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What Internal Documents Are Protected From Discovery By The Attorney Client Privilege?

By: Kurt W. Melchior
10/22/07

Communications between clients and their attorneys to obtain and give legal advice are protected against compelled disclosure by the attorney-client privilege in every United States jurisdiction.  What happens where the attorney’s advice is circulated, paraphrased, acted on or discussed within an organization?  Does the privilege protect such communications?  This question, so very important in this day of email and online communications, was addressed by a California court this month.

A large organization (an insurance company) resisted disclosure of internal communications not directly involving an attorney - communications it claimed discussed legal advice.  Eventually this dispute reached the California Court of Appeal.  The court ruled that "to implement the advice of lawyers, the advice must be communicated within the corporation" and issued "the following guidelines:" 

·          First, does the communication contain discussion of legal strategies or the advice of counsel?

·          If so, did the client waive the privilege by distributing the advice within the organization?

·          Waiver turns on whether the communication went only to those with a reasonable need to know or to accomplish the purpose of the legal advice.

·          But otherwise routine, non-privileged communications about the general business of the company do not obtain privilege protection by being copied to in-house or outside counsel.

·          And a fact, as distinguished from communications, is not protected "merely because it was incorporated into a communication involving an attorney."

·          Nor is there any privilege "where the attorney merely acts as a negotiator for the client, gives business advice or otherwise acts as a business agent."

This is a handy summary and provides sound guidance; but there will be many variations.  For instance, this writer has in the past redacted documents to exclude privileged materials where the document contained both privileged and non-privileged matter; and courts have supported this approach.  And the Court did not address the statutory prohibition against judicial review of privileged documents under Evidence code section 915 when it said, "The disputed documents must be reviewed to determine" waiver. 

As a practical matter, corporations seeking to protect their internal attorney-client communications should be prepared to show that the company limited disclosure to those employees necessary to further the purpose of the legal consultation.  In other words, too many "CCs" may destroy the privilege.

Zurich American Insurance Co. v. Superior Court (Oct. 11, 2007) ___ Cal. App. 4th ___; 07 CDOS 12141.

Kurt W. Melchior is a partner at Nossaman with over 30 years' experience in complex litigation. He can be reached at (415) 438-7279 or kmelchior@nossaman.com.

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