Losing the war on attorney-client privilege: viewing the selective waiver quagmire through the Tenth Circuit's In Re Qwest Communications International.

• Author: Eoff, Gretchen Elizabeth

THE attorney-client privilege, which belongs to the client, not to the lawyer, enables individual and corporate clients to communicate with their lawyer in confidence. (1) It is the "bedrock of the client's rights to effective counsel and confidentiality in seeking legal advice." (2) Attorney-client privilege "plays a key role in helping companies act legally by permitting corporate clients to seek out and obtain guidance on how to conform conduct to the law." (3) In addition, the privilege "facilitates self-investigation into past conduct to identify shortcomings and remedy problems as soon as possible, to the benefit of corporate institutions, the investing community and society-at-large." (4) Moreover, the attorney work product doctrine "underpins [the American] adversarial justice system" and "allows attorneys to prepare for litigation without fear that their work product and mental impressions will be revealed to adversaries." (5) All but one circuit that has considered the issue of selective waiver in recent years has rejected the concept, instead holding that waiver of privileged material as to one party for a specific purpose constitutes a waiver as to all parties for any purpose. (6)

The circuit court majority rejecting selective waiver of attorney-client privilege ignore the harsh reality currently facing corporations. In the course of a governmental investigation, companies accused of wrongdoing, or who engage in voluntary self-evaluation or self-reporting, are often forced to selectively waive attorney-client privilege in order to be judged as "cooperating" with federal prosecutors of government agencies under current governmental policies. (7) The result is the erosion of the attorney-client privilege having a wholly negative impact: executives who would otherwise consult with corporate counsel about sensitive issues become embroiled in confusion about whether the attorney-client privilege will apply to their conversations thereby chilling communications; lawyers investigating allegations of wrongdoing become concerned about how their honest attempts to unearth and correct serious problems may be used against the company's interests in the future; and employees who lack sophistication may be left without rights normally guaranteed to any other person whose actions are under scrutiny as a result of a government investigation. (8)

Legal scholars and corporate attorneys believe a war is being waged against attorney-client privilege. The latest battle involves the current policies of governmental agencies which encourage selective waiver of attorney-client privilege thereby corroding the confidential attorney-client relationship between companies and their lawyers, resulting in "great harm both to companies and the investing public." (9) Lawyers play a key role in helping business entities comply with the law and to fulfill this role and "must enjoy the trust and confidence of the managers and the board, and must be provided with all relevant information necessary to properly represent a client." (10) By requiring routine selective waiver of an entity's attorney-client and work product protections, governmental policies encouraging selective waiver "discourage entities from consulting with their lawyers, thereby impeding the lawyers' ability to effectively counsel compliance with the law." (11) This results in harm not only to companies, but the investing public as well.

The following sections will discuss the chasm between the majority circuit belief that selective waiver does little to foster the attorney-client privilege, and the quagmire that corporation's face in the choice between disclosing privileged information to aid in a governmental investigation and appearing non-cooperative under the DOJ's Thompson Memorandum and its progeny. In addition, this article will explore current congressional actions to federalize a selective waiver rule under proposed FRE 502(c) and whether it might present a possible solution to the majority circuit refusal to effectively address selective waiver. Moreover, the circuits rejecting selective waiver fail to acknowledge that many state and district courts approve of selective waiver. Accordingly, uniformity is lacking across circuits and lower courts presenting a danger for the administration of justice. In ignoring the de facto landscape of selective waiver, the Tenth Circuit fails to provide its circuit with sufficient judicial rationale to assist parties with battling the increasingly complex policies facing 21st century corporations.

Part I of this article details the history of the attorney-client privilege and the attorney work product doctrine as the long standing "bedrock" right to effective counsel and confidentiality in seeking legal advice. This section also includes a survey of the landscape of selective waiver of attorney-client privilege and the battle being waged over selective waiver. Part II discusses the circuit split regarding selective waiver of attorney client privilege and the Tenth Circuit decision rejecting selective waiver in In re Qwest Communications International, a case of first impression. Finally, Part III presents two arguments. First, that the Tenth Circuit decision largely mirrors the weak rationale presented by its sister circuits in rejecting selective waiver while selectively ignoring recent developments in the national legal community and congress over selective waiver and the attack on attorney-client privilege. Second, given the circuit split, and potential constitutional issues associated with federalizing a selective waiver rule, there is an urgent need for greater judicial predictability across federal and state courts in order to ensure the administration of justice.

1. General Background

   1. The Attorney-Client Privilege and the Attorney Work Product Doctrine

      All communications between a client and an attorney, for the purpose of obtaining or providing legal advice, are confidential. (12) The attorney-client privilege is based on the notion that both clients and society are best served when a client is able to obtain "fully informed legal advice" from a lawyer. The privilege is enforced to encourage an open atmosphere where a client would otherwise be discouraged from communicating openly with the attorney unless there is a promise that the communication will remain secret. Under the common law, a critical component of the attorney-client privilege "is whether the communication between the client and the attorney is made in confidence of the relationship, and under circumstances from which it may reasonably be assumed that the communication will remain in confidence." (13) The privilege applies equally to corporations and individuals.

      The attorney-client privilege has been summarized by Wigmore in a formula that federal courts frequently cite:

      (1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived. (14)

      The Tenth Circuit Court of Appeals has held that the key to attorney-client privilege is confidentiality. The "privilege is lost if the client discloses the substance of an otherwise privileged communication to a third party." (15) The Court reasoned that "the confidentiality of communications covered by the privilege must be jealously guarded by the holder of the privilege lest it be waived. The "courts will grant no greater protection to those who assert the privilege than their own precautions warrant." (16) The Tenth Circuit has further held that "[c]ourts need not allow the claim of attorney-client privilege when the party claiming the privilege is attempting to utilize the privilege in a manner that is not consistent with the privilege." (17) Moreover, any "voluntary disclosure by the client is inconsistent with the attorney-client relationship and waives the privilege." (18)

      The attorney work product doctrine was first addressed by the U.S. Supreme Court in Hickman v. Taylor. (19) The Court held that where no showing is made of need for the materials or justification for securing materials falls "outside the arena of discovery and contravenes the public policy underlying the orderly prosecution and defense of legal claims. Not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney." (20) The Court reasoned that it is "essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel." (21) Under the attorney work product doctrine, "an attorney is not required to divulge, by discovery or otherwise, facts developed by his efforts in preparation of the case or opinions he has formed about any phase of the litigation." (22)

      Fact work product may be obtained by an adversary only "upon a showing of both a substantial need and an inability to secure the substantial equivalent of the materials by alternate means without undue hardship." (23) Opinion work product consists of the attorney's "mental impressions, conclusions, opinions or legal theories" (24) relative to the client's case, and is "virtually undiscoverable." (25) The work product doctrine is based on the "public policy underlying the orderly prosecution and defense of legal claims" (26) based on an adversarial system where an attorney should not be compelled to share work product with a client's adversary. (27) If an attorney's work product were discoverable, the attorney would be discouraged from memorializing thoughts on paper. In 1948, the attorney work-product doctrine was incorporated into FED. R. CIV. P. 26(B)(3). (28)

      In the American legal system, the attorney-client privilege, and the attorney work product doctrine...