Friday, May 19, 2006
The indictment of Milberg Weiss may well be a turning point in the government's pursuit of organizations through the use of criminal charges, particularly regarding issues related to the waiver of the attorney-client privilege. On of the cornerstones of the attorney-client relationship is the privileged status of the communications, and the professional responsibility rules impose an even broader duty on attorneys to maintain the confidentiality of client-related information even if it does not meet the requirements of the privilege. If Milberg Weiss' side of the story is to be believed, the government demanded perhaps the broadest possible waiver of the privilege by seeking all information generated in connection with the government's investigation of the firm from the time the first subpoena launched in 2002. Other cases involving privilege waivers have usually focused on information generated in an internal investigation that would be protected by the organization's privilege, but not going to legal advice related to the government's investigation. The line may be a fine one, but at least other deferred prosecution agreements have viewed the communications between lawyer and client regarding the response to the government as privileged.
The investigation of a law firm involves unique issues that do not arise in other corporate crime prosecutions. The vast majority of a law firm's files and other records will be case-related, and hence privileged (and also protected as work product). To the extent that the alleged wrongdoing at Milberg Weiss involved its dealings with clients, there are two levels of confidentiality: the firm's attorney-client privilege, and the privilege arising from its role as an attorney for its clients. While the firm can waive its own privilege, it cannot waive the privilege on behalf of a client without that client's permission. If the government sought a waiver of all privilege claims related to the cases at issue in the indictment, then Milberg Weiss could not comply with such a request without having the permission of its clients.
If a broad attorney-client privilege waiver is the price of admission to negotiating a deferred prosecution agreement, then it may be that the negotiations between the law firm and prosecutors were doomed from the start. The prosecution of Milberg Weiss will likely involve a number of firsts, among them the fact that the privilege waiver has become the key step for prosecutors and a deal-breaker in the end. (ph)