journal of pension planning & compliance - Kluwer Law International

22 / JOURNAL OF PENSION PLANNING & COMPLIANCE
THE ATTORNEY-CLIENT PRIVILEGE
IN ENTITY REPRESENTATION
Employee benefits lawyers need to be alert to client identity issues
when representing entities, such as corporate and union plan sponsors
and jointly administered pension and welfare plans. 37 A lawyer retained
or employed by an organization represents it “acting through its duly
authorized constituents.” 38 “Constituents,” as used in the Model Rules,
means “directors, officers, employees, members, shareholders,” and others.
39 When the entity is the sole client, the entity generally can invoke
the attorney-client privilege with respect to a communication between
the lawyer and a constituent. To be privileged, however, the communication
must relate to the subject matter of the representation. 40 In
addition, the constituent must be an “agent” of the organization, but
that includes any lower-echelon employee communicating with counsel
regarding the subject matter of the representation. 41
Generally, the lawyer does not represent the constituents themselves
and must be alert to the potentially divergent interests of the
organization and the constituents with whom the lawyer is working. The
organization’s right to assert the attorney-client privilege with respect to
communications between the organization’s attorney and a constituent
of the organization may not be preserved if the nonclient constituent
later becomes an adverse party. Thus, one case ruled that a constituent
was not prohibited in such circumstances from sharing the privileged
communications with his lawyer. 42 However, if the organization and the
constituent who has become an adverse party were co-clients of the attorney
at the time of the communications, the rules on joint representation
determine the extent to which the attorney-client privilege applies. 43
A constituent may become a co-client by design or inadvertence.
The Restatement recognizes that if an attorney representing an
organization fails to clarify confusion as to the identity of the client,
an attorney-client relationship may inadvertently form between the
attorney and a constituent. 44 Thus, under the Restatement , an attorneyclient
relationship arises if a lawyer knows of, and fails to dispel, a
person’s reasonable reliance on the lawyer to provide legal services. 45
An attorney-client relationship is imputed in such circumstances in
recognition of the fact that, in relations with lawyers, a lay person may
have expectations of loyalty and confidentiality unless the lawyer clearly
explains the capacity in which the lawyer is acting. Conversely, if a
lawyer clarifies to constituents that the entity is the sole client, courts
will reject a constituent’s claim to be a co-client. 46 In addition, a line of
attorney-client privilege cases recognizes a presumption that the attorney
for an entity represents only the entity. 47