Tuesday, April 15, 2014

Dru Stevenson on being Against Confidentiality

Two points to make about confidentiality, just as all us ethics profs are about to (spoiler alert) examine on it. One is that I note that there is an interesting article in the current Litigation magazine (the ABA's journal by the Section on Litgation) on whether confidentiality and privilege survive death. It's not yet posted on their website, so look for it in print or anticipate it online. It notes that the successor law firm to Lizzie Borden's counsel circa 1892 is still safeguarding its (really, her) records. I foresee a poem about the privilege here, but what rhymes with "privilege"? One point six does not quite rhyme with ax.

The more accessible point is that Drury D. Stevenson (South Texas, Law) has posted to SSRN an article that, to me, follows in the tradition of the late Fred Zacahrias. Dru's title is Against Confidentiality and his abstract is:

Confidentiality rules form an important part of the ethical codes for lawyers, as a modern, expansive extension of the traditional attorney-client privilege doctrine. The legal academy, judiciary, and practitioners generally agree on the conventional wisdom that strict confidentiality rules are necessary to foster client-lawyer communication, thereby providing lawyers with information they need for effective representation. Yet this premise is demonstrably false – clients withhold information or lie to their lawyers despite the confidentiality rules, and the rules are mostly redundant with other ethical rules, evidentiary doctrines, and effective market mechanisms for protecting client privacy interests. At the same time, the confidentiality rules impose significant social costs – direct externalities, lemons effects, and even serious harm to third parties.

This Article argues that the lawyer confidentiality rules are ripe for repeal, revision, or rejection in the form of civil disobedience in certain cases. Using analytical tools from economics, including the Coase Theorem, this Article goes beyond previous criticisms of the rules to provide an extensive analysis of the social costs – and illusory benefits – of the ethical rules that compel lawyers to conceal client secrets. The rules undermine public trust in the legal system, and overall transparency and cooperation in society. In extreme instances, the rules facilitate wrongful convictions of innocent third parties and other serious harms. In relation to the other ethical rules, the confidentiality rules are generally in tension with, or redundant of, other rules designed to protect clients and third parties. The Article concludes with specific normative proposals for revising the rules, or challenging the existing rules as a way to force reforms.

[Alan Childress]

April 15, 2014 in Abstracts Highlights - Academic Articles on the Legal Profession, Privilege | Permalink | Comments (0) | TrackBack (0)

Thursday, January 23, 2014

Balancing The Attorney-Client And Physician-Patient Privileges

The Washington State Supreme Court has held that "an attorney hired by a corporate defendant to investigate or litigate an alleged negligent event may engage in privileged (ex parte) communications with the corporation's physician employee where the physician-employee has firsthand knowledge of the alleged negligent event and where the communications are limited to the facts of the alleged negligent event."

The ruling does not encompass health care provided before and after the event that resulted in litigation.

The court considered the application of the rule from a 1988 decision that barred ex parte communication between a doctor and his or her employer's attorney "where the employer is a corporation and named defendant whose corporate attorney-client privilege likely extends to the physician, at least as to certain subjects" and "balance[d] the values underlying the attorney-client privilege against those underlying the physician-patient privilege."

Justice Stephens concurred and dissented, finding the court's new rule an "unworkable" one that "erodes the sound policy decision" of the earlier case. (Mike Frisch)

January 23, 2014 in Privilege | Permalink | Comments (0) | TrackBack (0)

Friday, December 20, 2013

"The Understatement Of the Year"

Two attorneys who had represented opposing parties in civil litigation ended up in litigation against each other.

The Maryland Court of Appeals affirmed dismissal of the case, noting that "[t]o characterize Farmer and Mixter's relationship as acrimonious might be the understatement of the year. This court is sadly too familiar with the antics of these litigants from a dispute a few years ago..."

After the earlier case settled, Farmer "was so infuriated by Mixter's behavior that he sought sanctions against him."  Sanctions were imposed but reversed on appeal.

Farmer then sent twenty letters to various Maryland lawyers that alleged "unprofessional behavior" and sought information for a bar complaint. Mixter responded with a suit for defamation. Famer sent more letters to attorneys and filed a bar grievance against Mixter.

The court here affirmed the the dismissal of the Mixter suit against Farmer and a second attorney who allegedly conspired with him based on absolute judicial privilege grounds

Because [Attorney Grievance Commission] complaints are not published and lawyers' exposure is protected to a reasonable degree, we are unwilling to overlook the absolute privilege accorded to the AGC process simply because appellant feels aggrieved by the situation.

(Mike Frisch)

December 20, 2013 in Hot Topics, Privilege | Permalink | Comments (0) | TrackBack (0)

Monday, December 9, 2013

Disclosure Of Attorney's Files Sustained

The New Hampshire Supreme Court affirmed an order holding that an attorney's file is subject to disclosure in a probate matter.

The attorney was consulted twice, but not retained, for estate planning of a deceased couple. One of the brothers claims that the other brother exercised undue influence on the parents

...because the Attorney's file is relevant to an issue between the parties who claim through the same deceased client, we hold that the trial court did not unsustainably exercvise its discretion in allowing the file to be disclosed to the parties under [rules of evidence].

The court also sustained disclosure of correspondence between the attorney and one of the brothers. (Mike Frisch)

December 9, 2013 in Clients, Privilege | Permalink | Comments (0) | TrackBack (0)

Thursday, October 24, 2013

A Trip To Spain

An e-mail from Kean University's head basketball coach to the University's general counsel is protected by the attorney-client privilege, according to a decision issued today by the New Jersey Appellate Division.

The plaintiff in the litigation is the former athletic director, who was terminated "supposedly for failure to properly supervise subordinates in the athletic program, which led to the University being sanctioned" by the NCAA.

He sued for wrongful termination.

The e-mail had been in connection with a fundraising letter to defray costs of a team summer trip to Spain.

The court majority noted that the trial court found the e-mail to be privileged but found waiver. The court here agreed on privilege and reversed on the waiver issue.

The coach had provided the e-mail to the NCAA. The court concluded that the University, not the coach, had authority to waive the privilege.

A dissent concludes that the e-mail was not sent for the purpose of securing legal advice and thus was not privileged.

NJ.com reported on the NCAA actions. (Mike Frisch)

October 24, 2013 in Privilege | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 10, 2013

In-House Privilege Upheld By Massachusetts Court

A significant decision today by the Massachusetts Supreme Judicial Court.

The issue and holding:

The issue presented on appeal is whether confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim asserted by a current client of the firm are protected from disclosure to the client by the attorney-client privilege.  We conclude that they are, provided that (1) the law firm has designated an attorney or attorneys within the firm to represent the firm as in-house counsel, (2) the in-house counsel has not performed any work on the client matter at issue or a substantially related matter, (3) the time spent by the attorneys in these communications with in-house counsel is not billed to a client, and (4) the communications are made in confidence and kept confidential.  Because these criteria were met in this case, we affirm the judge's order allowing the defendant law firm and its attorneys to invoke the attorney-client privilege to preserve the  confidentiality of these communications.

The law firm was retained by a commercial lender to investigate title and foreclose on property secured by what the lender thought was a first mortgage. A third party claimed a superior interest in the property.

A year later, the client (through outside counsel) sent the law firm a draft complaint alleging malpractice and breach of contract. 

The lawyers in the firm then consulted with the firm partner "designated to respond to ethical questions and risk management issues on behalf of [the firm]..."

The court underscored the importance of the ethics attorney function:

Where a law firm designates one or more attorneys to serve as its in-house counsel on ethical, regulatory, and risk management issues that are crucial to the firm's reputation and financial success, the attorney-client privilege serves the same purpose as it does for corporations or governmental entities: it guarantees the confidentiality necessary to ensure that the firm's partners, associates, and staff employees provide the information needed to obtain sound legal advice.  See Hertzog, Calamari & Gleason v. Prudential Ins. Co. of Am., 850 F.Supp. 255, 255 (S.D.N.Y.1994) ("No principled reason appears for denying ... attorney-client privilege to a law partnership which elects to use a partner or associate as counsel of record in a litigated matter").  "[B]road protection of communications with law firm in-house counsel, including communication about the representation of a current client of the firm, ... would encourage firm members to seek early advice about their duties to clients and to correct mistakes or lapses, if possible, to alleviate harm." Chambliss, supra at 1724.  As the United States District Court for the Southern District of Ohio recently noted: 

"[I]ndividual lawyers who come to the realization that they have made some error in pursuing their client's legal matters should be encouraged to seek advice promptly about how to correct the error, and to make full disclosure to the attorney from whom that advice is sought about what was done or not done, so that the advice may stand some chance of allowing the mistake to be rectified before the client is irreparably damaged.  If such lawyers believe that these communications will eventually be revealed to the client in the context of a legal malpractice case, they will be much less likely to seek prompt advice from members of the same firm."


The court rejected a differing result when the situation involves a current, rather than former, client:

In law, as in architecture, form should follow function, and we prefer a formulation of the attorney-client privilege that encourages attorneys faced with the threat of legal action by a client to seek the legal advice of in-house ethics counsel before deciding whether they must withdraw from the representation to one that would encourage attorneys to withdraw or disclose a poorly understood potential conflict before seeking such advice.  The "current client" exception is a flawed interpretation of the rules of professional conduct that yields a dysfunctional result.  See N.Y. St. Bar Ass'n Comm. on  Prof. Ethics, Op. 789 (2005) ("We do not believe that the conflicts rules ... were intended to prohibit ethics consultation when it is most helpful:  during the client representation").  As such, we decline to adopt it in Massachusetts.

Briefs were submitted by several amicus curiae, including the Association of Professional Responsibility Lawyers, the American Bar Association and the Attorneys' Liability Assurance Society, Inc.

The case is RFF Family Partnership, LP v. Burns & Levinson LLP. One should be able to access the decision through this link.

Law firm ethics counsel --every firm of sufficient size needs one. (Mike Frisch)

July 10, 2013 in Current Affairs, Hot Topics, Privilege | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 14, 2013

Can State Get Access To Appointed Counsel Forms?

The New Jersey Supreme Court has held that the State's subpoena for an indicted defendant's application (with financial information) for court-appointed counsel was properly quashed.

The defendant is indicted for financial crimes. The State's investigation "suggested that defendant owned substantial assets."

The court modified an existing directive to permit disclosure for the purpose of investigating potential false statements of financial status in the future.

The court did not reach the issue whether the attorney-client privilege protect the form from disclosure. In the future, a fact-specific inquiry must be conducted "in accordance with settled principles governing the privilege. (Mike Frisch)

May 14, 2013 in Privilege | Permalink | Comments (0) | TrackBack (0)

Monday, May 13, 2013

Asking Sherwin-Williams

A recent Rhode Island Supreme Court decision is summarized on the court's web page:

Before this Court is the appeal of Sherwin-Williams Company (Sherwin-Williams) from an order denying its motion for a protective order to prohibit the disclosure of and the use of an internal company document.  Sherwin-Williams argues that the disclosure of that document would offend both the attorney-client privilege and the work-product doctrine.  Not surprisingly, the state maintains that the document is not privileged in any way and, therefore, it is not protected from disclosure.  After reviewing the record, the Court held that Sherwin-Williams met its burden of establishing that the internal company document was factual work product, and that the state failed to meet its burden of establishing that the protected document nevertheless was discoverable because of substantial need and a resulting injustice or undue hardship.  The Court also concluded that Sherwin-Williams did not waive the protection afforded by the work-product doctrine.  Because the Court held that the internal document was shielded from discovery based on the work-product doctrine and that this protection was not waived, it did not reach the claim of attorney-client privilege.

Accordingly, the Court vacated the order of the Superior Court denying Sherwin-Williams’ motion for a protective order and remanded the case to the Superior Court.
In the opinion's introduction, the court quotes from Macbeth, Act V, Scene 5 ("To-morrow, and to-morrow, and to-morrow, Creeps in this petty pace from day to day") and laments:  "In a case whose life begins to rival the age of the biblical Methusalah, we are confronted with another anfractuous dispute among the warring parties." (Mike Frisch)

May 13, 2013 in Current Affairs, Privilege | Permalink | Comments (0) | TrackBack (0)

Monday, January 28, 2013

Redistricting Consultations Privileged in North Carolina

The North Carolina Supreme Court has held that the consultations between members of the General Assembly and lawyers employed by the Attorney General and two outside law firms (Ogletree Dinkins and Jones Day) in matters involving redistricting plans are protected by the attorney-client privilege.

Justice Jackson, for the majority, concluded that the General Assembly did not intend to waive privilege in such matters:

..we are unwilling to infer such a sweeping waiver unless the General Assembly leaves no doubt about its intentions.

Justice Hudson dissented, and noted that the enactment at issue stripped confidentiality from redistricting law. Without confidentiality, there can be no privilege:

Defendants seek to protect much of their legislative redistricting work from public scrutiny under the cloak of the attorney-client privilege; however, the statutory language could not be clearer in indicating that the privilege is inapplicable here, making waiver irrelevant.

(Mike Frisch)

January 28, 2013 in Privilege | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 8, 2013

Law Firm Invoices For Representing County Are Public Records

In a matter in which a county was represented in litigation by a law firm pursuant to an insurance contract, a majority of the Wisconsin Supreme Court has held that the law firm's invoices are public records subject to disclosure:

Because the liability insurance policy is the basis for the tripartite relationship between the County, the insurance company, and the law firm and is the basis for an attorney-client relationship between the law firm and the County, we conclude that the invoices that were produced or collected during the course of the law firm's representation of the County pursuant to the liability insurance policy come under the liability insurance policy.  Wisconsin Stat. § 19.36(3) therefor governs the accessibility of the invoices...

The invoices——the billings for the law firm's legal work performed as the County's defense counsel and the insurance company's retained counsel——were produced or collected in the course of the law firm's representation of the County and the insurance company under the liability insurance policy between the County and the insurance company.  Because the liability insurance policy is the basis for the tripartite relationship between the County, the insurance company, and the law firm, and is the basis for an attorney-client relationship between the law firm and the County, we conclude that the invoices were produced or collected during the course of the law firm's representation of the County and the insurance company pursuant to the liability insurance policy; the liability insurance policy is a contract entered into by
the County and the insurance company. Thus, the requirements of Wis. Stat. § 19.36(3) have been met and § 19.36(3) governs the accessibility of the invoices.

There are several dissents, including this from the dissent of Justice Prosser:

The majority opinion permits Wisconsin's public records law to breach privileged communications, contrary to sound public policy and the text of the public records statute.  The majority's assurance that the opinion "does not alter the rules governing confidentiality, attorney-client privilege, or lawyers' work product, or any other rules protecting against disclosure," majority op., ¶15, is unpersuasive given the opinion's analysis and its other declarations.  Because I believe the opinion has serious negative ramifications for the practice of law, I respectfully dissent...

The stakes in this dispute are obvious.  The Star-Times already has information on the names of the County's lawyers, the number of hours they worked, and the amount they were paid——not by the County with County tax dollars, but by the County's insurer.  What the Star-Times wants are "detailed descriptions of the nature of the legal services rendered" and "the substance of [the] lawyer-client communications." 

Any court that determines that these matters of substance are not present in the subject invoices must be prepared to rule that the circuit court's findings were clearly erroneous.

Deciding this case without discussing the lawyer-client privilege in relation to the limiting language of the public records law (in Wis. Stat. §§ 19.31, 19.35(1), 19.36(1), and 19.85(1)(g)) casts a dark shadow over the lawyer-client privilege and other privileges in Chapter 905.  

 
An appellate court should reduce uncertainty, not magnify it.  The likely result of this case will be to force changes in billing practice.  In the future, legal invoices related to an "authority" may be sanitized so that they provide insurers and public entity clients with no information except the hours worked and the amount owed as well as an invitation to discuss the details orally.

The suit was brought the Star-Times. (Mike Rrisch)

January 8, 2013 in Privilege | Permalink | Comments (0) | TrackBack (0)

Monday, July 23, 2012

Privilege Claim Defeats Subpoena

The Connecticut Supreme Court has reversed an order compelling a law firm to comply with a subpoena.

The law firm represents a plaintiff suing former counsel for legal malpractice:

The plaintiffs' malpractice claim concerns only the allegedly negligent representation by the defendants, which is separate from the plaintiffs' subsequent representation by [plaintiffs' counsel] Finn Dixon. Although the issue of damages will likely involve the reasonableness of the settlements entered into on Finn Dixon's advice, the fact finder should be able to assess damages without resorting to privileged communications...We decline to adopt the contrary rule urged by the defendants because it lacks precedential support and runs counter to our narrow construction of exceptions to the attorney-client privilege.

There is a dissent that would hold that the order compelling discovery is not appealable at this juncture. (Mike Frisch)

July 23, 2012 in Privilege | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 19, 2012

Ohio Supreme Court Rules On Tressel Document Disclosure

From the Ohio Supreme Court:

The Supreme Court of Ohio today issued a limited writ of  mandamus ordering Ohio State University to provide ESPN with several documents  related to the 2011 NCAA investigation of football coach Jim Tressel that the  university had previously refused to provide to the network in response to  public records requests.

However the court  declined to order disclosure of most of the records sought by ESPN, finding  that the requested documents fell within exceptions to the state Public Records  Act for documents covered by attorney-client privilege and documents that may  not be disclosed under the federal Family Educational Rights and Privacy Act  (FERPA).

In today’s 7-0 per  curiam opinion, the court also found that OSU officials had committed “per se”  violations of the Public Records Act by failing to explain how ESPN could modify  some of its record requests after the university had rejected them as  “overbroad,” and by erroneously stating that the university was not required to  disclose records related to an ongoing NCAA investigation.  Because ESPN’s complaint did not ask the court  to award statutory damages or order other remedial action based on those alleged  violations, the court limited its ruling on those issues to making official  findings that violations had occurred.

The court  denied ESPN’s request for an award of attorney fees “(b)ecause Ohio  State complied with the vast majority of its obligations under R.C. 149.43 in  responding to ESPN’s records requests, and ESPN’s claims are largely without  merit.”

The court noted  that, in the weeks following a March 8, 2011 news conference at which Tressel  admitted that he had failed to inform his superiors after learning about  possible NCAA rule violations by OSU players, the university received 21  separate public records requests from ESPN and provided more than 700 pages of  documents in response to those requests. The university  declined to provide certain additional  documents, including some communications between athletic department officials and  the NCAA addressing the investigation of Tressel, documents identifying persons  officially barred from access to student athlete pass lists, and communications  to or from university officials that mentioned the name of Ted Sarniak, a  Pennsylvania man who had been a friend and advisor to Terrelle Pryor, one of  the football players implicated in the alleged rule violations.

In July 2011, ESPN  filed an original action in the Supreme Court seeking a writ of mandamus to  compel OSU to provide copies of all the requested documents. While that action,  which is resolved by today’s decision, remained pending, the parties continued  to negotiate, and OSU provided ESPN with some additional documents, but  continued to deny access to others.

In rejecting ESPN’s argument that the  exception to the Public Records Act for records that may not be disclosed under  a state or federal law does not apply to FERPA, the court wrote: “ESPN argues that FERPA does not prohibit the disclosure of  the requested records by educational agencies and institutions like Ohio State  − it merely penalizes those educational agencies and institutions that have a  policy or practice of permitting the release of those records without parental  consent by withholding federal funding. ESPN’s contention lacks merit.  ... ‘(A) participant who accepts federal education funds is well aware of the conditions  imposed by the FERPA and is clearly able to ascertain what is expected of  it.  Once the conditions and the funds  are accepted, the school is indeed prohibited from systematically releasing  education records without consent.’”

“Ohio State received approximately 23 percent of its total  operating revenues − over $919 million − in the 2010-2011 academic year from  federal funds, and it is estimated that the university will receive the same  amount of federal funds in the 2011-2012 academic year. Therefore, Ohio State,  having agreed to the conditions and accepted the federal funds, was prohibited  by FERPA from systematically releasing education records without parental  consent. This result is consistent with the holdings of other state courts that  have addressed this issue.”

“ESPN asserts that FERPA is inapplicable to the  records responsive to its requests for documents related to Sarniak and the  prior NCAA investigations because these records do not constitute ‘education  records.’  ... ESPN relies on language  from this court’s opinion in State ex  rel. Miami Student v. Miami Univ. (1997), in which the court granted a writ  of mandamus to compel the disclosure of student disciplinary proceedings for  1993 through 1996 by reasoning that because the cases, which involved  infractions of student rules and regulations, were ‘nonacademic in nature,’ the  records were not ‘education records’ subject to FERPA.” 

“Following  our decision in Miami Student,  however, the United States Court of Appeals for the Sixth Circuit held (in United States v. Miami University, 2002)  that student disciplinary records were education records subject to FERPA and  permanently enjoined Miami University and Ohio State from releasing records in  violation of FERPA. ... The court held that ‘[u]nder a plain language  interpretation of the FERPA, student disciplinary records are education records  because they directly relate to a student and are kept by that student’s  university.  Notably, Congress made no  content-based judgments with regard to its “education records” definition.’”            

“Upon  consideration of our opinion in Miami  Student and the Sixth Circuit Court of Appeals’ opinion in Miami Univ., we agree with the Sixth  Circuit and hold that the records here generally constitute ‘education records’  subject to FERPA because the plain language of the statute does not restrict  the term ‘education records’ to ‘academic performance, financial aid, or  scholastic performance.’  Education  records need only ‘contain information directly related to a student’ and be ‘maintained  by an educational agency or institution’ or a person acting for the institution  ...  The records here − insofar as they  contain information identifying student-athletes − are directly related to the  students.”

Following  its own in camera inspection of records that OSU had withheld as not  disclosable under FERPA, the court determined that  a few of those documents should have been  provided to ESPN after personal student information had been redacted.

The  court wrote: “An e-mail chain between Tressel, the Ohio State athletics  department official in charge of compliance, attorneys, and other officials  scheduling a meeting includes no personally identifiable information concerning  any student-athlete.  In e-mails to  schedule a meeting to formulate a compliance plan for one of the  student-athletes, aside from the name of the student-athlete  and a person who agreed to attend the meeting, no personally identifiable  information is included.  Another  document refers to one person’s request to obtain a disability-insurance policy  on behalf of a student-athlete, and with those names redacted, the document  would not contain personally identifiable information. There are also two  letters from Ohio State’s athletics department compliance director to the  parents of a student-athlete concerning preferential treatment.  With the personally identifiable information  concerning the names of the student-athlete, parents, parents’ addresses, and  the other person involved redacted, FERPA would not protect the remainder of  these records. ... Therefore, although the majority of the requested records  were properly redacted before being provided to ESPN, ESPN is entitled to  access to redacted copies of these few records that were completely withheld  from it based on FERPA.”

“Ohio State properly withheld the remaining  requested records based on attorney-client privilege. ... These records include  requests from Ohio State officials for legal advice and interpretation,  communications from or between the attorneys providing legal advice or  information to Ohio State, and investigatory fact-finding related to the legal  advice. ... ESPN’s contention that Ohio State cannot rely on attorney-client  privilege to shield these records is unfounded   because ‘an attorney does not become any less of an attorney by virtue  of state agency employment.’  ... (T)here  is no requirement in public-records mandamus cases that public offices or  officials must ‘conclusively establish’ the privilege by producing agreements  retaining agents or joint-defense agreements with attorneys representing other  clients. Therefore, Ohio State properly withheld the remaining requested  records based on the attorney-client privilege.”

The opinion is linked here. (Mike Frisch)

June 19, 2012 in Privilege | Permalink | Comments (0) | TrackBack (0)

Thursday, March 15, 2012

Privilege And Workers' Compensation

The Montana Supreme Court has dismissed an appeal from a district court order denying attorney-client privilege and work product claims in a workers' compensation matter.

The worker had suffered a serious injury. The employer's insurer (Zurich) accepted liability for the claim. When disagreements arose over the level of impairment and other issues, an outside attorney prepared an opinion and evaluation letter for Zurich in advance of a mediation. The opinion letter was given to the adjuster handling the claim, who provided it to the employer.

The district court found that the document was not protected from discovery.

The court here noted that "[t]he intersection of workers' compensation law and the attorney-client privilege presents a unique issue." The employer is not a party and is not at risk in the matter: "It is thus improper for an insurer and an employer to collaborate on settlement of a worker's claim for benefits."

The court held that the common interests of insurer and employer were "not sufficient to extend the [attorney-client] privilege beyond the attorney-client relationship." Further, the disclosure of the letter to the employer was not for the purpose of seeking legal advice.

Justice Rice dissented and would hold that there is a sufficient "community of interest" between employer and insurer to reverse the district court's privilege detrmination.

The link is not working. The case is American Zurich Insurance v. Montana Thirteenth Judicial District Court. (Mike Frisch)

March 15, 2012 in Privilege | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 18, 2012

CFPB Claims to Pierce Privilege in Discovering Confidential Bank and Financial Records

In a harrowing story--or just more of the same, in the recent attempted onslaught by regulatory agencies on attorney-client and work-product privilege--the new Consumer Financial Protection Bureau (CFPB) issued Bulletin 12-01 on January 4, 2012, to clarify its role in the production of records from banks and other financial institutions as part of CFPB oversight. The discovery power is claimed to include privileged documents. Although CFPB then proposes to keep the documents confidential, the bulletin is upfront that the bureau may have to share those documents outside its agency, including release to state attorneys general and other agencies, as needed. Fuller story here, at the Payment Law Advisor blog.

Although the bulletin assures readers that the agency intends to use non-privileged sources when it can, it really does not effectively assure them that any production of privileged documents would not constitute a general waiver to plaintiffs' attorneys and others. Of course, it does claim that discovery to themselves is not waiver to all--but that view may be problematic, at least arguably so, in that the specific congressional authorization for such a power (or such a protection) is not so easily found for the CFPB as it is for other regulatory agencies. Says the PLA blog:

The Bureau’s conclusion was based largely on provisions of the Financial Services Regulatory Relief Act of 2006, which applies to the federal banking agencies (the OCC, Federal Reserve, FDIC, and formerly, the OTS), allowing the agencies to receive privileged documents from supervised entities without effectuating a waiver of privilege. But the statute does not expressly apply to the CFPB, leaving the Bureau’s position on privilege questionable. The CFPB asserts that Congress intended it to be treated as a prudential regulatory agency with respect to waiver; but, its position has yet to be challenged in court.

To me, the lack of clear congressional authorization to add a layer of waiver protection on the discovery may be either harrowing news, as it could basically end the concept of attorney-client privilege in financial representations. Or it could be the trojan pony (I name him Tarpy, but his preppy barn friends call him Chase) that would make a court stop the initial grab of documents by the agency. I am not sure a court wants to allow an agency to end the centuries-old concept of privilege and the sanctity of the attorney-client relationship by a post-holiday bulletin (well, OK, by previous adminstrative regulations that a bulletin clarifies). More generally, we ethics writers and teachers have to seriously consider not just the usual buried-body and Upjohny cases on privilege but also the phenomenon that administrative agencies increasingly just don't believe in privilege anymore: they purport to act like a judge (just show me the documents in chambers; we're cool) then suggest they may have to show them to the Rhode Island and Hawaii attorneys general, but without a judicial finding that they were not privileged in the first place. You waived because you complied with a discovery demand, any decent opposing attorney would think.

[Alan Childress]

January 18, 2012 in Privilege | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 29, 2011

Privilege Trumps Public Records Act Discovery Claim

From the web page of the Ohio Supreme Court:

In a 7-0 decision announced today, the Supreme Court of Ohio declined to issue a writ of mandamus compelling a school district to provide copies of requested documents to a parent involved in a lawsuit against the district. The Court based its ruling on a finding that the requested documents were subject to the attorney-client privilege between the district and its lawyers, and therefore were not subject to disclosure under the state Public Records Act.

Angela Dawson, the mother of two students enrolled in the Bloom-Carroll Local School District who was pursuing a lawsuit against the district, submitted public records requests demanding that the district provide her with copies of 1) detailed invoices sent to the district by a law firm it had retained to defend against Dawson’s suit; and 2) copies of all correspondence the district had received from its insurance carrier appointing Janet Cooper as the district’s insurance attorney and describing the liability and exposure of the district and the insurance company related to the claims asserted in Dawson’s lawsuit.

The district provided Dawson with summaries of the law firm invoices noting the attorney’s name, the invoice total and the matter involved, but refused to provide copies of the detailed monthly billing statements that described the specific work performed, legal issues that were researched, and detailed communications among the attorneys,  the district and its insurer. The district also refused to provide Dawson with a letter that the insurance company’s claims analyst had sent to the district and its attorneys regarding Dawson’s lawsuit, on the ground that the information it contained was privileged.

Dawson filed suit in the Supreme Court seeking a writ of mandamus to compel the district to disclose the requested documents.  After an unsuccessful attempt to resolve the dispute through mediation, the Court issued an alternative writ directing the parties to submit evidence and written briefs, and ordered the district to provide copies of the disputed documents to the Court for in-camera inspection.

In today’s per curiam opinion denying the requested writ, the Court wrote: “R.C. 149.43(A)(1)(v) exempts ‘[r]ecords the release of which is prohibited by state or federal law’ from the definition of ‘public record.’ ...  In Ohio, the attorney-client privilege is governed both by statute, R.C. 2317.02(A), which provides a testimonial privilege, and by common law, which broadly protects against any dissemination of information obtained in the confidential attorney-client relationship.”

“ ... The school district refused to make the requested itemized attorney-billing statements available to Dawson because the statements contained detailed descriptions of work performed by the district’s attorneys, statements concerning their communications to each other and insurance counsel, and the issues they researched.  The withheld records are either covered by the attorney-client privilege or so inextricably intertwined with the privileged materials as to also be exempt from disclosure. Therefore, the school district properly responded to Dawson’s request for itemized invoices of law firms providing legal services to the district in matters involving Dawson and her children by providing her with summaries of the invoices including the attorney’s name, the fee total, and the general matter involved.  No further access to the detailed narratives contained in the itemized billing statements was warranted.”

“The February 9, 2010 letter from the school district’s insurance company to the district identifying Janet Cooper as the district’s attorney in Dawson’s due-process lawsuit against the district is also protected by the attorney-client privilege. The letter, which was addressed to the district and copied to the insurance counsel who would represent the district, evaluates Dawson’s claim and the extent to which the claim might be covered by the district’s insurance policy and instructs the district to cooperate with the insurance company and the attorney selected by the company to represent the school district to preserve its insurance coverage. In effect, the insurance company stands in the shoes of the district, and its letter naming Cooper as the district’s attorney in Dawson’s due-process lawsuit is covered by the attorney-client privilege.”

The Court’s opinion was joined by Chief Justice Maureen O’Connor and Justices Evelyn Lundberg Stratton, Terrence O’Donnell, Judith Ann Lanzinger, Robert R. Cupp and Yvette McGee Brown.  Justice Paul E. Pfeifer concurred in judgment only.

The court's opinion is linked here. (Mike Frisch)

November 29, 2011 in Privilege | Permalink | Comments (0) | TrackBack (0)

Thursday, November 10, 2011

Privilege In Bad Faith Claim Against Insurer

Answering a question certified from the Fourth District Court of Appeals, the Florida Supreme Court has held that the attorney-client privilege prevents discovery of privileged communications between an insurer-defendant and its counsel when an insured party brings a claim of bad faith against the insurer. The court had previously held that the work product doctrine did not preclude discovery in such actions.

The court further held the privilege may not apply when the insurer retains counsel to both investigate the underlying claim and render legal advice:

Where a claim of privilege is asserted, the trial court should conduct an in-camera inspection to determine whether the sought-after materials are truly protected by the attorney-client privilege. If the trial court determines that the investigation performed by the attorney resulted in the preparation of materials that are required to be disclosed pursuant to [the prior decision] and did not involve the rendering of legal advice, then that material is discoverable.

(Mike Frisch)

November 10, 2011 in Privilege | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 17, 2011

Privilege Assertion Leads To Reversal Of Conviction

A criminal conviction has been reversed by the Maryland Court of Appeals because the trial court permitted an attorney for the defendant to testify in the prosecution's case-in-chief about the "surrounding facts and circumstances" of the representation.

The court held:

Upon a showing that an attorney and a client communicated in a professional capacity, the
attorney-client privilege is invoked, and, pursuant to Maryland Rule 5-104, a trial judge must
perform a preliminary inquiry into the surrounding facts and circumstances of the
representation and determine the nature and scope of privileged communication, the State’s
intended use of the allegedly privileged communication, as well as the extent of any waiver.

The case involved allegations that a husband had stolen from his wife. The attorney had prepared a deed (at issue in the trial) and had asserted that he represented both husband and wife.

The Washington Post had these details on the criminal allegations. The Post reports that the alleged victim was an 83 year old widow who married the 66 year old defendant.

 A guardian was appointed for the widow. He sought to void a deed and invalidate a will drawn by the lawyer-witness. The guardian also sought and obtained annullment of the marriage. The defendant's attorney had testified in the annulment proceeding, which the trial court viewed as a waiver of the privilege.

On a personal note, the Parkway Deli (the scene of the alleged crime, according to the Post) is the deli I grew up with. The food is still great.  (Mike Frisch)

August 17, 2011 in Clients, Privilege | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 31, 2011

Application For Appointed Counsel Is Privileged

The New Jersey Appellate Division has held that a defendant's application for appointed counsel and the "factual materials submitted in support of that application are protected b y the attorney-client privilege. The privilege may properly be invoked where the materials "may contain information the State could use against [the defendant] in the prosecution of the charges for which he sought representation..."

The defendant was one of 34 persons indicted for racketeering. The court indicated that it might consider enforcing a more narrowly-drawn subpoena. (Mike Frisch)

May 31, 2011 in Privilege | Permalink | Comments (0) | TrackBack (0)

Sunday, May 8, 2011

Ineffective Assistance When Client Wants To Withdraw Plea

The New Jersey Appellate Division has held that a defense attorney provided ineffective assistance of counsel by undercutting the defendant's efforts to withdraw a previously offered guilty plea:

...in the present case the trial judge placed great reliance on his searching inquiry at the time that  the plea was entered, and upon defendant's unequivocal responses. But here, the judge's determination was also undoubtedly colored by defense counsel's statements completely undercutting defendant's claims of innocence and was explicitly colored by defendant's
statement in his letter to counsel regarding his potential willingness to accept a lower plea.

The case was remanded to consider the motion to withdraw the guilty plea with new defense counsel and a new judge. (Mike Frisch)

May 8, 2011 in Clients, Current Affairs, Privilege | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 30, 2011

Privilege And Girl Scouts

The Oklahoma Supreme Court has held that the attorney-client privilege did not prohibit disclosure of otherwise confidential information from counsel to an entity client to an entity created by a merger. The facts:

The defendant/appellant Marilyn Barringer-Thomson (Attorney) is an attorney who represented Girl Scouts-Sooner Council, Inc. (Sooner) on employee severance and other matters related to employees of Sooner. Subsequently, Sooner merged with Girl Scouts-Red Lands Council, Inc. (Red Lands) and the surviving corporation is the plaintiff/appellee, Girl Scouts-Western Oklahoma, Inc. (Western). Western filed a replevin action to obtain all Sooner files and documents, including confidential employee severance agreements, in the possession of Attorney and now owned by Western as a result of the merger. The petition recited that the documents sought contained details of agreements between Sooner and its former employees for which Western is now responsible as Sooner's successor in interest. Attorney objected, claiming attorney-client privilege and attorney work product. Western asserted that the attorney-client privilege transferred to it as a result of the merger. Both sides filed motions for summary judgment and the trial judge granted summary judgment in favor of Western. Attorney appealed and we granted her motion to retain the case.  

The court concluded:

 The attorney-client privilege belongs to the client and not to the lawyer, and it may be waived only by the client...if the client is a corporation, the privilege may be claimed by the successor, trustee, or similar representative.This is in accord with Commodity Futures Trading Commission v. Weintraub, 471 U.S. 343,348-49, 105 S.Ct. 1986, 1991, 85 L.Ed.2d 372 (1985). There, the Supreme Court stated that the power of a solvent corporation to waive the corporate attorney-client privilege rests with the corporation's management and is normally exercised by its officers and directors. When control of a corporation passes to new management, the authority to assert and waive the corporation's attorney-client privilege passes as well. New managers installed as a result of a merger, or simply normal succession, may waive the attorney-client privilege with respect to communications made by former officers and directors. The displaced managers may not assert the privilege over the wishes of current management. Weintraub held that the trustee in bankruptcy of an insolvent corporation had the power to waive the corporation's attorney-client privilege for pre-bankruptcy communications.

To the same effect is Tekni-Plex, Inc. v. Meyer and Landis, 674 N.E.2d 663 (NY 1996). Tekni-Plex merged into TP Acquisitions, which became the surviving corporation. The merger agreement conveyed all of the assets, rights and liabilities of Tekni-Plex. The merger agreement contained warranties by Tang, the owner of Tekni-Plex, that Tekni-Plex was in full environmental compliance, and Tang indemnified TP against loss as a result of breach of the warranties. TP Acquisition later renamed itself Tekni-Plex, Inc. (new Tekni-Plex). New Tekni-Plex obtained arbitration against Tang for breach of warranties of environmental compliance. The law firm representing Tang in the arbitration had represented Tekni-Plex and Tang on environmental compliance matters and also represented them in the merger transaction. New Tekni-Plex moved to disqualify law firm and, among other things, sought an order directing law firm to return to new Tekni-Plex all of the files in the law firm's possession concerning its prior legal representation of Tekni-Plex.

The New York Court of Appeals held that where the successor corporation continued the business operations of the pre-merger entity, ownership of the law firm's files regarding its pre-merger representation on environmental issues passed to the successor, as did control of the attorney-client privilege attached thereto. Thus, ownership of the law firm's files regarding its pre-merger representation of Tekni-Plex on environmental compliance matters passed to the management of new Tekni-Plex. The court held that the privilege did not pass on files regarding the merger transactions because the arbitration arose from representations made in the merger agreement.

 The court concluded that it was necessary for new Tekni-Plex to have the right to invoke the pre-merger attorney-client relationship if it should have to prosecute or defend against third-party suits involving the assets, rights or liabilities that it assumed from Tekni-Plex.

We find the reasoning in Weintraub and Tekni-Plex persuasive. Tekni-Plex holds that where the successor corporation carries on the business and assumes managerial responsibilities, ownership of a lawyer's files regarding its pre-merger representation of a corporation passes to the management of the successor corporation. In the present matter, plaintiff's evidentiary materials show that the business of both Sooner and Red Lands is being continued by Western. Western has assumed Sooner's rights and liabilities and may have to prosecute or defend third-party suits involving those rights and liabilities. Attorney did not represent Sooner in the merger transaction and the materials sought from attorney are not materials regarding the merger transaction itself.

 Sooner did not exempt or exclude confidential or any other materials from the merger agreement; it adopted a merger agreement that transferred all assets, properties and privileges to the surviving corporation. Ownership of Sooner's assets, as well as its attorney-client privilege, has now transferred to Western by operation of law as a result of the merger. To allow Attorney to assert Sooner's attorney-client post-merger would be in derogation of the merger agreement transferring ownership to Western.

(Mike Frisch)

March 30, 2011 in Privilege | Permalink | Comments (0) | TrackBack (0)