"fly on the Wall" - Discovery of Attorney Fee Statements

• Publication year: 2017
• Author: By Mary Gillick, Esq.

"FLY ON THE WALL" - DISCOVERY OF ATTORNEY FEE STATEMENTS

By Mary Gillick, Esq.^*

I. INTRODUCTION

Attorneys generally bill time in tenths of an hour, dutifully keeping for clients a contemporaneous record of everything from conversational topics, to areas of law researched, to summaries and outcomes of court hearings. Those time records are then compiled, often with the same level of detail, into an invoice which is sent to the client. What happens, when someone other than the client tries to examine the contents of the invoices, either through formal discovery or some other procedure? This is especially worrisome in the trusts and estates context for trustees or personal representatives and their counsel. If a beneficiary demands an accounting, how much detail must be provided regarding legal fees? What if the attorney fees have been paid from the trust or the estate? Can a valid claim of attorney-client privilege be asserted to allow the client to maintain confidentiality of the invoices? The answer depends largely on two things (1) the jurisdiction, and (2) the level of detail contained in the invoices.

II. ATTORNEY-CLIENT PRIVILEGE

"The attorney-client privilege is the oldest of the privileges for confidential communications."¹ It protects the confidentiality of communications between a client and an attorney when the communications are intended to be confidential and that confidentiality is not later waived.²"Its purpose is to encourage full and frank communication between attorneys and their clients, and thereby promote broader public interests in the observance of law and administration of justice."³

The exact elements and language of the privilege vary between jurisdictions, but all jurisdictions have the same general principles, as summarized in United States v. United Shoe Mach. Corp. ("United Shoe"):

The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client, (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate, and (b) in connection with this communication is acting as a lawyer, (3) the communication relates to a fact of which the attorney was informed (a) by his client, (b) without the presence of strangers, (c) for the purpose of securing primarily either (i) an opinion of law, (ii) legal services, or (iii) assistance in some sort of legal proceeding, and not (d) for the purpose of committing a crime or tort, and (4) the privilege has been (a) claimed and (b) not waived by the client. ⁴

III. EXAMPLES OF CODIFICATION OF ATTORNEY-CLIENT PRIVILEGE

Although the phrasing may be different, the state codifications of the attorney-client privilege follow the same general framework as laid out in United Shoe.

For example, California's attorney-client privilege statute states that the client can "refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer."⁵ The term "confidential communication between client and lawyer" means "information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which . . . discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted . . . ."⁶ Although the privilege belongs to the client, "the attorney is professionally obligated to claim it . . . whenever the opportunity arises, unless he or she has been instructed otherwise by the client."⁷

New York's privilege statute holds privileged a confidential communication made between the attorney or his or her employee and the client in the course of professional employment, unless the client waives the privilege.⁸ The New York statute also explicitly states that beneficiaries of estates are not clients of the personal representative's attorney, and shall not be treated as clients, for purposes of the privilege.⁹

Finally, Florida's privilege statute states that "[a] client has a privilege to refuse to disclose and to prevent any other person from disclosing, the contents of confidential communications when such other person learned of the communications because they were made in the rendition of legal services to the client."¹⁰ Communications are confidential if they are "not intended to be disclosed to third persons other than . . . those to whom disclosure is in furtherance of the rendition of legal services . . . [or] those reasonably necessary for the transmission of the communication."¹¹

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IV. PRIVILEGE AND ATTORNEY INVOICES: CALIFORNIA, NEW YORK, AND FLORIDA

Although all of the above three states have codified the attorney-client privilege in very similar ways, they differ in their application of the privilege to fee statements.

A. California ? Privileged in Pending and Active Legal Matters

The California Supreme Court recently decided County of Los Angeles Board of Supervisors v. Superior Court ("L.A. County Bd."))¹² The California Supreme Court held that "the attorney-client privilege does not categorically shield everything in a billing invoice," but that "invoices for work in pending and active legal matters are so closely related to attorney-client communications that they implicate the heartland of the privilege."¹³ In California, therefore, the attorney-client privilege protects the confidentiality of invoices for work in pending and active legal matters.

At the appellate level, L.A. County Bd. considered whether attorney billing statements constituted "confidential communications" within the meaning of California's attorney-client privilege.¹⁴ The Court of Appeal held billing statements categorically constituted confidential communications, protected by the attorney-client privilege.¹⁵ The California Supreme Court reversed and remanded.¹⁶

In the underlying litigation, the ACLU of Southern California filed a California Public Records Act ("CPRA") request seeking invoices billed to Los Angeles County (the "County") by any outside law firm in connection with nine lawsuits regarding excessive force against inmates.¹⁷ The County agreed to produce invoices related to three of the lawsuits as they were no longer pending cases, but refused to produce invoices relating to the remaining six lawsuits still pending.¹⁸ The County claimed that the invoices in the six pending lawsuits contained "detailed description[s], timing, and amount of attorney work performed, which communicates to the client and discloses attorney strategy, tactics, thought processes and analysis," and were therefore privileged under the Evidence Code.¹⁹

The CPRA provides "the public with a broad right of access to government information" and records in the possession of state and local agencies.²⁰ Not all records, however, must be provided.²¹ One of the exemptions from the CPRA allows agencies to withhold records which are protected by provisions of the Evidence Code relating to privilege ? including the attorney-client privilege.²² Therefore, if invoices in pending lawsuits are privileged under the Evidence Code, they do not have to be provided in response to a CPRA request.

In reversing the Court of Appeal holding that billing statements categorically were privileged, the California Supreme Court analyzed California Business and Professions Code sections 6148 and 6149. Section 6148 describes the information that must be in both fee agreements and attorney billing statements.²³ Section 6149 states that fee agreements shall be a confidential communication, but "makes no mention of attorney billing statements or invoices."²⁴ By this statutory scheme, including both fee agreements and billing statements in one statute, but only fee agreements in the next, the court concluded the legislature did not intend the privilege "to protect both fee agreements and invoices in the exact same way."²⁵

Additionally, in analyzing the Evidence Code, the California Supreme Court determined that the primary purpose of the attorney-client privilege is to "protect the confidential relationship between client and attorney to promote frank discussion between the two."²⁶ Despite the court's prior holding in Costco Wholesale Corporation v. Superior Court,²⁷ the court in L.A. County Bd. held "the attorney-client privilege only protects communications between attorney and client made for the purpose of seeking or delivering the attorney's legal advice or representation."²⁸

Based on the court's reading of the Evidence Code, it found the "heartland of the privilege protects those communications that bear some relationship to the attorney's provision of legal consultation."²⁹ Invoices, in the Court's opinion, are "not communicated for the purpose of legal consultation" but "are communicated for the purpose of billing the client" and therefore "fall outside the scope of the attorney's professional representation."³⁰ The court held that the purpose of invoices is to "ensure proper payment for services rendered, not to seek or deliver the attorney's legal advice or representation."³¹

While the court determined that billing invoices are generally not made for the purpose of legal representation, "the information contained within certain invoices may be within the scope of the privilege."³² For example, if the billing information is "to inform the client of the nature or amount of work occurring in connection with a pending legal issue," that information "lies in the heartland of the attorney-client privilege."³³ The same protection, however, may not apply to "fee totals in legal matters that concluded long ago."³⁴ Rather than the actual content of the invoice, it appears that the privilege "turns on whether those amounts reveal anything about legal consultation."³⁵ While the "scope of the attorney-client privilege remains constant," the information...