Quiz: Privileged or not?

What you should do in 10 scenarios involving attorney-client privilege

Privileged or Not Quiz

I trust that you have been anxiously awaiting the answers to the privileged-or-not game. I attempted to use the majority rule; the outcome in your jurisdiction may vary.

The 10 scenarios and their correct answers appear on the following pages. Good luck! 

Quiz: Privileged or not?

1. You investigate a hotline allegation that an employee was being harassed. You conclude that the allegations are baseless and draft a memorandum reflecting your legal analysis and conclusions.

Privileged or not?

Privileged or not quiz-privileged

ANSWER: Privileged.

OK, I started you off with an easy one. This is an opportunity to review the basic rule: If a client consults with an attorney for the purpose of obtaining legal assistance, then all confidential communications with the client in furtherance of that end are protected by the attorney-client privilege.

Quiz: Privileged or not?

2. Assume that the memorandum referred to in scenario 1 included key factual findings that you considered when developing your legal conclusions.

Privileged or not?

Privileged or not-not privileged

ANSWER: The recitation of the facts are not privileged.

The privilege does not extend to protect against disclosure of the facts discussed in otherwise confidential attorney-client communications. Granted, perhaps there are better sources of the factual discovery (i.e., the employees) but an investigator’s findings of facts do not necessarily become privileged just because they are contained in an attorney’s memorandum.   

Quiz: Privileged or not?

3. Assume that you send the memorandum in scenario 1 to the company’s 60 human resources managers.

Privileged or not?

Privileged or not-not privileged

ANSWER:  Privileged waived.

Although courts have upheld the privilege when attorney communications were distributed to “need-to-know” agents, indiscriminate transmission of otherwise privileged material waives the privilege. (See F.C. Cycles, Inc. v. Fila Sport.)

In this case, sending the memo to 60 individuals—most of whom would have no connection to the matter—would almost certainly result in a waiver.

Quiz: Privileged or not?

4. You have been involved in rendering legal advice regarding a matter about which litigation ensued. Unbeknownst to anyone at your company, your bar membership has lapsed and you are not licensed in any jurisdiction. In the litigation, the opposing party seeks the production of your memoranda.  

Privileged or not?

Privileged or not-privileged

ANSWER: Privileged.

Remember the in-house lawyer at Gucci who went “inactive” and a magistrate held that he was not an attorney, so all of his work was admissible? Remember how we then checked our teams members’ bar membership statuses? Well, that ruling was overturned. The test is whether the client had a reasonable belief that it was communicating with an attorney. Whew.

Quiz: Privileged or not?

5. One of your emails to your business partner is the subject of a discovery request. The email contains the following: “The information contained in this email is privileged. It has been sent for the sole use of the intended recipient(s). If the reader of this message is not an intended recipient, you are hereby notified that any unauthorized review, use, disclosure, dissemination, distribution or copying of this communication, or any of its contents, is strictly prohibited.”

Privileged or not?

Privileged or not-not privileged

ANSWER: Not privileged.

I added this scenario because too many of us believe that blanket privilege inscriptions help in the privilege analysis; they do not. In fact, courts are increasingly wary of indiscriminate marking of all communications as privileged. 

Quiz: Privileged or not?

6. You are asked to present your litigation strategy and risk assessment to the company’s public relations firm that is helping with press inquiries regarding the litigation. The opposing party is now seeking your slide deck.

Privileged or not?

Privileged or not-not privileged

ANSWER: Not privileged.

I acknowledge that this one may require additional facts, but if the PR firm is the company’s standing PR firm and has been retained by the company (and not by counsel), then communications are likely not privileged.

There are two leading cases in this area. The first is In Re Copper Market Antitrust Litigation, and it established the “functional equivalent” test for PR firms: If the PR firm is the functional equivalent of a company employee, then communications with the PR firm are privileged. 

The second case is In Re Grand Jury Subpoenas, in which the privilege analysis depended upon who hired the PR firm (the attorneys or the client).

A recent case out of Colorado adopted the functional-equivalent test but focused on whether the PR firm served an essential corporate function for which the company did not have an equivalent internal organization. See, A.H. ex rel. Hadijah v. Evenflo.

To maximize the chances that the privilege will apply, outside trial counsel should hire and direct the PR firm.

Quiz: Privileged or not?

7. An employee, who watched your presentation at a meeting where you encouraged workers to proactively consult you with all their legal and compliance questions, visits your office without an appointment. He hands you a document titled “Price Fixing at Our Company.” It is marked: “Attorney-Client Communication.” In a subsequent investigation, the government seeks production of the document.            

Privileged or not?

Privileged or not-not privileged

ANSWER: Not privileged.

This one is a close call, so depending upon the assumptions you made, you may be correct if you guessed “privileged.”

Pursuant to the Supreme Court’s Upjohn case in 1981, a lower-echelon employee is considered a client under the attorney-client privilege. However, the reach of Upjohn is not so extensive as to sweep into the privilege any and all communications of lower employees with in-house counsel. There generally must be a showing that the “control group” (generally defined as the company’s management) expressly asked lower-level employees to communicate with counsel so that counsel could render a legal opinion. 

Absent such an express request, there is no guarantee that communications from lower-echelon employees will be protected. See Independent Petrochemical Corp v. Aetna Cas. & Sur. Co. (“Without showing that such communications are part of the control group’s efforts to secure legal advice, every memorandum and conversation between a corporate employee and corporate counsel would be confidential, which would expand the privilege far beyond its bounds and unnecessarily frustrate the efforts of others to disco very corporate activity,” the decision said.) 

Additionally, courts are more likely to enforce the privilege provided that the matters discussed with in-house counsel fall within the compass of the employees’ corporate duties. See Upjohn at 394-95 (acknowledging that the communications at issue concerned matters within the scope of the employees’ corporate duties.)            

Quiz: Privileged or not?

8. With respect to the employee memorandum described in scenario 7, the company agrees to disclose the document to the government. Now, it is being demanded in companion civil litigation.

Privileged or not?

Privileged or not-not privileged

ANSWER: Not privileged.

The 8th Circuit—the first circuit court to examine the issue—adopted the so-called “selective waiver” doctrine in 1978, and every other circuit asked to consider adopting it since then has refused to do so. As the selective waiver doctrine is an endangered species, assume that disclosing otherwise privileged documents to the government waives the privilege.

Quiz: Privileged or not?

9. Based upon the employee’s price-fixing memorandum described in scenario 7, your company’s in-house counsel in Belgium evaluates local compliance with the competition laws and shares his findings with the company’s European executive staff.

Privileged or not?

Privileged or not-not privileged

ANSWER: Not privileged.

Speaking of endangered species: The in-house counsel privilege in the EU is fading. In Akzo Nobel Chemicals Ltd. v. Commission, the European Union Court of Justice announced that it did not recognize a privilege involving communications to a client from in-house counsel. Use outside counsel to secure the privilege.

Quiz: Privileged or not?

10. Because of your antitrust skills, you have been asked to also serve as the company’s vice president of distribution networks where you will have responsibility for developing a distribution program. You have developed a presentation that contains your distribution design and the legal risks associated with it. You use your business title in the presentation.

Privileged or not?

Privileged or not-not privileged

ANSWER: Not privileged.

In-house counsel serving in business functions do not magically transform ordinary business communications into privileged ones. Courts have found that use of a business title and a predominate business purpose of a communication thwarts application of the privilege. At best, the legal advice could be redacted. Try to separate legal from business advice.

I hope this exercise stirred some discussion within your teams.

Brian Martin

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