Tuesday, September 10, 2013
David L.J.M. Skidmore & Laura E. Morris (Warner Norcross & Judd LLP) recently published an article entitled, Whose Privilege Is It, Anyway? – The Fiduciary Exception to the Attorney-Client Privilege, 27 Prob. & Prop. 21 (September/October 2013). Provided below is the beginning of their introduction:
Imagine that a legal dispute has arisen between a trustee and a trust beneficiary regarding trust administration. The beneficiary claims the trustee has breached its fiduciary duties by certain actions and omissions. In discovery, the beneficiary questions why the fiduciary did what it did. The fiduciary refuses to provide this discovery, citing the attorney-client privilege.
Will the fiduciary’s assertion of privilege be upheld by the court? It depends on whether the jurisdiction recognizes the fiduciary exception to the attorney-client privilege. In general, the fiduciary exception provides that a fiduciary cannot shield communications with an attorney from the beneficiaries when the legal services were related to administration (rather than defending the fiduciary against charges of misconduct) and the legal services were paid for with assets of the fiduciary entity. This article will consider the origins of the fiduciary exception, the reasons for and against recognizing the exception, and the current status of the exception in federal and state jurisdictions.