Sword and Shield: the Georgia Supreme Court Adopts Third-party Waiver of Attorney-client Privilege
| Jurisdiction | Georgia,United States,Federal |
| Publication year | 2021 |
| Citation | Vol. 72 No. 5 |
Sword and Shield: The Georgia Supreme Court Adopts Third-Party Waiver of Attorney-Client Privilege
D. Garrett White
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The attorney-client privilege is generally held out as a sacred instrument (a shield) reserved for clients and used by attorneys for the benefit of those clients. Persons untrained in the law tend to have a basic understanding of what the attorney-client privilege is and can often explain in a rudimentary sense what it protects. What few non-lawyers realize, however, is that the privilege is not absolute, and is waivable under certain, limited, circumstances. Now, it seems that shield is losing its integrity in the realm of legal malpractice.
In January 2020, the Georgia Supreme Court ruled in Hill, Kertscher & Wharton v. Moody1 that where a client sues a former firm for legal malpractice, the waiver of attorney-client privilege, also known as the "offensive use" doctrine, applies to third parties, unnamed firms, and other lawyers that represented the malpractice plaintiff in the underlying litigation or transaction, and not just the firm being sued.2 At first glance Hill seems to be a sweeping ruling, applying to any and all lawyers or firms involved in a legal malpractice suit. In reality, Hill is a narrow decision that seriously implicates the Georgia Supreme Court's reaffirmation that attorney-client privilege may be waived by former clients that put prior representation at issue. The decision strengthens a powerful defensive mechanism in the defendant-attorney's arsenal when they become the target of malpractice litigation. At first glance readers may fall into a trap, assuming that Hill dramatically expands the third-party waiver of attorney-client privilege. However, a close reading
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of Hill shows that the Georgia Supreme Court actually reaffirms and bolsters the third-party waiver as factually dependent, while upholding the purpose of the attorney-client privilege and protecting Georgia attorneys. The decision in Hill has flown under the radar, but should be viewed under a microscope, and reviewed by evidence and legal ethics scholars, not only in the state of Georgia, but across the United States.
While the facts of Hill are somewhat complex and contain several parties, it is important to focus on the plaintiffs relationship with the firms or individual lawyers that represented him in the matters that gave rise to the malpractice action. Plaintiff, Daryl Moody (Moody) and two businesses, Mast Nine, Inc. (Mast Nine), and UAS Investments, LLC (UAS) invested in a company named Leucadia Group, LLC (Leucadia Group), a California-based company owned by Robert Miller (Miller) and Sean Frisbee. Moody, Mast Nine, and UAS sought legal advice from the law firm of Hill, Kertscher & Wharton, LLP (HKW) about terminating Miller, the sitting president of Leucadia Group.3
HKW advised the parties to appoint Moody to Leucadia Group's Board of Directors; form a new company named Leucadia Group Investment Holdings, Inc.; issue shares to the new company; and, finally, terminate Miller. Moody followed the advice. HKW further recommended filing suit against Miller and Leucadia Group in Fulton County Superior Court. Miller responded by filing his own lawsuit in California against Moody.4
Despite specific requests from Moody, HKW failed to assert certain defenses, including a defense that the California court lacked personal jurisdiction over Moody. Further, HKW was disqualified from the Fulton County lawsuit after it failed to disclose or obtain written waivers of potential or actual conflicts of interest from the prior or ongoing representation of Leucadia Group and Miller. HKW withdrew from the California lawsuit. The California court ruled that the appointment of Moody to the Board, the issuance of shares to Leucadia Investment Holdings, Inc., and Miller's termination were all void.5
Moody, Mast Nine, and UAS then filed suit in Cobb County, Georgia State Court against HKW for legal malpractice and breach of fiduciary duty based on legal advice and services in the matter involving Leucadia Group, and the Fulton County and California lawsuits. HKW filed its Answer, counterclaimed for unpaid legal fees, and admitted many of the
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factual allegations in the Complaint. HKW asserted several defenses including that non-parties caused some or all of the damages, and that plaintiffs had separate counsel-Holland & Knight, LLP-who provided "confirmatory advice." HKW further alleged that Moody directed the firm to "follow the instructions" of Holland & Knight, LLP (Holland & Knight) over the course of the representation of Moody.6
During discovery, HKW served a request for production of documents on non-party Holland & Knight. The request included: (1) Files for any corporate work performed for plaintiffs regarding Leucadia Group, Miller, etc.; (2) Holland & Knight's litigation file for the Fulton County lawsuit; (3) Holland & Knight's litigation file for the California lawsuit; and (4) All correspondence related to that corporate work and the Fulton County and California lawsuits, including communications between plaintiffs and Holland & Knight.7
Holland & Knight produced many redacted documents, but withheld others based on specific objections including the attorney-client privilege and work-product protection. Moody as well as the other plaintiffs filed a motion for protective order on the same grounds. HKW argued in its response that filing of a complaint for legal malpractice based on HKW's legal advice was an implied waiver of the attorney-client privilege and work-product doctrine as to all attorneys and law firms involved in the underlying suit, including Holland & Knight.8
The trial court found that Holland & Knight as well as HKW represented Moody in connection with the legal malpractice complaint, and found that the plaintiffs waived attorney-client privilege and work-product protection as to Holland & Knight. The trial court granted Plaintiffs' request for a certificate of immediate review. The Georgia Court of Appeals granted an application for interlocutory appeal, and reversed the trial court's order denying Plaintiffs' motion for protective order. The court expressed doubt that the waiver extends as far as other attorneys who represented the client in the same underlying matter, and concluded there was no basis for finding implied waiver of attorney-client privilege between Holland & Night, and Moody.9
The Georgia Supreme Court decided the case as a matter of first impression, holding that even though a client chooses not to sue certain lawyers or firms that represented the client in an underlying matter, implied waiver of attorney-client privilege extends to those lawyers and firms as well as those that the former client chose to sue. The court held,
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"[W]hen a client sues his former attorney for legal malpractice, the implied waiver of attorney-client privilege extends to the client's communications with other attorneys who represented the client with respect to the same underlying transaction or litigation."10 11
A. Attorney-client privilege
The attorney-client privilege is codified in Georgia under O.C.G.A. § 24-5-50112 which states: "(a) There are certain admissions and communications excluded from evidence on grounds of public policy, including . . . (2) [c]ommunications between attorney and client . . . ."13 The privilege is narrowly construed in Georgia due to the fact that it operates to exclude evidence and impede the truth-seeking process.14 The purpose of the privilege is to:
[E]ncourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice. The privilege recognizes that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer's being fully informed by the client.15
The attorney-client privilege originated in evidence law. However, it is often confused as a product of legal ethics because of its relationship with confidentiality in the Georgia Supreme Court's Rules of Professional Conduct.16 The rules state only that, "The attorney-client privilege applies in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client."17 Client confidentiality is broader, and encompasses the attorney-client privilege according to the Rules.18
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Finally, the attorney-client privilege often arises in the context of gathering evidence, or "discovery."19 During discovery, "[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action . . . ."20
B. Waiver
The attorney-client privilege is not absolute, and may be waived if there is a "voluntary relinquishment of a known right and may be established by express statements or implied by conduct."21 Implied waiver is shown by "decisive, unequivocal conduct reasonably inferring the intent to waive."22 In other words, under Georgia law, disclosure of privileged communication may waive the attorney-client privilege.23 It is generally accepted that the attorney-client privilege belongs to the client, and not the attorney.24 If a client does not wish to disclose certain privileged information from a previous suit, they must be careful not to impliedly waive privilege through third-party waiver often called offensive use doctrine, which recognizes that when a litigant places information protected by privilege at issue through an affirmative act for their own benefit, they waive the privilege.25 Courts have recognized that allowing the litigant to claim privilege in such a situation would be manifestly unfair to the opposing party.26
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