Consistently controlling the circumstances of the consultant’s relationship with the company, and maintaining good communication practices throughout the consultant’s engagement, are the only way to reliably protect the company’s attorney-client privilege. Make it your policy. Originally published in The Legal Intelligencer on March 19, 2014.
Full Answer
Are consultants subject to the attorney-client privilege?
Apr 15, 2014 · Consistently controlling the circumstances of the consultant’s relationship with the company, and maintaining good communication practices throughout the consultant’s engagement, are the only way to reliably protect the company’s attorney-client privilege. Make it your policy. Originally published in The Legal Intelligencer on March 19, 2014.
How do you protect the company’s attorney-client privilege?
Therefore, lawyers whose clients plan to hire outside consultants (whether in the ordinary course of business or in the heat of litigation) should study the third party cases carefully and should, if possible, tailor the engagement letter and the job description for the third-party consultants so that the lawyer’s communications with them come under the protective umbrella of the …
What is the cornerstone of the attorney-client privilege?
Jan 12, 2022 · In a normal business setting, the attorney-client privilege is not implicated when third-party consultants are involved in typical business functions, such as meetings, revising draft documents, and setting corporate policy. However, the privilege can be, and often is, at issue when privileged communications are shared with these consultants.
Are consultant communications protected by privilege?
The attorney-client privilege allows a client to seek and receive legal advice from an attorney in confidence. The purpose is to promote adherence to the law, by encouraging a client to seek legal advice in the first instance and by fostering full and frank discussions in the course of the attorney-client relationship.
Does attorney-client privilege cover consultants?
When answered in the affirmative, the consultant is “in all relevant respects the functional equivalent of an employee” and communications between corporate counsel and the consultant may be covered under attorney-client privilege.May 11, 2020
Are communications with consultants privileged?
Thus, where a consultant has a close working relationship with a company and performs a similar role to that of an employee, confidential communications that are made for the purpose of obtaining or providing legal advice should be subject to the attorney-client privilege.
Do Advisors break privilege?
First, including a financial advisor in otherwise privileged communications does not waive the privilege if the advi- sor is the “functional equivalent” of an employee of the client. ... Second, the privilege is not waived if the advisor “facilitates” the render- ing of legal advice to the client.Jun 8, 2015
Is legal consultation privileged?
In general, as long as the prospective client is seeking legal advice or representation and reasonably believes the communication will be confidential, the consultation is privileged. This is so even if the would-be client never pays or hires the attorney.
What happens if privileged information is voluntarily disclosed to a third party?
The attorney-client privilege protects confidential communications between an attorney and a client for the purpose of obtaining legal advice or services. ... Voluntary disclosure of privileged communications to a third party results in waiver of the attorney-client privilege unless an exception applies.
How do you protect common interest privileges?
How to protect common interest privilege? It is not always necessary for all holders of common interest privilege to agree to the action that caused waiver, for LPP in the document to be waived. In some cases, fairness can require that waiver by one holder of common interest privilege has the effect of waiver by all.Jul 1, 2021
Which of the following may not be protected under the attorney-client privilege?
Which of the following may not be protected under the attorney-client privilege? A client who orally confesses to a crime. Correct!
What is the difference between confidentiality and attorney-client privilege?
Attorney-client privilege protects lawyers from being compelled to disclose your information to others. ... Confidentiality rules provide that attorneys are prohibited from disclosing any information for privacy reasons, unless it is generally known to others.Jan 6, 2017
What is covered by legal privilege?
Legal advice privilege covers confidential communications between a client and its lawyers, whereby legal advice is given or sought. ... Privilege attaches to all material forming the lawyer-client communications, even if those documents do not expressly seek or convey legal advice.
When can a lawyer break confidentiality?
When can a solicitor breach confidentiality? A solicitor cannot be under a duty of confidentiality if the client is trying to use them or the firm to commit fraud or other crimes. A client cannot make a solicitor the confidant of a crime and expect them to close up their lips upon any secret they dare to disclose.Jan 7, 2021
Who is the holder of the attorney-client privilege?
The client is the holder of the privilege. This means that the attorney must receive the client's permission and consent to openly share the information. Also, the courts cannot force the attorney to testify in court about confidential client information.May 3, 2018
Is attorney-client privilege substantive or procedural?
U.S. courts generally view privilege issues to be questions of substantive law, and will engage in a choice-of-law analysis when presented with several potentially applicable privilege laws. By contrast, work product is viewed as a procedural matter, and the work product law of the forum will apply.May 16, 2017
United States v. Kovel: Extending The Privilege to Nonlawyers
The seminal decision extending the attorney-client privilege to conversations with a nonlawyer was United States v. Kovel, 296 F.2d 918 (2d Cir. 19...
Calvin Klein: Thumbs Down on Public Relations Agents
Judge Friendly’s decision in Kovel said nothing about communications with public relations agents. The first case to address that issue was a trade...
Copper Market Antitrust Litigation: Thumbs Up on PR Agents
The following year, however, in In re Copper Market Antitrust Litigation, 200 F.R.D. 213 (S.D.N.Y. 2001) (Laura Taylor Swain, J.), the court recogn...
Twentieth Century Fox: Independent Hollywood Contractors Are Privileged
Twentieth Century Fox Film Corp. v. Marvel Enterprises, Inc., 2002 WL 31556383 (S.D.N.Y. Nov. 15, 2002) (Henry Pitman, Magistrate Judge) — a case I...
in Re Grand Jury Subpoenas: PR Agents Win Again
In In re Grand Jury Subpoenas Dated March 24, 2003 Directed to (A) Grand Jury Witness Firm and (B) Grand Jury Witness, 265 F. Supp.2d 321 (S.D.N.Y....
Currency Conversion Fee Antitrust Litigation: Transaction Processing Companies Don’T Qualify
In In re Currency Conversion Fee Antitrust Litigation, 2003 WL 22389169 (S.D.N.Y. 2003) (William Pauley, J.), a class action alleging a price-fixin...
Asia Pulp & Paper: Financial Consultant was Not A Privileged Person
Export-Import Bank of the U.S. v. Asia Pulp & Paper Co., Ltd., 232 F.R.D. 103 (S.D.N.Y. 2005) (James C. Francis IV, magistrate Judge), was a suit b...
in Re Adelphia Communications Corporation: Credit Consultants Pass Muster
In the bankruptcy proceeding entitled In re Adelphia Communications Corporation, 2007 WL 601452 (Bankr. S.D.N.Y. 2007) (Cecelia Morris, Bankr. J.),...
Sieger v. Zak: Business Consultants Qualify For The Privilege
Sieger v. Zak, 18 Misc.3d 1143(a) (Nassau County Supreme Ct. 2008) (Stephen Bucaria, J.) — one of two state court cases on the subject — was a suit...
Payton Lane Nursing Home: Construction Supervisors Make The Grade
In American Manufacturers Mutual Insurance Co. v. Payton Lane Nursing Home, Inc., 2008 WL 5231831 (E.D.N.Y 2008) (A. Kathleen Tomlinson, Magistrate...
What is the purpose of asserting and maintaining the privilege with third parties?
As with any assertion of privilege, it is important to understand that properly asserting and maintaining the privilege with third parties has two components: 1) ensuring that communications involving third parties and company attorneys (whether company counsel or outside counsel) are covered by the attorney-client and/or work-product privilege; and 2) maintaining that privilege by avoiding any claim of waiver.
What is the common interest privilege?
The common-interest privilege doctrine is another exception to the black-letter rule that the presence of a third party waives the attorney-client or work-product privilege. The common-interest privilege is typically invoked when privileged communications are exchanged among parties involved in such joint ventures.
What is black letter law?
Traditional black-letter law teaches that the presence of an outside, or third, party on an otherwise privileged communication will waive privilege. However, courts have found two exceptions to this rule: 1) where the third party is participating to assist an attorney in understanding and interpreting complex principles, ...
What is the Ambac decision?
The Ambac decision and the recent functional equivalent cases are the tip of the spear in the effort to assert and protect your company or client's privileged communications. As market pressures continue to force companies to find efficiencies through outsourcing typical in-house functions or engaging in joint ventures to promote or develop a product, counsel should be careful to properly structure the communication channels among vendors, third parties and joint venture partners so as not to waive any privilege. Taking a proactive approach to understanding the privilege rules of the relevant jurisdiction – which will most likely be the rules of the state in which the communications were made – before sharing privileged communications with a vendor or joint venture partner will save a great deal of stress in the future. Likewise, litigation counsel must be diligent in asserting these privileges during discovery, in order to educate opposing counsel and the courts on the recent shifts in the law.
Is privileged communications legal?
The modern business landscape is replete with examples of privileged legal communications occurring outside traditional corporate silos. For years, it has been appreciated by litigants (and courts) that bankers, experts and consultants could sufficiently implicate legal issues and strategies and, as a result, some communications with them may be protected under the attorney-client privilege. More recently, faced with pressure to increase efficiency, companies have increased their dependence on outside entities to complete tasks that were once reserved for in-house employees.
What is the most recent case in the third party consultant line?
The most recent case in the third-party consultant line is a state court case, Mt. McKinley Insurance Co. v. Corning Inc., 602454/2002 (N.Y. County Supreme Ct., Dec. 13, 2009) (Eileen Bransten, J.). That case asked whether a lawyer’s talks with an insurance broker to get advice and information to help a client were protected by the attorney-client privilege.
What was the first case to address the issue of public relations?
The first case to address that issue was a trademark infringement action, Calvin Klein Trademark Trust v. Wachner, 198 F.R.D. 53 (S.D.N.Y. 2000) (Jed S. Rakoff, J.). In May 2000, in anticipation of filing a lawsuit on behalf of Calvin Klein, the law firm of Boies, Schiller & Flexner LLP (BSF) retained the public relations firm of Robinson Lerer & Montgomery (RLM) to act as a “consultant” to BSF for certain communications services related to BSF’s representation of Calvin Klein, Inc. (CKI). Defendants contended that BSF had retained RLM solely “to wage a press war against the defendant,” but plaintiffs said that they had retained RLM to help BSF “to understand the possible reaction of CKI’s constituencies to the matters that would arise in the litigation, to provide legal advice to CKI, and to assure that the media crisis that would ensue — including responses to requests by the media about the law suit and the overall dispute between the companies — would be handled responsibly…” The court denied Calvin KIein the protection of the attorney-client privilege, for at least three reasons.
What was the In re Currency Conversion Fee Antitrust Litigation?
2003) (William Pauley, J.), a class action alleging a price-fixing conspiracy by Visa and Mastercard and their member banks with respect to currency conversion fees, plaintiffs moved to compel a bank (First USA) to produce documents that First USA had disclosed to employees of a third party, First Data Resources, Inc. (First Data), which provided “computing services, consulting services, and other support services to credit card issuers.” First USA, citing In re Copper Market Antitrust Litigation and other cases, claimed that the First Data Documents remained privileged because the First Data employees were the “functional equivalent” of First USA employees.
What is the role of the media in public opinion?
The media, prosecutors, and law enforcement personnel in high profile cases often engage in activities that color public opinion, not only to the detriment of the subject’s general reputation but also, in extreme cases, to the detriment of his or her ability to obtain a fair trial.
What was the Sieger v. Zak case?
Sieger v. Zak, 18 Misc.3d 1143 (a) (Nassau County Supreme Ct. 2008) (Stephen Bucaria, J.) — one of two state court cases on the subject — was a suit alleging breach of fiduciary duty by the majority shareholder and principal manager of PowerSystems International, Inc., which manufactured specialized trailers sold primarily to the military to service command posts and mobile hospitals. Plaintiffs were minority shareholders who had each invested $25,000 in 1995 to get the company started. By early 2004, the company was making more than $1.2 million a year in profits, and plaintiffs suggested to Zak that he sell the entire company in order to liquidate their investment. Zak then met with a business consultant named John Magee who offered to make recommendations to PowerSystems’ board of directors concerning the current and future value of the company. Magee and PowerSystems entered into a confidentiality agreement whereby Magee agreed to keep confidential pricing, customer and supplier lists, operating data, and other information obtained in the course of providing consulting services to the company. Magee also prepared an “engagement letter,” which formally outlined the services he intended to perform for PowerSystems. In the engagement letter, Magee undertook to develop a strategy and time line for “monetizing the shareholders’ investment” in PowerSystems.
What was the Fox vs Marvel case?
Marvel Enterprises, Inc., 2002 WL 31556383 (S.D.N.Y. Nov. 15, 2002) (Henry Pitman, Magistrate Judge) — a case I unintentionally omitted from my 2003 article — originated as a copyright and licensing dispute over the “X-Men” characters. Fox withheld about 15 documents that Fox had shown to certain independent contractors. In opposition to a motion to compel, Fox argued that the independent contractors to whom disclosure was made were directly involved in the production of X-Men2 and that disclosure to them did not operate as a waiver of the privilege because “they functioned as employees and Fox’s economic decision to conduct its business through independent contractors as opposed to employees should not affect the scope of its privilege.”
Why do businesses use third party consultants?
Reed Smith – ByLisa Baird, Colleen Davies, Andrew Stillufsen – In our modern economy, businesses regularly use all manner of third-party consultants for many different reasons, including cost, efficiency, and expertise. Less regularly, communications between businesses and consultants are the subject of discovery motion practice in litigation. Two recent decisions out of the Southern District of New York demonstrate why businesses that use third-party consultants should proceed with caution to preserve claims of attorney-client privilege, and prevent the disclosure of what would otherwise be privileged communications.
How much did the Ashley Madison lawsuit cost?
Two Canadian law firms say they have filed a $578 million class-action lawsuit against the media companies behind Ashley Madison, following the massive hack that has exposed almost 40 million users on the adultery website.
Is attorney client privilege waived?
The root of the problem lies with a basic tenet of the attorney-client privilege: communications between attorney and client are confidential, but once that communication is shared with a third party, the privilege is waived. In some cases, however, courts have found an exception to this normal waiver rule, depending upon the role ...
Third-Party Waiver Exception Doctrines Applied to PR Firms
The attorney-client privilege protects communications made in confidence with counsel for the purpose of legal advice, but the privilege is waived if the communication is shared with a third party. Starting in 2001, courts applied two developing exceptions to the third-party waiver rule to PR firms.
Decisions Finding No Waiver
In NECA-IBEW Pension Trust Fund v. Precision Castparts Corp ., [9] the plaintiffs in a securities action moved to compel documents listed on the privilege log drafted by counsel for Precision Castparts Corp. (PCC) and shared with AMG, PCC’s PR firm, for comments.
Cases Where Courts Found Waiver
Other courts, however, have reached different conclusions. Following the premiere of “Blackfish,” a film critical of SeaWorld, SeaWorld and its counsel retained two “crisis” PR firms to work with counsel in developing a legal strategy, including considering potential litigation. In Anderson v.
Best Practices
While each case will turn on its facts, there are steps counsel can take to best ensure privileged and protected communications with PR firms retain their protection by making a clear record of what role the PR firm will play.
The Use of Third-Party Agents and The Functional Equivalent Doctrine
As with any assertion of privilege, it is important to understand that properly asserting and maintaining the privilege with third parties has two components: 1) ensuring that communications involving third parties and company attorneys (whether company counsel or outside counsel) are covered by the attorney-clien…
Third Parties Who Assist in Understanding and Interpreting Complex Principles
- Courts have long recognized that few lawyers can practice without the assistance of messengers, clerks and secretaries who are not themselves attorneys, and thus these third parties will not break privilege. Use of these quasi-legal third parties does not significantly differ from an attorney's use of a language interpreter to translate documents. Courts have made the jump fro…
The Functional Equivalent Doctrine
- Another factual predicate supporting claims of privilege is when a third party is so integrated in the company that he or she becomes a functional equivalent of an employee. Under the functional equivalent doctrine, communications between a company's lawyers and its independent contractor merit protection if, "by virtue of assuming the functions and duties of [a] full-time emp…
Joint Venture and Co-Promotion Agreements
- The common-interest privilege doctrine is another exception to the black-letter rule that the presence of a third party waives the attorney-client or work-product privilege. The common-interest privilege is typically invoked when privileged communications are exchanged among parties involved in such joint ventures. It is important to understand the basic elements of the co…
Conclusion
- The Ambacdecision and the recent functional equivalent cases are the tip of the spear in the effort to assert and protect your company or client's privileged communications. As market pressures continue to force companies to find efficiencies through outsourcing typical in-house functions or engaging in joint ventures to promote or develop a product, counsel should be caref…
Third-Party Waiver Exception Doctrines Applied to PR Firms
- The attorney-client privilege protects communications made in confidence with counsel for the purpose of legal advice, but the privilege is waived if the communication is shared with a third party. Starting in 2001, courts applied two developing exceptions to the third-party waiver rule to PR firms. The court in In re Copper Market Antitrust Litigationheld that a PR firm was the functio…
Decisions Finding No Waiver
- In NECA-IBEW Pension Trust Fund v. Precision Castparts Corp., the plaintiffs in a securities action moved to compel documents listed on the privilege log drafted by counsel for Precision Castparts Corp. (PCC) and shared with AMG, PCC’s PR firm, for comments. The defendant asserted that the documents were privileged, arguing that AMG was the functional equivalent of an employee suc…
Cases Where Courts Found Waiver
- Other courts, however, have reached different conclusions. Following the premiere of “Blackfish,” a film critical of SeaWorld, SeaWorld and its counsel retained two “crisis” PR firms to work with counsel in developing a legal strategy, including considering potential litigation. In Anderson v. SeaWorld Parks & Entertainment, Inc.,the PR firms produced documents regarding their work wit…
Best Practices
- While each case will turn on its facts, there are steps counsel can take to best ensure privileged and protected communications with PR firms retain their protection by making a clear record of what role the PR firm will play. First, it should be counsel who engages a PR firm, and counsel should provide a clear, written description of the PR firm’s role in the litigation in their engageme…
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