Attorney-client Privilege: What to Know to Protect Your Business
What is the attorney-client privilege generally?
The attorney-client privilege is the legal right that protects communications between a person and her attorney from compelled disclosure in a legal action. Attorney-client privilege is most often invoked when a person is asked to provide details of communications in a court proceeding or regulatory hearing, and it is codified in Washington as a rule of evidence. In a hearing, if a party otherwise entitled to the information asks for details or copies of communications and the communications are subject to attorney-client privilege, then the person being asked to disclose the information can withhold certain parts of those communications by claiming the attorney-client privilege.
Why do we have the attorney-client privilege?
The attorney-client privilege exists because it is difficult to provide effective legal advice without having full knowledge of the facts, and clients are likely to withhold damaging (and therefore probably the most important) facts if they believe their disclosure to their attorney is not truly confidential. By providing a limited exception to court ordered disclosure via the attorney-client privilege, “the law” enables a more open discussion between the attorney and client. More open discussion enables a better relationship, and a better relationship allows for the most effective legal advice.
Is there a difference between attorney-client privilege and attorney work-product privilege?
There is a difference between attorney-client privilege and attorney work-product privilege, and the difference is important for every business owner and manager to understand. Attorney work-product privilege is similar to attorney-client privilege in that it protects information from compelled disclosure, including communications between an attorney and client related to legal advice. But attorney-client privilege is a narrower privilege. Attorney work-product privilege is broad protection of all of the attorney’s tangible and intangible “work-product” from compelled disclosure. But this broader protection only applies if the attorney work-product is created in anticipation of actual (as opposed to hypothetical) litigation.
Whereas the attorney work-product privilege provides broad (though not blanket) protection of information in anticipation of litigation, the attorney-client privilege is only available when you meet the specific conditions for properly invoking it (detailed below), and it only applies to specific communications:
What characteristics must communications have to be protected by attorney-client privilege?
1. Communication must be between the attorney and the “client”
The communication must be between the attorney and client. For an individual client, it is simple to determine who the client is. But for a business entity with multiple stakeholders, including owners, managers, and employees, who the client is in any particular situation can be a complex analysis that requires consulting common law (that is, law that is created by precedent in the courts rather than a statute).
What makes the analysis especially complex is that the definition of client as it applies to a business entity (at least in state courts) is governed by state law that varies by state. The definition of client as it applies to a business entity is not clearly settled, but many states have been converging on a standardized definition that roughly follows the standard applied to federal courts by the US Supreme Court. Though many states adopt the federal standardized definition of client as it applies to a business entity, some of those states vary the definition slightly.
Because a business can find itself subject to the courts of any state relatively easily (especially since the Internet was invented!), businesses should understand the basics of each of the definitions of “client” as it applies to a business entity:
Corporate Control Group Test:
The control group test holds that attorney-client privilege only applies to employees who communicate directly with counsel and who have the authority to determine whether the company will implement the legal advice. Thus, the corporate control group test focuses on the speaker’s position in the business rather than the nature of the communication. Eight states, including Alaska, Hawaii, and Illinois, still apply versions of the control group test.
Subject Matter Test:
The subject matter test extends the application of attorney-client privilege to lower level employees under specific circumstances. An employee’s communication with the company’s attorney will be protected from disclosure under the subject matter test if:
(1) the communication was made for the purpose of securing legal advice;
(2) the employee making the communication did so at the direction of his corporate superior;
(3) the superior made the request so that the corporation could secure legal advice;
(4) the subject matter of the communication is within the scope of the employee’s corporate duties; and
(5) the communication is not disseminated beyond those persons who, because of the corporate structure, need to know of its contents.
The subject matter test focuses on the purpose of the communication rather than solely on who in the business made the communication.
The Supreme Court developed the prevailing test for attorney-client privilege in the case of Upjohn v. U.S. In Upjohn, the Court rejected the control group test and laid out four criteria to determine whether a communication between corporate counsel and an employee would be protected from disclosure. Under the Upjohn test, communications are covered by attorney-client privilege if:
(1) they were made to in-house counsel at the direction of corporate “superiors,”
(2) they concerned matters within the scope of the employees’ duties,
(3) the information was not available directly from upper-level management; and
(4) the employees were aware that they were being questioned in order for the corporation to receive legal advice.
Since Upjohn, few states have continued to use the control group test. However, variations of the subject matter test are still used in certain states.
The Washington State Supreme Court adopted the Upjohn test for attorney-client privilege in the case of Youngs v. Peacehealth. Under Washington law, attorney-client privilege extends beyond the “control group” to include communications between corporate counsel and employees for the purpose of obtaining relevant information about a specific legal issue. The reasoning and elements of the Upjohn test have been expressly adopted in Washington, so businesses and their counselors should be cautious that the matters they discuss are within the scope of the employees’ duties and that the information is not otherwise available from a member of the control group.
(A related consideration for individual clients not related enough to be detailed in this post is the spousal witness exception to compelled disclosure).
2. Communication must concern legal advice
You would be normal but wrong to think every communication between a client and their attorney concerns legal advice. For a communication to be protected by attorney-client privilege, the communication must be one where legal advice is sought or rendered. Attorneys are often called on to provide business related advice, editing, and similar functions, and communications between the attorney and client about those issues are not afforded protection from disclosure by the attorney-client privilege. If the communication does not require the attorney to be bar licensed to respond, it may be deemed “business related.” Business related communications (and more generally those communications where it is not clear that legal advice is being sought by the client or rendered by the attorney) are likely to be unprotected by the attorney-client privilege.
To ensure you keep legal advice separate and protected, you should avoid requesting legal advice along with business advice. For instance, avoid sending an email to the whole team, including your attorney, that says “look this over and provide feedback.” Instead, send that email to your team, and send a separate email to your attorney saying “look this over and give me your advice.” If you don’t like two emails, at least consider separating the email into business and legal request “sections.”
Forwarding an email to your attorney (or copying your attorney in an email to others) with no request for legal advice is not a communication that is likely to be protected by attorney-client privilege.
On a related note, you may wonder if draft documents are considered “legal advice” and protected by the attorney-client privilege. If the drafts seek or render legal advice, they may be protected. Whether they are protected is not easy to know, because the law on this point is not settled. The question is whether they meet the third requirement for invoking the attorney-client privilege:
3. Communication must be intended to be confidential
For a communication to be protected by attorney-client privilege, the client (or attorney, as applicable) must intend the communication to be confidential. You can show your intent that a communication be confidential in many ways, for instance, through labeling the communication explicitly as “CONFIDENTIAL.” You can also show that you did not have the intent to keep the communication confidential, for example, if the communication is forwarded to a third party or if the communication happens in the presence of a third party.
As we mentioned, draft documents are a special case. There is an argument that the drafts are intended to be kept confidential, though the “final draft” will ultimately be shared. Thus the drafts should be protected by attorney-client privilege. But there is also an argument that any document that was intended to be shared could not have been intended in an earlier form to be confidential. Courts are split on this issue, though Washington exempts many draft documents under a “deliberative process” exemption. In order to rely on this exemption, the draft must be part of the internal deliberative process, it must contain the opinions of subordinate employees and not be composed of only raw factual data, and the disclosure of the draft must be damaging to the internal deliberative process.
Who does the attorney-client privilege belong to and how can it be waived?
Under Washington law, the attorney-client privilege belongs to the client and can be waived voluntarily only by the client. The attorney cannot on his own voluntarily waive the privilege on the client’s behalf. That being said, the client can give their attorney permission to waive the privilege.
You can easily waive the attorney-client privilege by disclosing a communication to a third party. While there is a limited exception for disclosures to third parties who have a shared legal interest, any disclosure to a third party at least implies that you did not intend the communication to be held confidential between the attorney and the client. Disclosures to third parties (or even those stakeholders of the client without a need to know) also implies that the communication was not intended to seek or render legal advice.
You can also waive the attorney-client privilege through accidental disclosure. That is, you may waive attorney-client privilege by disclosing a communication to a third party even if you did not intend to disclose the communication. Courts will look to see if the disclosure was truly an accident, whether you took reasonable steps to prevent the disclosure, and whether you took reasonable steps to remedy the disclosure after it happened.
Quick rundown of good practices to maintain attorney-client privilege:
1. Know who the client is
2. Keep legal advice communications between the attorney and those who need to know
3. Don’t share legal advice communications with any third party
4. Separate legal and business issues when requesting feedback (preferably send separate emails)
5. Be clear that you are seeking legal advice
6. Don’t forward communications to your attorney without requesting advice from the attorney
7. Avoid routinely copying the attorney on non-legal communications (though keep the attorney in the loop!)
8. Keep sensitive topic discussions out of drafts
If you have questions or concerns about attorney-client privilege, contact your attorney. If you do not have an attorney or if you are looking for a change, please feel free to contact us to discuss how we can help. If you’ve enjoyed reading this post, please share.
Thanks to Brandon Mahrt for his help revising and editing this post.