Accessing the Black Box - What Every Estate Attorney Needs to Know About Attorney-client Privilege

• Publication year: 2017
• Author: By Benjamin D. Fox, Esq.

ACCESSING THE BLACK BOX - WHAT EVERY ESTATE ATTORNEY NEEDS TO KNOW ABOUT ATTORNEY-CLIENT PRIVILEGE

By Benjamin D. Fox, Esq.^*

Whether planning, administering, or litigating an estate or trust, an attorney should keep the attorney-client privilege at the forefront of his mind. The privilege is robust and longstanding, but with several nuances and exceptions. Furthermore, the law on privilege, both universally and specifically as to estate and trust litigation, has undergone a recent and substantial overhaul. This article will first address the foundational elements of attorney-client privilege. These "basics" of the privilege demonstrate how the privilege can exist in unexpected scenarios and how the California Supreme Court radically affected the scope of privilege in 2016. Next, this article will address how the personal representative of an estate holds the privilege for the decedent, and then how the privilege moves from one successor trustee of a trust to the next. Finally, this article will address the exceptions to the privilege specific to trust and estate litigation. In the context of trust and estate litigation, the paramount concern for courts is the decedent's capacity and intent. A determination of these issues often depends on accessing one of the most protected black boxes in the legal world: attorney-client privilege.¹

I. THE NOT SO SIMPLE BASICS OF ATTORNEY- CLIENT PRIVILEGE

A foundational understanding of the attorney-client privilege is essential both to fully protect the privilege and to better comprehend the exceptions to it. Elementally, attorney-client privilege is statutory in nature and founded in Evidence Code sections 952 and 954, statutes worth re-reading at a deliberately slow pace to truly appreciate their content. The privilege applies to "confidential communications between client and lawyer."² Evidence Code section 952 defines confidential communications between client and lawyer as 1) information transmitted between a client and his or her lawyer; 2) in the course of that relationship; and 3) in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those necessary to further the interests of the client.

A. Defining "Lawyer" and "Client"

The Evidence Code further defines "client" and "lawyer," but in ways often overlooked. Ironically, the statutes and case law apply the privilege to individuals who are not attorneys and individuals not typically considered clients. For instance, Evidence Code section 950 defines "lawyer" as a person authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation. This statute expands the definition of lawyer beyond individuals who are actually authorized to practice law by including individuals whom the client reasonably believes are authorized to practice law in any state or nation.³

For example, in Fox v. Pollack,⁴ two couples sought to enter into a contract. One couple retained an attorney who drafted a written contract for both couples to review at the attorney's office.⁵ The attorney read over the contract but did not provide legal advice to the second couple, who had not retained him.⁶ Problems arose after execution, and the second couple sued the attorney, arguing that they believed he was their attorney and had breached his duties to them.⁷ The court held the second couple's belief was unreasonable.⁸ The court reasoned the attorney had done nothing to cause the second couple to believe he was their attorney; simply reviewing a contract was insufficient.⁹

Further, a third party or re-insurer cannot claim an attorney-client relationship based merely on payment and unreasonable belief.¹⁰ In Zenith Ins. Co. v. O'Connor,¹¹ Zenith Insurance Company ("Zenith") was a re-insurer for Royal Insurance Company ("Royal"). Royal had retained counsel for its insured. Zenith had several discussions with Royal's legal counsel regarding the lawsuit against the insured, litigation strategy, and settlement.¹² Royal's legal counsel went as far as to tell Zenith that a particular settlement offer was in Zenith's best interest.¹³ A Royal representative told Zenith that Royal's legal counsel was protecting "all our interests."¹⁴ Zenith, however, became dissatisfied with the attorney's handling of the case and demanded Royal retain new counsel, which it did.¹⁵ Zenith later sued the attorney for professional negligence based on an attorney-client relationship Zenith believed it had with the attorney.¹⁶

The court held Zenith's belief was unreasonable, explaining that the attorney's communications to Zenith regarding the case were nothing more than information Zenith was entitled to as a re-insurer.¹⁷ Such communications cannot reasonably cause one to believe Royal's attorney was also Zenith's attorney.¹⁸ Furthermore, when Zenith became dissatisfied with the attorney, Zenith did not directly fire the attorney but instead demanded that Royal fire the attorney.¹⁹ The court reasoned that Zenith would have attempted to directly fire the attorney if it thought the attorney was actually Zenith's attorney.²⁰

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Evidence Code section 950 and the cases above demonstrate that the definition of "lawyer" is based on the client's perspective and the reasonableness of that perspective. On the other hand, a "client" is defined in Evidence Code section 951 as a person who consults a lawyer for the purpose of retaining the lawyer or securing legal advice from the lawyer in his or her professional capacity. The statue is sufficiently broad to include group settings wherein several individuals gather to obtain some legal advice from an attorney.²¹

For example, in Benge v. Superior Court, union employees of a battery plant became concerned about possible lead poisoning.²² The union invited its attorney to participate in specially called union meetings, exclusively for union members.²³ Approximately 65 union members attended the meetings where the attorney discussed lead poisoning concerns and possible litigation.²⁴ Eventually, 32 of the union members retained the attorney in a lawsuit against the battery plant.²⁵

The battery plant deposed the plaintiff union members, inquiring about the union meetings that prompted the plaintiffs to retain counsel.²⁶ The deponents refused to respond to this inquiry on the basis of attorney-client privilege.²⁷ The court held in favor of the union members, explaining that the members had attended a meeting to obtain legal advice, and the fact that they did not intend to retain legal counsel when they went to the meeting was irrelevant.²⁸

Benge v. Superior Court highlights the fact that the attorney-client privilege can begin prior to the client retaining the attorney.²⁹ Though the privilege applies to prospective clients, it does not apply to communications after the attorney declines to represent the prospective client.³⁰ In People v. Gionis, defendant Dr. Thomas Gionis vented to his attorney friend, John Lueck, about divorce papers he recently received from his then-wife.³¹ Dr. Gionis made such remarks as "[she] had no idea how easy it would be for him to pay somebody to really take care of her."³² Prior to hearing these statements, the attorney friend had explicitly told Dr. Gionis that he would not represent him in the dissolution matter.³³

Sometime later, Dr. Gionis' former wife and her then-boyfriend were brutally assaulted by two strangers.³⁴ At trial, the court admitted into evidence the statements Dr. Gionis made to John Lueck.³⁵ Dr. Gionis was convicted of conspiracy to commit assault among other convictions, but the Court of Appeal reversed the convictions based on the trial court's admission of Dr. Gionis' statements into evidence.³⁶ The Supreme Court reversed the judgment of the Court of Appeal, holding that attorney-client privilege did not apply to Dr. Gionis' statements.³⁷ The Supreme Court reasoned that a person could have no reasonable expectation of being represented by an attorney after the attorney's explicit refusal to undertake representation.³⁸

B. How to Determine When a Communication is Made in the Course of the Attorney-Client Relationship

For a communication to be privileged, Evidence Code section 952 requires that it be transmitted between a client and his or her lawyer "in the course of that relationship." Courts of Appeal, and now, recently, the Supreme Court, have interpreted this phrase with a wide spectrum of results. In the last eight years, the Supreme Court has rendered two opinions of such dissonance that harmonizing the opinions, or even finding a consistent melody, appears impossible.³⁹

1. The Dominant Purpose of the Relationship Between Attorney and Client is Material

In Costco Wholesale Corporation v. Superior Court,⁴⁰ the Supreme Court appeared to have cemented the "dominant purpose" test to determine whether a communication was made in the course of an attorney-client relationship. The dominant purpose test looks to the dominant purpose of the relationship, not the dominant purpose of the communication, to determine whether the communication was made in the course of that relationship and, therefore, privileged.⁴¹

For instance, in Costco, the wholesale corporation ("Costco") hired legal counsel to conduct an investigation and provide the corporation with a legal opinion as to whether certain managers were exempt from California's wage and overtime laws.⁴² Kelly Hensley, the attorney on the matter, conducted interviews with managers as part of the law firm's service of providing a legal opinion.⁴³ Ms. Hensley then provided Costco a 22-page opinion letter.⁴⁴ Ms. Hensley conducted the interviews and drafted the letter with the understanding that the interviews and letter were, and would remain, confidential.⁴⁵

Seven years after Ms. Hensley provided the opinion letter, Costco employees filed a class action against Costco regarding the issue of exempt employees.⁴⁶ During the litigation, plaintiff employees filed a motion...