In my last column, "Proper Practices," I described two action items I recommend to ensure that your in-house team is managing the attorney-client privilege. In this article, I offer the additional steps.
After making sure your team is properly trained and is educating your business teams on attorney-client privilege, you should develop and implement a standard internal investigation process. The actions you take in the first 48 hours after an issue arises are critical to the internal investigation's effectiveness. The conduct of in-house counsel during this time can preserve or destroy the attorney-client privilege.
Many law departments mistakenly assume their lawyers are well prepared to manage the early stages of an investigation, including the tricky initial interaction with an employee bringing an issue to the attorney's attention. Case law is littered with examples of privilege being compromised by improper handling of employee interviews. Legal department leaders should develop a durable investigation process.
An essential component of the investigative process is the "Upjohn warning," which clarifies to an employee being interviewed that the attorney is representing the corporation and not the individual. Establishing this relationship at the outset precludes the employees from reasonably asserting ownership of the privilege relating to interactions with in-house counsel.
When delivering an Upjohn warning, a formal investigation process and training prepare in-house counsel for managing an internal investigation, including the critical early stage, and preserve the privilege for the organizational client.
The fourth thing you can do is internalize the lessons of Coastal States Gas Corp. v. Department of Energy and Exxon v. Department of Conservation and Natural Resources. These cases remind us that privileged exchanges remain so only if the communications are treated as confidential and are not indiscriminately circulated within an organization. Courts have recognized the need to share privileged communications with "need-to-know" agents without waiving the privilege. Before you hit the send button, test yourself: Can you articulate the "need-to-know" justification for each recipient? In Exxon, a multibillion-dollar verdict against Exxon (and its ultimate reversal) was tied to a determination of whether the recipients of an in-house lawyer's memorandum had "need-to-know" status. How would your communications fare under such scrutiny?
Finally, courts continue to remind us that the privilege applies only to legal advice. The rendering of business advice, even from an attorney, is not subject to the privilege. Courts have particular difficulty evaluating the application of the privilege to communications with mixed purposes. In such cases, courts will look for the predominate purpose of the communication, if one can be identified. Often, impatient courts will reject protection of hopelessly entangled business and legal advice. For example, in In re Vioxx Products Liability Litigation, Merck & Co. asserted privilege over approximately 30,000 documents. Looking at the primary purpose of the communications, the court advised that "this [rule] cannot be gotten around by the simple expedient of putting a lawyer in the shoes of the executive or ... giving the legal department the power of the corporate executive."
As in-house counsel, I urge you to to classify your communications in order to elucidate the purpose of each communication. I often preface my legal advice with a notation that counsel is rendering legal advice. Also, rather than mixing business and legal advice in a single communication, you may want to send separate communications. The bottom line is to draft your communications in a way that makes it easy for a court to apply the privilege.