The Civil Litigator
| Publication year | 1980 |
| Pages | 945 |
| Citation | Vol. 9 No. 5 Pg. 945 |
1980, May, Pg. 945. The Civil Litigator
The civil and criminal consequences of running afoul of the ever-increasing statutory, regulatory, and case law governing business conduct(fn1) often may lead to an understandable insistence by prudent executives and directors to get to the bottom of suspicions that lower echelon employees may be engaging in some form of corporate wrong-doing---commercial bribery, price fixing with competitors, illegal political contributions, or even carelessness in designing or manufacturing consumer products.
A conscientious chief executive might want to head off or at least contain the potential for mammoth damages exposure or public embarrassment by directing an immediate in-house investigation to get "the facts." The danger in such zeal is that the internal investigation may be the unwitting discovery tool of the company's ultimate adversaries in litigation, including government prosecutors and class action specialists.
Several recent federal court decisions(fn2) highlight the vulnerability of documents generated in connection with such investigations, as well as the recollections of the investigators, to civil and criminal discovery process. The standard pattern is for a corporation's management to be tipped off to possible misconduct by lower level employees. An internal investigation is then undertaken by corporate personnel, in-house lawyers, outside counsel, or some combination of the three groups. The investigation may involve interviews of employees and non-employees or the use of questionnaires. Memoranda may be prepared by the investigators, and formal reports may ultimately be submitted to the corporation's top management or its board of directors. Thereafter, litigation ensues and the adversary attempts to obtain the questionnaires, interview notes, memoranda, and reports through discovery.
The courts' treatment of the issues has varied, but, taken together, the cases make clear that a corporation cannot assume that the attorney-client privilege or work product doctrine will immunize the fruits of an investigation from subsequent discovery. The prospects for retaining immunity, however,
can be maximized by structuring the investigation to take full advantage of the attorney-client and work product protections.
In Colorado, the common law attorney-client privilege has been codified in C.R.S. 1973, § 13-90-107(1)(b),(fn3) which provides:
An attorney shall not be examined without the consent of his client as to any communication made by the client to him or his advice given thereon in the course of professional employment; nor shall an attorney's secretary, stenographer, or clerk be examined without the consent of his employer concerning any fact, the knowledge of which he has acquired in such capacity.
Although the statute's literal terms appear to envision oral testimony by the attorney or his employees, the privilege is routinely applied to documents embodying attorney-client communications, including statements taken by investigators.(fn4) The essential nature of the privilege has been summarized by the Colorado Supreme Court as follows:
The privilege is established by the act of a client seeking professional advice from a lawyer and extends only to confidential matters communicated by or to the client in the course of gaining counsel, advice, or direction with respect to the client's rights or obligations.(fn5) (Emphasis added.)
Although the privilege in Colorado has been held applicable to corporations, the Supreme Court has thus far declined to deal with the critical issue of "who speaks on behalf of the corporate client."(fn6) Accordingly, for purposes of Colorado law we do not yet know with which individuals within the corporate structure an attorney may communicate without fear of breaching the confidentiality requirement and losing the privilege.
In the federal courts in Colorado, slightly different rules may apply. Under Rule 501 of the Federal Rules of Evidence, the state law of privilege applies "to an element of a claim or defense as to which state law supplies the rule of decision," such as in diversity jurisdiction cases. Otherwise, the existence of a privilege is determined by reference to the U.S. Constitution, federal statutes, Supreme Court rules and the common law. The seminal decision in the Tenth Circuit interpreting the attorney-client privilege in the corporate setting is Natta v. Hogan.(fn7) In Natta, a party sought the production of documents by a corporation, pursuant to Rule 34 of the Federal Rules of Civil Procedure, over attorney-client privilege and work product objections. Several important principles regarding the privilege emerge from Natta.
First, the court implicitly recognized that the privilege applies to corporations.(fn8) Second, the court held that the privilege applies to confidential communications involving either in-house or outside counsel.(fn9) Third, the court stated that the privilege applies to the attorney's communications to the client, as well as to communications by the client to his attorney.(fn10) Finally, the Tenth Circuit squarely faced the issue that has thus far escaped consideration by the Colorado courts---"what officers and employees of [the corporation] are in a position to speak for the company within the meaning of the word 'client.'"(fn11) Without discussion, the court...
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