Attorney-client privilege and work product doctrine in the corporate setting.

• Author: Hyland, Thomas W.

Corporations have many associations with their attorneys, whether in-house counsel for consultation on a broad range of matters or outside counsel for possible litigation matters. In order to receive the best counseling, corporate representatives must be able to communicate frankly with their attorneys. However, many corporations are not aware of the protections that are afforded communications with counsel, protections that will ensure confidentiality from the public and from adversaries.

Those protections are the attorney-client privilege and the work product doctrine. This article offers practical suggestions that will enable a corporation to communicate with counsel while maintaining a confidential status.

Attorney-Client Privilege

The attorney-client privilege shields from discovery communications between attorney and client, and it therefore provides the basis for objection to demands for discovery of materials or communications that otherwise might be discoverable. There are five elements needed to establish the existence of the privilege: (1) a communication (2) made in confidence (3) to an attorney (4) by a client (5) for the purpose of seeking or obtaining legal advice.[1]

The justification for the privilege lies in the proposition that the privilege promotes candor in the attorney-client relationship.[2] The privilege is important in order to alleviate any reservations clients may have about being completely frank with their attorneys. The privilege rests on the belief that in an adversary system, clients' full disclosure to their attorneys is a necessary predicate to skillful advocacy and fully informed legal advice.[3] The attorney-client privilege allows a person to seek the advice of a lawyer without the fear that confidential discussions may be disclosed to the public at some later point. Accordingly, the client or potential client can communicate all pertinent facts to the attorney in confidence, and the attorney can receive the information needed to best serve the client.

Not all communications between attorney and client will qualify for the protection from discovery the privilege affords. If any one of the five elements noted above is lacking, the privilege does not apply. The burden of proving that at least one of the five elements has not been met falls on the one seeking the discovery as to which the attorney-client privilege objection is raised.

Even when the privilege applies, the communication between attorney and client may be discoverable if the privilege has been waived. The privilege is waived by (1) disclosure of any part of the communication to a third party; (2) production of privileged documents; (3) deposition testimony; or (4) the use of legal advice for business purposes.

Work Product Doctrine

The work product doctrine excludes from discovery items that contain or indicate the cognitive processes or "work product" of an attorney. It is closely related to the attorney-client privilege in that both protect communications between the attorney and the client. The work product doctrine, however, applies to attorney-client communications only when the attorney has reduced the communication to a writing.

This aspect of the work product doctrine was first articulated by the U.S. Supreme Court in Hickman v. Taylor,[4] which held that public policy would be contravened by the disclosure of the writings of an attorney reflecting the statements of potential witnesses. The Court also held that the burden is on the person seeking to obtain discovery of a document protected by the doctrine "to establish adequate reasons to justify production."

This doctrine has been substantially codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure, which states that (a) documents and tangible things (b) prepared in anticipation of litigation or for trial (c) by or for another party or by or for that party's attorney are protected against discovery unless the party seeking disclosure can demonstrate: (1) substantial need and (2) that it would experience undue hardship without discovery. The rule goes on to state that the "court shall protect against disclosure of the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation."

Courts that have examined the work product doctrine have made a distinction between ordinary work product and opinion work product.[5] The former includes an attorney's recording of witness statements or facts of a case. The latter includes material containing mental impressions, opinions and conclusions of the attorney. Opinion work product is discoverable, if at all, only on a showing of extraordinary need. This threshold is much more difficult to meet than that for the discovery of ordinary work product. This is a necessary distinction because opinion work product often reflects the strategy of the attorney's handling of a particular matter or case, which obviously deserves a greater protection from disclosure in order to preserve the adversary system.

The work product protection may be waived in several different ways - by disclosure to anyone other than one with a common interest,[6] by disclosure to a government agency,[7] or work product prepared to further a crime or fraud, which will be discussed later.

Work product protection also may be waived through Rule 612 of the Federal Rules of Evidence, which relates to the use of a writing to refresh a witness's memory. If the witness is given a writing before or while testifying, the court may allow an adverse party to have the document produced at a hearing, inspect it, cross-examine the witness about the document and enter the portions that relate to the testimony into evidence.

Because of this rule, it is important that attorneys, in an effort to procure expert opinion or deposition testimony, be wary of providing witnesses with any writings that may contain mental impressions. Regardless of whether these writings constitute attorney work product, the court may use its discretion to permit discovery of them.1 In some cases, the court, if the circumstances permit, may redact a portion of the document, even though it is discoverable under Rule 612.

Contrasting Privilege and Doctrine

Although the attorney-client privilege and the work product doctrine are interrelated, there is a contrast between the purpose of each. While the attorney-client privilege exists to encourage courage and full disclosure between attorney and client of all relevant information, the work product doctrine exists to protect the attorney's work from disclosure to the opposing party, thereby fostering the adversary system.

In addition, another difference arises in the scope of applicability. For example, a federal court sitting in diversity jurisdiction will turn to the state law rule governing the scope of the attorney-client privilege. However, under Rule 26(b)(3), a federal court applies federal law to determine the scope of the work product doctrine. In this situation, the scope of the attorney-client privilege provided by state law may be very different from the coverage provided under federal law for work product protection. Accordingly, in some cases it is difficult to predict which communications will be protected and which will not.

Consistency in the application of the attorney-client privilege is important in the corporate setting. Because counsel often deal with many employees on different levels within the corporation, it is necessary to determine which communications will be privileged and which will be subject to discovery.

Attorney-Client Privilege

in Corporate Setting

The attorney-client privilege in the corporate setting is unique in that it is the corporate entity to whom the privilege attaches and not the individual employees who communicate with the attorney. This means that it is the corporation that can decide to waive the privilege regardless of what the employee wants to do. The problem that then arises is twofold: Who are the employees who actively represent the corporation for purposes of invoking the privilege? What are the ways in which a corporation can make certain confidentiality is maintained?

1. Control Group v. Subject Matter

   The first case to fashion a guideline to determine which employees are covered by the privilege was City of Philadelphia v. Westinghouse Electric Corp., decided by the U.S. District Court for the Eastern District of Pennsylvania in 1962.[9] That case determined that the "control group" are those employees who communicate with counsel and who are in a position to control or take a substantial role in the determination of the course of action a corporation may take based on the legal advice received. The control group normally consists of top management and those lower-level managers who are closely involved with making decisions with respect to the legal advice being sought. Under this rule, only the control group members may invoke the attorney-client privilege.

   In contrast is the subject matter test arising from the Seventh Circuit in Harper & Row Publishers Inc. v. Decker[10] as modified by the Eighth Circuit in Diversified Industries Inc. v. Meredith.[11] This test attempts to encourage the free flow of information while limiting the number of people who can invoke the privilege. The criteria are: (1) the communication must be made for the purpose of securing legal advice; (2) the employee making the communication must do so at the direction of a superior; (3) the direction must be given by the superior to obtain legal advice for the corporation; (4) the subject matter of the communication must be within the scope of the employees' corporate duties; and (5) the communication is not disseminated beyond those persons who need to know.

   The subject matter test prevents the privilege from attaching to routine business documents that pass through the hands of counsel for normal business advice. It...