§ 3.07 Attorney-Client Privilege and The Work Product Doctrine

• Jurisdiction: Washington

§ 3.07 ATTORNEY-CLIENT PRIVILEGE AND THE WORK PRODUCT DOCTRINE

[1] General Principles of Privilege

The purpose of the attorney-client privilege "is to encourage free and open attorney-client communication by assuring the client that his communications will be neither directly nor indirectly disclosed to others." Pappas v. Holloway, 114 Wn.2d 198, 203, 787 P.2d 30 (1990) (citation omitted); see also Dietz v. Doe, 131 Wn.2d 835, 842, 935 P.2d 611 (1997). "An attorney or counselor shall not, without the consent of his or her client, be examined as to any communications made by the client to him or her, or his or her advice given thereon in the course of professional employment." RCW 5.60.060(2)(a); see Pappas, 114 Wn.2d at 202.

Under CR 26(b), parties "may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action." Because the attorney-client privilege may result in the exclusion of relevant evidence, "the privilege cannot be treated as absolute; rather, it must be strictly limited to the purpose for which it exists," which is to promote free and open communications between attorney and client. Pappas, 114 Wn.2d at 203. The party claiming the privilege bears the burden of proving that a communication is privileged. Soter v. Cowles Publ'g Co., 162 Wn.2d 716, 745, 174 P.3d 60 (2007).

The privilege applies to corporate clients just as it does to any other client. Upjohn Co. v. United States, 449 U.S. 383, 389-90, 101 S. Ct. 677, 66 L. Ed. 2d 584 (1981); Youngs v. Peacehealth, 179 Wn.2d 645, 651, 316 P.3d 1035 (2014). Communications with a corporation's in-house counsel are covered in the same way as communications with outside counsel. Upjohn, 499 U.S. at 396; see also Youngs, 179 Wn.2d at 652 ("Upjohn decides which corporate employees' communications with corporate counsel are protected by the attorney-client privilege; it bases this decision on policy determinations about how much confidentiality is needed to further the values upon which the attorney-client privilege is based.").

In addition to the attorney-client privilege, documents created by counsel in connection with threatened or actual shareholder litigation may also be protected by the work product doctrine. See CR 26(b)(4). For example, investigative reports prepared by counsel to a demand review committee, special litigation committee, or the full board may be entitled to work product protection if they are prepared in anticipation of potential litigation. See, e.g., Soter, 162 Wn.2d at 743-44 (discussing work product in detail with examples of protected investigative documents).

Under Washington law, the attorney-client privilege is generally waived where a party voluntarily discloses privileged information to a third party. Kittitas County v. Allphin, 190 Wn.2d 691, 710, 416 P.3d 1232 (2018). More than disclosure to a third party is required to waive work product protection; work product protection will be waived only when a party "discloses work product documents to a third party in a manner creating a significant likelihood that an adversary will obtain the information." Id. at 708. Consequently, allowing shareholders to inspect board or committee materials such as attorney-client privileged portions of investigative reports of counsel is likely to be considered a waiver of both the attorney-client privilege and work product protection.

In general, "the power to waive the corporate attorney-client privilege rests with the corporation's management and is normally exercised by its officers and directors." Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343, 348, 105 S. Ct. 1986, 85 L. Ed. 2d 372 (1985); see also RCW 23B.08.010(2)(a) ("All corporate powers shall be exercised by or under the authority of the corporation's board of directors."). When control of the corporation passes to new management, as in bankruptcy or when individual officers or directors resign, "the authority to assert and waive the corporation's attorney-client privilege passes as well." Weintraub, 471 U.S. at 349. Under Weintraub, there is little risk of a court finding that a corporation's disclosure of privileged materials to an ad hoc committee results in a privilege waiver because the directors making up a demand review committee or special litigation committee are part and parcel of the company for the purposes of privilege. See id.

Practice Tip: Demand review committees and special litigation committees may mitigate the risk of subject matter waiver by substantially limiting

...