled disclosure to private litigation adversaries. However, within the last year, federal district courts in New York and California have breathed some life into the selective waiver doctrine. See Section I.G.6.a., Selective Waiver Doctrine, Disclosure to the Government, and Section IV.E.4., Selective Waiver: Reporting to Government Agencies.
We hope that you turn to this handbook as your first reference when confronting privilege issues. For a broader reference on all of the privileges that may confront practitioners, we recommend DAVID M. GREENWALD, EDWARD F. MALONE, & ROBERT R. STAUFFER, TESTIMONIAL PRIVILEGES (Thomson West 3d ed. 2005). We welcome your comments and suggestions for future editions.
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I. The Attorney-Client Privilege
Historically, the attorney-client privilege developed upon two assumptions: that good legal assistance requires full disclosure of a client's legal problems, and that a client will only reveal the details required for proper representation if her confidences are protected. See Fisher v. United States, 425 U.S. 391, 403 (1976). In response to these assumptions, the attorney-client privilege developed at common law to encourage free and open communication between client and lawyer, thus promoting informed, effective representation. 8 JOHN H. WIGMORE, EVIDENCE § 2291 (J. McNaughton rev. 1961). Because the privilege obstructs the search for truth, however, it is construed narrowly. See, e.g., Fisher, 425 U.S. at 403; Haines v. Liggett Group, Inc., 975 F.2d 81, 84 (3d Cir. 1992) ("[S]ince the privilege has the effect of withholding relevant information from the factfinder, it applies only where necessary to achieve its purpose."); In re Grand Jury Proceedings Under Seal, 947 F.2d 1188 (4th Cir. 1991); JEREMY BENTHAM, RATIONALE OF JUDICIAL EVIDENCE (1827).
Over the years, the courts have provided several definitions of the attorney-client privilege. Judge Wyzanski provided the seminal definition in United States v. United Shoe Machinery Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950):
The [attorney-client] privilege applies only if (1) the asserted holder of the privilege is or sought to be come a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.
As a general matter, the privilege protects:
(A) a communication,
(B) made between privileged persons (i.e., attorney, client or agent),
(C) in confidence,
(D) for the purpose of obtaining or providing legal assistance for the client.
See In re Air Crash Disaster, 133 F.R.D. 515, 518 (N.D. Ill. 1990); RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 68 (hereinafter REST. 3D); 8 JOHN H. WIGMORE, EVIDENCE § 2292 (J. McNaughton rev. 1961); see also Coltec Indus., Inc. v. Am. Motorists Ins. Co., 197 F.R.D. 368, 370-71 (N.D. Ill. 2000) (Noting the elements as outlined by Wigmore: "(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived."); SEC v. Beacon Hill Asset Mgmt. LLC, No. 02CIV8855LAKHBP, 2004 WL 1746790, at *3 (S.D.N.Y. Aug. 3, 2004) (quoting United Shoe).
Communications Covered By the Privilege
Virtually all types of communications or exchanges between a client and attorney may be covered by the attorney-client privilege. Privileged communications include essentially any expression undertaken to convey information in confidence for the purpose of seeking or rendering legal advice. Haines v. Liggett Group, Inc., 975 F.2d 81, 90 (3d Cir. 1992) (privilege extends to verbal statements, documents and tangible objects conveyed in confidence for the purpose of legal advice); 8 John H. WIGMORE, EVIDENCE § 2292 (J. McNaughton rev. 1961); REST. 3d § 119.
1. Documents And Recorded Communications
The broad sweep of privileged communications encompasses not only oral communications, but also documents or other records in which communications have been recorded. REST. 3D § 69; JOHN W. STRONG, MCCORMICK ON EVIDENCE § 89 (5th ed. 1999); 24 CHARLES ALAN WRIGHT & KENNETH W. GRAHAM, JR., FEDERAL PRACTICE & PROCEDURE § 5484 (1986).
However, documents do not become automatically privileged merely because they are communicated to an attorney. The privilege only protects those documents that reflect communications between an attorney and client. In re Grand Jury Subpoenas, 959 F.2d 1158 (2d Cir. 1992); Duttle v. Bandler & Kass, 127 F.R.D. 46, 52 (S.D.N.Y. 1989). Documents or other communications that a client transmits to a lawyer neither gain nor lose privileged status as a result of the transfer. Fisher v. United States, 425 U.S. 391, 404 (1976); JOHN W. STRONG, MCCORMICK ON EVIDENCE § 89 (5th ed. 1999). Unless a preexisting document was itself privileged before it was communicated to an attorney, it does not become privileged merely because of the transfer. Fisher, 425 U.S. at 391; JOHN W. STRONG, MCCORMICK ON EVIDENCE § 89 (5th ed. 1999); 8 JOHN H. WIGMORE, EVIDENCE § 2307 (J. McNaughton rev. 1961). Thus, a court will consider a pre-existing document to be privileged only if the document was kept confidential and was prepared to provide information to the lawyer in order to obtain legal advice. See United States v. DeFonte, 441 F.3d 92, 94 (2d Cir. 2006) (notes prepared by an incarcerated client of issues to be discussed with attorney, and which were in fact later discussed with counsel, were protected by attorney-client privilege).
In addition to written documents, other modes of communication may also be covered under the privilege. Thus, telephone, audio and video records or tapes may qualify as privileged communications. See JOHN W. STRONG, MCCORMICK ON EVIDENCE § 89 (5th ed. 1999). In general, the mode of communication is not relevant to the determination of privilege. However, the method of communication may be relevant to a determination as to whether the communicator could reasonably expect the information would remain confidential. See REST. 3D § 119 cmt. b; Communications Must Be Intended to Be Confidential, § I.C., below.
2. Communicative Acts
The attorney-client privilege includes non-verbal acts within its definition of protected communications. REST. 3D § 69 cmt. e. A communicative act is one in which the privileged person's actions attempt to convey information such as a facial expression or nod of affirmation. See 8 JOHN H. WIGMORE, EVIDENCE § 2306 (J. McNaughton rev. 1961); 24 CHARLES ALAN WRIGHT & KENNETH W. GRAHAM, JR., FEDERAL PRACTICE & PROCEDURE § 5484 (1986). Such acts are typically protected by the attorney-client privilege. However, not all acts are voluntary attempts at communicating. For example, physical characteristics, demeanor, complexion, sobriety, or dress are not communicative and would not be protected. See JOHN W. STRONG, MCCORMICK ON EVIDENCE § 89 (5th ed. 1999); see also:
In re Grand Jury Proceedings, 13 F.3d 1293, 1296 (9th Cir. 1993). Attorney required to testify regarding client's expenditures, income producing activities and lifestyle during European vacation.
In re Grand Jury Proceedings, 791 F.2d 663, 666 (8th Cir. 1986). An attorney could not claim the privilege to avoid testifying about the authenticity of a client's signature or to avoid identifying the client in a photograph.
United States v. Weger, 709 F.2d 1151, 1154-55 (7th Cir. 1983). The type style characteristics of a letter typed on a typewriter are not communicative and therefore not privileged.
Darrow v. Gunn, 594 F.2d 767, 774 (9th Cir. 1979). An attorney's observations of demeanor are not privileged unless based on a confidential communication.
United States v. Kendrick, 331 F.2d 110, 113-14 (4th Cir. 1964). Physical characteristics (e.g., a mustache) are not subject to the privilege.
United States v. Kaiser, 308 F. Supp. 2d 946, 954 (E.D. Mo. 2004). Peripheral matters pertaining to the relationships between respondents and their clients, such as client identities and fee information, are simply not protected by the privilege because that type of information was not communicated in confidence to the attorney for the purpose of securing legal advice.
Williams v. Chrans, 742 F. Supp. 472, 493 (N.D. Ill. 1990), aff'd, 945 F.2d 926 (7th Cir. 1991). Testimony by a legal clerk that the defendant was calm and articulate while a dead body was hidden in defendant's trunk did not violate the privilege.
Frieman v. USAir Group, Inc., Civ. A. No. 93-3142, 1994 WL 719643, at *6-7 (E.D. Pa. Dec. 22, 1994). Lawyer for client claiming permanent disability was compelled to testify regarding observations of client's physical condition and activities.
Gunther v. United States, 230 F.2d 222, 223-24 (D.C.Cir.1956). Attorney could not be called to testify as to client's competency as such an inquiry would require testimony as to facts learned in privileged context.
State v. Meeks, 666 N.W.2d 859, 868-71 (Wis. 2003). Rejecting Darrow v. Gunn, 594 F.2d 767 (9th Cir.1979) (cited above) and holding that attorney's observation of client's mental state necessarily involved attorney-client communications.
3. Fees, Identity And The "Last Link"
Some courts have carved out exceptions to the types of communications that are protected by the privilege and have denied protection to items such as the identity of the client, the fact of consultation, the payment of fees, and the details of retainer agreements. See 8 JOHN H. WIGMORE, EVIDENCE § 2313 (J. McNaughton rev. 1961); 24 CHARLES ALAN WRIGHT & KENNETH W. GRAHAM, JR., FEDERAL PRACTICE & PROCEDURE § 5484 (1986); Diane M. Allen, Attorney's Disclosure, in Federal Proceedings, of Identity of Client as Violating Attorney-Client Privilege, 84 A.L.R. FED. 852 (1987). These courts have reasoned that such routine items are not communicated in order to obtain legal services and that fear of disclosure of such information will not deter clients from providing these facts. See:
In re Grand Jury Subpoena Duces Tecum, 94 Fed. Appx. 495, 497 (9th Cir. 2004). Defendant in money-laundering case could not assert the privilege over communications with his attorney related to fee arrangements in defense of an LSD possession charge. Such information, even if it could implicate the defendant in money-laundering, was not a privileged legal communication.
In re Grand Jury Subpoena, 204 F.3d 516, 519 (4th Cir. 2000). Client may not veil his identity with attorney-client privilege by voluntarily disclosing confidential communications which necessarily will be exposed by revealing client's identity.
Gerald B. Lefcourt P. C. v. United States, 125 F.3d 79, 86 (2d Cir. 1997). Information regarding the payment of fees is not privileged.
United States v. Bauer, 132 F.3d 504, 508-09 (9th Cir. 1997). Identity of client, amount of fees paid, identification of payment by case name, general purpose of work performed, and whether client's testimony is the product of attorney coaching are not within attorney-client privilege.
In re Grand Jury Proceedings, 841 F.2d 230 (8th Cir. 1988). The identity of a third party paying the legal fees of another is not privileged.
In re Grand Jury Subpoenas, 803 F.2d 493 (9th Cir. 1986), corrected, 817 F.2d 64 (9th Cir. 1987). Identity of a non-client fee payer is not privileged.
In re Grand Jury Proceedings, 517 F.2d 666, 670-71 n.2 (5th Cir. 1975). Identity of client not privileged (collecting cases)).
Porter v. Nationscredit Consumer Discount Co., No. Civ.A. 03-3768, 2004 WL 1753255, at *2 (E.D. Pa. July 8, 2004). Information regarding fee arrangements is not privileged.
Bria v. United States, No. Civ.3: 00CV1156 (CFD), 2002 WL 663862, at *5 (D. Conn. Mar. 26, 2002). Identities and fees not protected.
Bank Brussels Lambert v. Credit Lyonnais (Suisse), 220 F.Supp. 2d 283, 288 (S.D.N.Y. 2002). Holding that it is "well established" in the Second Circuit that a client's identity is not protected, except in special circumstances.
Gonzalez v. Reno, 2001 WL 34083812, at *2 (S.D. Fla. 2001). Client's identity generally falls outside of the privilege.
Duttle v. Bandler & Kass, 127 F.R.D. 46, 52 (S.D.N.Y. 1989). Attorney's bills and documents concerning the termination of the attorney-client relationship were not privileged.
Condon v. Petacque, 90 F.R.D. 53, 54-55 (N.D. Ill. 1981). Fact of consultation and the dates legal services were performed are not privileged.
Ehrich v. Binghamton City Sch. Dist., 210 F.R.D. 17, 20 (N.D.N.Y. 2002). Holding that billing statements that detail attorney services, listing services provided and conversations and conferences between counsel and others, are privileged.
United States v. Gonzalez-Mendez, 352 F. Supp. 2d 173, 175-76 (D. P.R. 2005). Holding that, while a client's fee arrangements are not privileged, the government was not entitled to an expedited hearing on the issue of whether otherwise destitute defendants were paying their attorneys from the proceeds of a bank heist.
Other courts and the Restatement have rejected a strictly categorical approach. See JOHN W. STRONG, MCCORMICK ON EVIDENCE § 90 (5th ed. 1999); 24 CHARLES ALAN WRIGHT & KENNETH W. GRAHAM, JR., FEDERAL PRACTICE & PROCEDURE § 5484 (1986); REST. 3D § 69 cmt. g. Under this alternative approach, the attorney-client privilege applies if revealing the information would directly, or by obvious inference, reveal the content of a confidential communication from a privileged person (client, attorney or agent). See In re Witness before the Special March 1980 Grand Jury, 729 F.2d 489, 495 (7th Cir. 1984); REST. 3D § 69 cmt. g. Courts often refer to this approach as a "last link" exception. Under the "last link" doctrine a routine communication such as a client's identity is not protected unless it links the client to the case. See, e.g., In re Grand Jury Proceedings, 517 F.2d 666, 671 (5th Cir. 1975); NLRB v. Harvey, 349 F.2d 900, 905 (4th Cir. 1965); Baird v. Koerner, 279 F.2d 623 (9th Cir. 1960) (an often-cited case but highly criticized as a misapplication of the doctrine).
It should be remembered that the purpose of the privilege is to encourage free disclosure; it does not act generally to protect clients from incrimination. See, e.g., In re Grand Jury Proceedings, 791 F.2d 663, 665 (8th Cir. 1986); In re Shargel, 742 F.2d 61, 62-63 (2d Cir. 1984). Thus, the privilege does not protect information that is merely invasive or inculpatory, and it is not enough that the communication provides the "last link" to incriminate the client. In re Grand Jury Proceedings, Cherney, 898 F.2d 565 (7th Cir. 1990). Instead, the only "last link" that implicates the privilege is the one that connects the client to a confidential communication or that exposes a confidential communication. See JOHN W. STRONG, MCCORMICK ON EVIDENCE § 90 (5th ed. 1999). See:
In re Grand Jury Subpoena Duces Tecum, 94 Fed. Appx. 495, 497 (9th Cir. 2005). Though potentially incriminating in money laundering case, fee arrangements with counsel were not privileged because they would not provide the last link to the criminal charge.
In re Grand Jury Matter, No. 91-01386, 969 F.2d 995 (11th Cir. 1992). An attorney was ordered to reveal the identity of a client who paid with a counterfeit $ 100 bill. The court reasoned that the only "last link" provided by the identity information was to incriminate the client and not to reveal any confidences.
In re Grand Jury Matter (Special Grand Jury Narcotics) (Under Seal), 926 F.2d 348 (4th Cir. 1991). It is irrelevant that disclosure of a fee arrangement will implicate the client. The privilege only protects fee arrangements if they will reveal confidential communications.
In re Grand Jury Subpoena for Attorney Representing Reyes-Requena, 913 F.2d 1118, 1124-25 (5th Cir. 1990). Court indicated that its holding in In re Grand Jury Proceedings, 517 F.2d 666, 671 (5th Cir. 1975) (cited above) applied only where disclosure of fee information would reveal the "ultimate motive "for seeking legal advice.
DeGuerin v. United States, 214 F. Supp. 2d 726 (S.D. Tex. 2002). Fee information protected only where revealing the information also would expose a substantive attorney-client communication.
Sony Corp of Am. v. Soundview Corp. of Am., No. 3:00 CV 754 (JBA), 2001 WL 1772920, at *3 (D. Conn. Oct. 23, 2001). Fee information protected only if it reveals the motive for representation or substance of advice.
Dean v. Dean, 607 So. 2d 494 (Fla. Dist. Ct. App. 1992). Court refused to order an attorney to disclose the identity of a client involved in a hit and run accident.
Sometimes the disclosure of even routine information can serve to expose client confidences instead of merely providing a link to the confidences. The attorney-client privilege also protects against this type of exposure. A common situation involving this aspect of the privilege arises when the motive of a client is revealed by the fact of consultation. See:
In re Grand Jury Proceedings, 204 F.3d 516, 520-22 (4th Cir. 2000). Where it "appeared that the client's identity was sufficiently intertwined with the client's confidences such that compelled disclosure of the former essentially disclosed the latter . . . "the attorney-client privilege would preclude an attorney from disclosing the client's identity, but where the client voluntarily discloses otherwise privileged information, such a privilege is lost as to the clients identity, even where the disclosure of his identity will link the client to the statement.
United States v. Ellis, 90 F.3d 447, 450-51 (11th Cir. 1996). Identity is protected only if its disclosure would lead to the uncovering of privileged information.
Ralls v. United States, 52 F.3d 223, 226 (9th Cir. 1995). Privilege applies when identity of payor or terms of engagement were so "inextricably intertwined" with confidential communications that revealing either the identity or the terms "would be tantamount to revealing privileged communication."
In re Grand Jury Proceedings, 946 F.2d 746 (11th Cir. 1991). Revelation of a client's identity would expose his motive for seeking advice (i.e., a drug conspiracy investigation). Court further noted that the government's knowledge of this motive did not obviate the protection of the attorney-client privilege.
In re Grand Jury Proceedings, Cherney, 898 F.2d 565 (7th Cir. 1990). Grand jury sought the identity of third party who was paying the attorneys 'fees of the person who was the target of its investigation. Seventh Circuit noted that fee information normally is not privileged, but that in this case revealing the payor's identity might disclose a confidential communication: the payor's motive for paying the fees of the target. Court held payor's identity was privileged.
In re Grand Jury Subpoenas, 906 F.2d 1485, 1492 (10th Cir. 1990). Fee information is not privileged unless it will disclose confidential client communications.
In re Two Grand Jury Subpoena Duces Tecum Dated Aug. 21, 1985, 793 F.2d 69 (2d Cir. 1986). Privilege does not protect information about fee arrangements except when they involve prejudicial disclosure of confidential communications.
United States v. Strahl, 590 F.2d 10, 11 (1st Cir. 1978). Identity of client protected because disclosure would implicate the client "in the very criminal activity for which legal advice was sought" and penalize the seeking of advice.
Funke v. Life Fin. Corp., No. 99 Civ. 11877 (CBM), 2003 WL 1787125, at *1 (S.D.N.Y. Apr. 3, 2003). Retainer agreements may contain privileged communications.
Riddell Sports, Inc. v. Brooks, 158 F.R.D. 555, 560 (S.D.N.Y. 1994). Although attorney fee arrangements are ordinarily not protected, the privilege would apply to bills, ledgers, statements, time records and correspondence that reveal the client's motive in seeking representation or litigation strategy.
Brett v. Berkowitz, 706 A.2d 509, 515 (Del. 1998). Attorney specializing in divorce cases was not required to produce the names of his other clients to a client that sued the attorney for sexual harassment. "[T]he mere revelation of the [other clients' names] would reveal the confidential communication that [the clients] were seeking advice concerning a divorce." Id.
Gerald B. Lefcourt, P.C. v. United States, 125 F.3d 79, 87 (2d Cir. 1997). Though acknowledging the adoption of a "legal advice exception" in other circuits, the Second Circuit "all but categorically rejected it" in Vingelli v. United States (see below).
Vingelli v. United States, 992 F.2d 449 (2d Cir. 1993). Grand jury subpoenaed attorney to determine who was paying the fees for the defense of a convicted party. Attorney refused to disclose the client and fee information because it would reveal the purpose of the representation. Court found that the client could have consulted the attorney for a variety of reasons and that while the disclosure of the fee payor's identity might suggest the possibility of wrongdoing it would not reveal a confidential communication. Court also found that the fact that money was paid did not reveal any confidential communication and that the financial transfers were not made to obtain legal advice.
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