Protecting the Attorney-Client Privilege for Corporate Clients
We recently represented a national corporation and one of its regional subsidiaries in complex litigation. Once per week, a “Litigation Team” convened conference calls to discuss and coordinate case strategy. The Litigation Team was made up of the national corporation’s in-house counsel, two in-house attorneys from the regional subsidiary, adjusters from the corporation’s insurer, attorneys from our office, and, from-time-to-time, third-party consultants. Early in the process, we had questions about whether these conference calls and the work performed by our third-party consultants were privileged and confidential.
We were surprised to find that no court has squarely addressed whether this type of team approach is covered by the veil of attorney-client and work product privilege. This was surprising because our situation was the natural outgrowth of two developments in the legal profession. First, in-house corporate counsel are a given at most large corporations. Second, as litigation becomes more complex, this type of team approach—a mix of in-house and outside counsel working with third-party consultants—seems to be on the rise. The absence of on-point case law on this approach was unsettling.
Despite this dearth of case law, we concluded that the traditional rules of attorney-client privilege and work product privilege applied with equal force in this “new” situation. We identified some steps attorneys for corporate clients can take to protect and preserve their privileged information. This article outlines our analysis and lays out some recommendations for others who find themselves in a team-based approach to complex litigation.
I. The Attorney-Client Privilege
The attorney-client privilege protects communications between attorneys and clients from compelled disclosure. The purpose of the privilege is to encourage clients to make “full and frank” disclosures to their attorneys, who are then better able to provide candid advice to their clients. “Open communication assists lawyers in rendering legal advice, not only to represent their clients in ongoing litigation, but also to prevent litigation by advising clients to conform their conduct to the law and by addressing legal concerns that may inhibit clients from engaging in otherwise lawful and socially beneficial activities.”
Wisconsin’s attorney-client privilege, codified in Wis. Stat. § 905.03, applies to confidential communications between the client, the lawyer, and, if applicable, the lawyer’s representative. Section 905.03(1)(d) defines a “confidential communication” as a communication “not intended to be disclosed to 3rd persons other than those to whom disclosure is in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.” Section 905.03(1)(c) defines “representative of the lawyer” as “one employed to assist the lawyer in the rendition of professional services.” Wisconsin Stat. § 905.03(2) outlines the scope of the lawyer-client privilege.
A client has a privilege to refuse to disclose and to prevent any other person from disclosing communications made for the purpose of facilitating the rendition of professional legal services to the client:
- [B]etween the client or the client's representative and the client's lawyer or the lawyer's representative; or
- [B]etween the client's lawyer and the lawyer's representative; or
- [B]y the client or the client's lawyer to a lawyer representing another in a matter of common interest; or
- [B]etween representatives of the client or between the client and a representative of the client; or
- [B]etween lawyers representing the client.
Recognizing the inherent tension between the broad scope of the attorney-client privilege outlined above and the courts’ right to every person’s evidence, the courts have articulated the following principles to guide attorney-client privilege determinations:
- The privilege will be construed to apply only where it is necessary to achieve its purposes.
- Only those communications which reflect the lawyer’s thinking or are made for the purpose of eliciting the lawyer’s professional advice or other legal assistance fall within the privilege.
- Because one of the objectives of the privilege is assisting clients in conforming their conduct to the law, litigation need not be pending for the communication to be made in connection to the provision of legal services.
- Because the privilege is in derogation of the search for truth, the application of the attorney-client privilege must be strictly confined.
The attorney-client privilege is an absolute privilege and gives way only when the client voluntarily waives its application. In most circumstances, disclosing an otherwise privileged communication to a third-party waives the privilege. In limited circumstances, detailed in Section III.C below, the attorney-client privilege may extend to third parties retained “to assist the lawyer in the rendition of professional legal services.” The absolute nature of this privilege, however, extends only to “communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney.”
II. The Work Product Privilege
“The work-product doctrine protects the enterprise—either analytical or entrepreneurial—by a party or by the party’s agent.” The work product privilege applies to work “prepared in anticipation of litigation or for trial by or for another party or by or for that other party’s representative (including an attorney, consultant, surety, indemnitor, insurer or agent).” The “litigation” need not have been commenced at the time the documents were prepared. Moreover, the “litigation” need not be the proceeding in which the doctrine is asserted.
The Wisconsin Supreme Court has recognized that attorney work product “consists of the information [the lawyer] has assembled and the mental impressions, the legal theories and strategies that he has pursued or adopted as derived from interviews, statements, memoranda, correspondence, briefs, legal and factual research, mental impressions, personal beliefs, and other tangible and intangible means.” Work product can also include materials, information, mental impressions, and strategies of others that attorneys assimilate as part of their own work product. Before a document or item can be classified as attorney work product, it must have been obtained at the attorney’s direction and in anticipation of litigation.
As opposed to the absolute, yet narrow, attorney-client privilege, the work product privilege is qualified due to its expansive scope. The privilege gives way “upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the case and that the party seeking discovery is unable without undue hardship to obtain the substantial equivalent of the materials by other means.” Like the attorney-client privilege, the client may claim and assert the privilege and is the only person able to voluntarily waive the privilege.
III. The Corporate Client and Privilege
A. The Co-Client or Joint Client Privilege
In the case we worked on above, we had three separate clients: the national corporation, its regional subsidiary, and the insurance company. In all respects, these three were separate entities, and in many respects, were separate clients for purposes of a privilege analysis. “As common-law courts developed the privilege in an age in which clients were almost exclusively natural persons, more modern courts sought to adapt it to the now ubiquitous corporate client.” Modern courts have attempted to respect the corporate form by treating corporate parents, subsidiaries, and their insurers as separate entities.
Our Litigation Team included three distinct groups of attorneys, each representing a separate client. The national corporation’s in-house counsel represented the national interests of the corporation. The in-house counsel from the regional subsidiary represented the national corporation as a whole, but was tied directly to the regional subsidiary. “Recognizing that any other result would wreak havoc on corporate counsel offices, courts almost universally hold that intra-group information sharing does not implicate the [attorney-client] disclosure rule.” “This [approach] reflects both the separateness of each entity and the reality that they are all represented by the same in-house counsel (whether that counsel typically takes up office with the parent or with a subsidiary).”
Our firm, on the other hand, was explicitly retained to represent the regional subsidiary and its insurer in the litigation. In doing so, we represented the national corporation’s interests so long as those interests coincided with that of the regional subsidiary and its insurer. In effect, we assumed a joint-representation of all three separate clients. “When co-clients and their common attorneys communicate with one another, those communications are ‘in confidence’ for privilege purposes.” This co-client or joint privilege manifests when co-clients convey their desire for representation and the lawyer consents. Parties seeking to assert the co-client privilege before a court must demonstrate their intention to create a joint-client relationship. Courts will typically look for indicia of intent, “particularly how the parties interact with the joint attorneys and each other.”
B. The Corporation’s Employees
As noted above, the attorney-client and work product privileges were developed at a time in which clients were individual, natural persons. Because corporations act through their human agents, the question of whose communications with the corporation’s attorneys are entitled to protection often comes up. In the seminal case of Upjohn v. United States, the United States Supreme Court rejected a more narrow view of the attorney-corporate client privilege—the so-called “control group theory,” whereby only communications between high-level managers and corporate attorneys merited protection—and opted for a broader view of a corporate client. The court held that when a corporation’s managers require its employees to give information to its attorneys in the course of providing legal advice, those communications are privileged. The court justified this broader protection on the grounds that lawyers need to be able to communicate freely with corporate employees in order to carry out their professional obligations and to guide their corporate clients to legal compliance.
Pursuant to Upjohn, communications between corporate employees and attorneys are privileged when: (1) the information helps the attorney provide legal advice; (2) the communications relate to the employees’ corporate duties; (3) the employees are aware that they are being questioned; and (4) the communications are considered and kept confidential. This nuanced analysis potentially provides a corporate-client and its employees with very broad protection against compelled disclosure of communications with attorneys. This broad scope of protection was important in our case because of the large number of corporate employee-witnesses. As outside counsel, we were able to interview all witnesses behind the shield of attorney-client privilege.
C. Third-Party Agents
Generally, the attorney-client privilege is waived when the client voluntarily discloses an otherwise confidential communication to a third-party. The exception to this general disclosure rule is when the third-party is an agent assisting the lawyer in rendering professional legal services.
This agency exception stems from U.S. v. Koval, in which the Second Circuit Court of Appeals applied the attorney-client privilege between a lawyer, a client, and an accountant employed by the lawyer. The court reasoned that attorneys often have to seek help from other professionals in order to advise clients, and concluded that communications with third-party agents should be protected when they are needed to accomplish the attorney’s work. After Koval, the law has taken an expansive view of this agency theory and extends the attorney-client privilege to anyone retained to assist an attorney in the rendering of professional legal services.
The third-party agents we retained in this case also had the benefit of the work product privilege. As noted above, the work product privilege extends to work “prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative.”
This section is meant to be a guide to help determine whether a particular communication or document is privileged. The boxes below are a check-list of for analyzing a statement or document under either privilege:
Work Product Privilege
Next, below are some common examples of communications and potential work product that may give rise to a discovery dispute. These examples are meant to demonstrate the privilege analysis.
Litigation Team Conference Calls. Our Litigation Team had weekly conference calls with third-party consultants to discuss and coordinate case strategy. The information sought to be protected was the oral communications between members of the Litigation Team and the third-party consultants. Our third-party consultant was retained as a representative of the lawyers for the purpose of rendering professional legal services. These communications were made in connection with the provision of legal services and were, under our analysis, privileged under the attorney-client privilege.
Third-Party Consultant Notes, Memoranda, and Communications. Our third-party consultants were retained to investigate and collect information about the case. In doing so, they took notes and drafted memoranda to inform the Litigation Team of their activities. These notes and memoranda were created by parties retained to assist the lawyers in the rendition of professional legal services and were created at the direction of the Litigation Team. These notes and memoranda were privileged under the work-product privilege. We also concluded that when the third-party investigators e-mailed or otherwise transmitted these documents to the Litigation Team, the documents were privileged under the attorney-client privilege since they were confidential communications.
Facts Known to Corporate Employees. The Litigation Team discovered the facts underlying the case through the factual recounts of corporate employees. The specific interviews and any notes, memoranda, or reports created by the Litigation Team or its agents related to these factual recounts were privileged under both the attorney-client and work product privileges. We concluded, however, that the specific facts and evidence which were the basis for these interviews were not privileged.
V. Recommendations for Working with a Corporate Client
We were fortunate that we did not have to test our analysis in court so as to protect our privileged information. In anticipation of a dispute over this privileged information, we took precautionary steps to help show a court that the information was privileged.
- We drafted and executed a joint representation agreement between the clients and the attorneys.
- We drafted and executed engagement agreements with all third-party agents preserving both the attorney-client and work product privileges by indicating that the agents were being retained for the purpose of assisting the lawyers in providing professional legal services, that all of their communications were to be considered highly confidential, and that all work was to be performed at the direction of the attorneys.
- We inserted document footers onto all work created by third-party agents which indicated that “This document is considered work product and was created at the direction of and in concert with the attorneys on the Litigation Team.”
- We drafted a witness interview form that tracked the Upjohn requirements to have all corporate employees review and sign prior to interviews. Though this may have been a “belt-and-suspenders” approach, we felt that it would alleviate the need for foundational testimony from the employees or the attorneys in case of a discovery dispute.
Litigation today is increasingly complex and often requires a team approach. Corporations rely on both in-house counsel and outside law firms to work together toward resolving the lawsuits. These attorneys often rely on third-party consultants in order to provide fully informed, competent legal advice and services. We found that traditional attorney-client and work product privilege rules should apply equally to both this new team-based approach and to the historical situation of attorney and individual client.
 State ex rel. Dudek v. Circuit Court for Milwaukee County, 34 Wis. 2d 559, 578, 150 N.W.2d 387 (1967).
 Upjohn Co. v. United States, 449 U.S. 383, 389 (1981); see also Dudek, 34 Wis. 2d at 578-79.
 U.S. v. BDO Seidman, LLP, 492 F.3d 806, 815 (7th Cir. 2007).
 Wis. Stat. § 905.03(2) (bullet points added to assist the reader).
 BDO Seidman, LLP, 492 F.3d at 815; see also Lane v. Sharp Packaging Systems, Inc., 2002 WI 28, ¶¶ 21, 40, 251 Wis. 2d 68, 640 N.W.2d 788.
 Harold Sampson Children’s Trust v. The Linda Gale Sampson 1979 Trust, 2004 WI 57, ¶¶ 16-27, 271 Wis. 2d 610, 679 N.W.2d 794.
 In re Supoena of Steckbauer, 228 Wis. 2d 459, 596 N.W.2d 496 (Ct. App. 1999).
 Wis. Stat. § 905.03(1)(c).
 Upjohn, 383 U.S. at 396; see also Dudek, 34 Wis. 2d at 580 (“[T]he courts have noted that a party cannot conceal a fact merely be revealing it to his lawyer.”).
 Ranft v. Lyons, 163 Wis. 2d 282, 297, 471 N.W.2d 254 (Ct. App. 1991) (citing Dudek, 34 Wis. 2d at 590-91).
 Wis. Stat. § 804.01(2)(c).
 Borgwardt v. Redlin, 196 Wis. 2d 342, 354, 538 N.W.2d 581 (Ct. App. 1995).
 Id. (citing Federal Trade Comm’n v. Grolier Inc., 462 U.S. 19, 25-26 (1983)).
 Dudek, 34 Wis. 2d at 589.
 See State ex rel. Shelby Mut. Ins. Co. v. Circuit Court, 67 Wis. 2d 469, 475, 228 N.W.2d 161 (1975).
 Dudek, 34 Wis. 2d at 594-95; see also Ranft, 163 Wis. 2d at 301 (“A lawyer’s strategic decision to invest a client’s resources on photographic or video surveillance is protected work product.”).
 Wis. Stat. § 804.01(2)(c).
 In re Teleglobe Communications Corp., 493 F.3d 345, 360 (3rd Cir. 2007); see also DeStefano-Beardslee, The Corporate Attorney-Client Privilege: Third Rate Doctrine for Third-Party Consultants, 62 S.M.U. L. Rev. 727 (Spring 2009).
 See Teleglobe, 493 F.3d at 371.
 Id. at 369.
 Id. at 372.
 See S.C.R. 20:1.7 Conflicts of interests current clients, Notes 29-33.
 Teleglobe, 493 F.3d at 363; see also Wis. Stat. § 905.03(4)(e).
 Teleglobe, 493 F.3d at 362.
 449 U.S. at 392.
 Id. at 396.
 Id. at 390-92.
 Id. at 394-95.
 See Wis. Stat. § 905.03(1)(c).
 296 F.2d 918, 920 (2d Cir. 1961).
 Id. at 922.
 See Wis. Stat. § 905.03(2); see also, e.g., United States v. McPartlin, 595 F.2d 1321, 1335 (7th Cir. 1979) (holding that client statements made to a private investigator employed by an attorney are privileged).
 Wis. Stat. § 804.01(2)(c)1.