California Procedure,  Discovery,  Ethics,  Evidence,  Privilege

Privilege within the Company

Lawyer advises the CEO of his client on some litigation strategy. Privileged communication, obviously. CEO then meets with his VPs and shares the information with them. Privileged?

I always thought it should be, and now I have the decision in Zurich American Ins. Co. v. Superior Court (Watts Industries, Inc.), case no. B194793 (2d Dist. Oct. 11, 2007) to back me up.

The court holds that the trial court construed the attorney-client privilege too narrowly by exempting from discovery only those documents that “contain actual copies of letters or e-mail communications from outside counsel, or documents that have been created by counsel, or received by counsel, or that contain direct communications from counsel.” Evidence Code section 952 defines confidential communications between lawyer and client much more broadly. Under section 952:

[C]onfidential communications include information transmitted to persons “to whom disclosure is reasonably necessary for the transmission of the information,” and those to whom disclosure is reasonably necessary for “the accomplishment of the purpose for which the lawyer is consulted.” Section 952 expressly includes legal opinions and advice given by a lawyer within the definition of confidential communication.

Since corporations are unquestionably “persons” who can invoke the privilege, and can only communicate through living individuals:

It follows that in order to implement the advice of lawyers, the advice must be communicated to others within the corporation. It is neither practical nor efficient to require that every corporate employee charged with implementing legal advice given by counsel for the corporation must directly meet with counsel or see verbatim excerpts of the legal advice given. But that is what the approach adopted by the referee and trial court would require in light of the narrow construction of section 952 they adopted.

But before your company gets too crazy telling everybody everything, realize there are limits: “The privilege only protects disclosure of communications, it does not protect disclosure of the underlying facts by those who communicated with the attorney.”

Documents are privileged if they (1) contain legal advice or a discussion of legal advice or strategy and (2) were not disclosed within the corporation to anyone but those identified in section 952, i.e.,

those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.