In late December, a divided California Supreme Court ruled that legal-fee bills in closed cases aren’t necessarily covered by attorney-client privilege. Although the case involved a discovery demand sent to a government entity under the state’s public records act, some lawyers have questioned (sub. req.) how far the privilege limitations might go.
No “categorical” protection
The case arose out of a public-records request from the ACLU of Southern California to the Los Angeles County Board of Supervisors, seeking legal fee invoices that would reveal law firm billings to the county regarding nine lawsuits, each of which alleged the use of excessive force against inmates in the L.A. County jail system. The ACLU alleged that the county and its outside lawyers were pursuing “scorched earth” tactics in refusing to settle excessive-force cases, and were using taxpayer dollars to do so.
Three of the cases were closed; the county agreed to produce copies of those legal bills. But as to the six still-pending suits, the county said that they were exempt from the reach of the public records law under the attorney-client privilege exception, because “the detailed description, timing, and amount of attorney work performed … communicates to the client and discloses attorney strategy, tactics and thought process and analysis.”
On dueling writs of mandate, the intermediate state court of appeals found that the invoices were privileged and exempt from disclosure under the public record act. In a 4-3 vote, the state supreme court reversed.
The high court rejected “categorical protection” for billing records. Acknowledging that attorney-client privilege “no doubt holds a special place in the law of our state,” the majority wrote that it still only protects communications “made for the purpose of seeking or delivering the attorney’s legal advice or representations.”
Agreeing with the ACLU, the majority opinion said that “while invoices may convey some very general information about the process through which a client obtains legal advice, their purpose is to ensure proper payment for services rendered, not to seek or deliver that attorney’s legal advice or representation.” Fee bills, the court said, evoke “an arm’s -length transaction between the parties in the market for professional services” more than they do the “discreet conveyance of facts and advice.”
Information in the “heartland”?
What remains privileged in a fee bill, however, said the court, is information that “lies in the heartland of the attorney-client privilege” — namely everything in an invoice on an active and pending legal matter — even when the information is conveyed in a document, i.e. the bill, that is not “categorically privileged.”
The dissenters said that the majority’s ruling undermines a “pillar of our jurisprudence” by adding a “heretofore hidden meaning” to the state privilege statute, by shielding only communications that relate to the provision of legal consultation, even if they were otherwise transmitted confidentially between lawyer and client.
Following the majority’s rule, the dissenters wrote, means that lawyers must explain to their clients that confidential communications that were previously privileged “may be forced into the open by interested parties once the subject litigation has concluded. If a limiting principle applies to this new rule,” the dissent warned, “it is not perceptible…”
The contents of fee bills have long been subject to attorney-client privilege when they reveal information about strategy, research topics and the like. As even the majority in this case notes, things like research topics or an uptick in the hours charged can be useful information to litigation opponents. But as California commentators point out, the case will likely be read as a narrowing of the privilege, and by introducing subjectivity into the test, will possibly encourage discovery forays against the fee bills of opposing counsel.
California lawyer Ellen A. Pansky, quoted in the ABA/BNA Lawyers’ Manual on Professional Conduct, noted that “the case leaves an interesting, unanswered question: What mechanism will courts use to resolve a privilege claim when a party asserts attorney-client privilege to only portions of invoices previously transmitted in a completed prior matter?” This might be an acute question, because California law seems to be that a court may not compel disclosure of attorney-client communications, even in camera, to rule upon a claim of privilege.
Particularly if you have cases in which California privilege law applies, stay tuned.