How to protect your privileged information.

Author:Angeli, Elisa M.
Position:Small Business CENTRAL

Recent high-profile prosecutions have brought attention to the issue of lawyer-client and work-product privileges. A company that's the target of a federal prosecution does face a dilemma, deciding whether to waive the attorney-client privilege in exchange for avoiding obstruction-of-justice charges or significant Securities and Exchange Commission penalties, for example. But it's far more common for waivers of privilege to occur unknowingly in the course of day-to-day business.

How? All it takes is a careless failure to preserve the confidentiality of otherwise protected information. What, exactly, is protected information? Who is entitled to have access to that information? And under what circumstances?

Communications between lawyer and client for the purpose of rendering legal advice are protected by attorney-client privilege. The client holds the privilege and ultimately decides whether to claim it or waive it. Crucial to that privilege is confidentiality. The information itself need not be confidential, but it must be conveyed in confidence.

Privileged legal communications can be conveyed within a company's "control group"--generally made up of officers and agents responsible for directing the company's actions in response to legal advice. Under the Supreme Court's "subject matter" rule, protection is extended to other employees who also must seek and act on legal advice.

In cases where an outside party is acting as an agent of the company, the privilege may apply if the communication occurs for the purpose of rendering legal advice or advancing the efficient administration of justice, and involves something more than a recitation of facts.

When an external disclosure is made for a commercial purpose or with the intent of being incorporated into a public filing (providing an internal report to outside auditors, or preparing a public offering...

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