The scope and use of the attorney-client privilege in the U.S. and its applicability to communications at home and abroad.

• Author: D'Angelo, Christopher Scott

ALTHOUGH the attorney-client privilege has been described as, "one of the most revered of common law privileges," (1) recent developments have challenged the scope and use of the privilege, particularly concerning government investigations of corporate clients. In a recent survey by the National Association of Criminal Defense Lawyers, 87 percent of lawyers surveyed reported that they had experienced recent challenges to the attorney-client privilege. (2) Additionally, 85 percent reported that the Department of Justice and Securities and Exchange Commission frequently require waiver discussions when negotiating settlements. (3) Reviewing the characteristics of the privilege in the United States will aid clients and practitioners in ensuring that their communications remain as securely shielded by the attorney-client privilege as possible.

What the Privilege Is

The attorney-client privilege is the oldest confidential communications privilege known to the common law. (4) Though each U.S. jurisdiction retains its own particular privilege test, often codified by statute, most jurisdictions require the same four elements for establishing privilege. There must be (1) a communication (2) between counsel and client (3) made confidentially (4) for the purpose of obtaining or rendering legal advice. (5) Though most jurisdictions have extended the privilege to include a client's confidential communications with a subordinate or outside agent assisting an attorney, the communication must always be confidential and made for the purpose of obtaining or rendering legal advice. (6) The privilege protects these communications to encourage frank discussions between a client and an attorney and to ensure that an attorney is" not hindered in providing legal advice and services to a client. (7) The attorney-client privilege rests with the client and survives an individual client's death. (8)

What It Is Not

Jurisdictions also are similar in what they do not protect under the attorney-client privilege. First, the privilege does not protect facts, including those imbedded within otherwise privileged communications. (9) Even facts concerning the attorney-client relationship itself, such as a client's identity, whether such a relationship exists, when an attorney was retained, or the terms of the attorney's engagement, usually are not privileged. (10) Additionally, the attorney-client privilege is applicable only to information sought for the purpose of obtaining legal advice and to communications involving an attorney acting as a legal advisor. (11) Therefore, business advice rendered by an attorney is not privileged. (12) As a practical matter, documents containing both privileged communications and facts or business advice likely are discoverable, but may be redacted before production.

The attorney-client privilege also does not protect information that counsel obtained from third parties during the course of representation. (13) Therefore, "any communications from counsel to the client disclosing information from third parties would not be protected because the underlying communication between counsel and the third party is not protected." (14) Counsel's notes and impressions of third party conversations may be protected, however, as attorney work product.

Choice of Law

Because jurisdictions each have their own particular attorney-client privilege laws, choice or conflict of law issues can arise. Federal courts sitting in diversity jurisdiction apply state law concerning the attorney-client privilege. (15) A court determines which state's privilege laws apply by analyzing the forum state's choice or conflict of law principles. (16) States generally look to the state with the greatest interest or most significant relationship to the case generally, or to the privilege issue specifically. (17) Among the factors analyzed are: choice of law agreements, the principal locations of the parties involved, the location of the disputed occurrence, the location of the communication, where discovery is occurring, and where any waiver is alleged to have occurred. (18)

If the federal court maintains federal question jurisdiction, federal common law applies to privilege disputes. (19) Where both federal question claims and pendent state law claims are at issue, the federal common law of privilege applies to all claims. (20) In cases involving international privilege disputes, courts have ruled that comity and federal choice of law rules are included within the ambit of federal common law and, therefore, should be referenced and analyzed when deciding such disputes. (21)

Certain courts examining international privilege disputes have adopted a two-tier analysis for determining which jurisdiction's rules should apply. (22) First, if the communication simply "touches base" with the United States, such as by being authored or concerning legal matters in the United States, United States federal discovery principles prevail. (23 Second, if the communication relates solely to matters concerning foreign jurisdictions, such as by taking place and involving attorneys or proceedings there, the court analyzes which foreign jurisdiction has the predominant interest, by examining the place where the privileged relationship was entered into or the place in which the relationship was centered at the time of the communication. (24)

At least one court, however, has found the first "touching base with the United States" part of the analysis too restrictive, and when faced with a choice of law question, immediately weighed the United States' and the foreign jurisdiction's interests to determine which had the "most direct and compelling interest," taking into account the location of the parties, the substance of the communication, the center of the communicating relationship, the needs of the international system, and whether the application of foreign law would be inconsistent with federal law policies. (25)

Waiver

The attorney-client privilege can be waived in several ways. Most common is when the communication at issue loses its confidential nature. If a privileged communication is shared with third parties, the privilege generally is waived. (26)

Most courts provide for an exception to this rule when parties establish a joint defense agreement among themselves, allowing for a joint defense privilege. The joint defense privilege protects communications between or among parties with mutual interests and their counsel. To establish the privilege, a party must demonstrate that the communication was made in the course of, and to further, a joint litigation effort. (27) Additionally, because the privilege is not distinct, but rather considered an extension of the attorney-client privilege, the communication still must be made confidentially and for the purpose of obtaining or rendering legal advice. (28)

Though not all jurisdictions require one, the relevant parties should sign a written joint defense agreement establishing the scope of their shared privilege and, if appropriate, obtain court approval of the agreement. Additionally, because of future disqualification concerns, parties should include a waiver of conflict of interest clause.

Parties must also be wary of inadvertent disclosures of privileged communications as courts are divided concerning whether such disclosures waive the privilege. While certain courts leniently hold that no waiver occurs in such instances, other courts hold that an inadvertent disclosure constitutes a complete waiver of the privilege. (29) Still other jurisdictions decide on a case-by-case basis, weighing the precautions taken to avoid inadvertent disclosure, the time taken to rectify the error, the scope of discovery, the extent of the disclosure, and general considerations of fairness and equity. (30)

Clients can also waive their privilege over communications by placing the communication at issue in litigation. Often this occurs when a client challenges their former attorney's representation or relies on advice of counsel as a defense, or when the case concerns insurance bad faith claims. Courts generally fall into two categories when analyzing an "at issue waiver." One group holds that if a privileged communication is relevant to the privilege-holder's claim or...