Protecting Attorney-Client and Attorney Work-Product Privileges

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Protecting Attorney-Client and Attorney Work-Product Privileges

Mara DavisWhere an investigation is undertaken primarilyfor business purposes, the attorney clientprivilege will not apply, and the participationof the corporation’s GS or other attorney willnot automatically cloak the investigation withan attorney-client privilege. 6 For example,in United States ex rel Parikh v. Premera BlueCross, 7 the court found that an investigationconducted by Premera’s vice president forcorporate compliance and ethics was notprotected by attorney-client privilege, eventhough the compliance officer was an attorneyand, according to Premera, was actingon behalf of the GC. In reaching its decision,the court noted that in-house counsel oftenplays a dual role of legal advisor and businessadvisor and that the company had the burdenof establishing that “the communication inquestion was made for the express purpose ofsecuring legal not business advice.” Accordingto the court, Premera failed in its burdenbecause their were no documents or othersatisfactory evidence establishing that: (1)the compliance officer was appointed by theGC to conduct a legal investigation, and (2)the employees interviewed were sufficientlyinformed and aware that they were beingquestioned so that the company could obtainlegal advice.Work-product privilegeThe work-product doctrine is codified in Rule26(b)(3) of the Federal Rules of Civil Procedure.It protects from discovery evidence thatis prepared in anticipation of litigation or fortrial. Therefore, the work-product doctrineprotects both the attorney and the client. Thework-product doctrine is overcome where aparty shows substantial need for the workproductand cannot, without undue hardship,obtain the substantial equivalent. Courts havedistinguished between work-product of afactual nature and work-product grounded inopinion. Opinion work-product that reflectsan attorney’s thought processes, opinions, andconclusions is conferred heightened protectionfrom disclosure.In the context of a corporate investigation,materials may be protected from disclosureunder the work-product doctrine if theinternal investigation was commenced inanticipation of litigation or a governmentagency investigation. 8 Factual materials thatare protected include notes and memorandaof interviews with both employee and nonemployeewitnesses, as well as documentsand evidence compiled by an attorney, whichreveal the attorney’s analysis and mentalprocesses. However, work-product will not beprotected from discovery where the documentswere prepared in the ordinary courseof business or if the documents would havebeen created in a similar form, regardless ofthe litigation. Also, evidence is not shieldedfrom production under the work-productdoctrine where the corporation would haveundertaken an internal investigation forbusiness necessity, even if no litigation wasexpected.Waiver of privileges through voluntaryor inadvertent disclosureThe attorney-client privilege may be waivedif the protected communications are revealedto third parties, intercepted, or inadvertentlydisclosed. Traditionally, any disclosure ofprivileged communications, even inadvertentdisclosure, constituted a waiver of the privilege.Today, most federal courts seek to determinethe degree of culpability when there isan inadvertent disclosure of privileged communications,and a waiver will not be deemedto have occurred unless there is evidence ofcarelessness. 9 Pending federal legislation seeksto amend Federal Rule of Evidence 502(b),which would prevent inadvertent waiver ifreasonable precautions were taken to preventdisclosure and reasonably prompt steps weretaken to retrieve the disclosed materials. 10Attorneys may use the services of experts,such as accountants, but they should proceedwith caution when disclosing privilegedmaterial to a regularly employed auditor.Arguments have been made that the attorneyclientprivilege should not apply in such casesbecause (1) the company is really seeking anaccounting service and not legal advice, and(2) the advice sought is the accountant’s,not the lawyer’s. Accordingly, many courtshave held that the disclosure of privilegedinformation to an outside auditor waives theattorney-client privilege. 11Waiver of privilege in governmentinvestigationsSince 1999, the Justice Department haspromulgated various memoranda thatarticulate the government’s policy that waiverof attorney-client privilege and disclosureof privileged corporate information to thegovernment, including results of internal investigations,is required in order to obtain thebenefits of cooperation with a governmentinvestigation, and therefore, a considerationin a corporate charging decision.The McNulty Memorandum, issued inDecember 2006, delineates the government’scurrent policy statement regarding cooperationContinued on page 28Society of Corporate Compliance and Ethics • +1 952 933 4977 or 888 277 4977 • www.corporatecompliance.orgFebruary 200825

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