We’ve written before about the breadth of the duty of confidentiality we owe to our clients, and how it even extends to matters that you think are safe to discuss because they are of “public record.”   (See here and here.)  Now comes the ABA’s latest on the subject of lawyer “public commentary” — Formal Opinion 480 (Mar. 6, 2018).  And it prompts us to be wary of a couple pitfalls when it comes to what we say about clients in online articles, on twitter, at webinars, in podcasts and through traditional print publications — all of which the opinion refers to as “public commentary.”

Duty “extends generally”

All such public commentary, the ABA reminds us, whether on-line or not, must comply with the relevant jurisdiction’s version of Model Rule 1.6.  The rule requires us to maintain the confidentiality of all information relating to the representation of a client, unless that client has given informed consent to the disclosure, the disclosure is impliedly authorized to carry out the representation, or the disclosure is permitted by a specific exception in Rule 1.6(b).

The confidentiality rule, as is frequently said, is much broader than the attorney-client privilege, and includes all information relating to the representation, whatever its source.  Even the identity of the client is usually deemed to be confidential information, the ABA ethics committee notes in this newest, foot-note-heavy opinion.  And, adds the committee, it’s highly unlikely that a disclosure exception (except for consent) would apply when a lawyer engages in this sort of public commentary.

Don’t hype the hypo

That brings us to “hypotheticals.”  We all use them — from law profs in class, to lawyers seeking informal practical advice from colleagues at other firms, to gurus of various stripes who use real-life examples at legal CLE seminars.  But, says the ABA committee, beware:  “A violation of Rule 1.6(a) is not avoided by describing public commentary as a ‘hypothetical,’ if there is a reasonable likelihood that a third party may ascertain the identity or situation of the client from the facts.”

For example, in a widely-reported case mentioned in the ABA opinion, an Illinois lawyer got a 60-day suspension in her home jurisdiction for violating  Rule 1.6, when she blogged about her criminal defense clients using either their first names, a derivation of their first names, or their jail ID number.  Reciprocal discipline was imposed in Wisconsin.

In light of the ABA opinion, you’re going to want to make sure that any real-life client situations you describe in  public commentary is so thoroughly disguised that no one can tell that it’s real.  If you’re using social media to educate and engage, there’s arguable benefit in discussing actual situations in a hypothetical way, while being sure to scrub the real facts out.  But as we’ve said before, if you’re just making cocktail party chit-chat, why even go there?  It’s not worth the risk of divulging confidential client information.

Trial publicity statements

The ABA opinion also briefly notes the constraints that Model Rule 3.5 puts on using public commentary to influence the court of public opinion.  The rule prohibits a lawyer from seeking to influence a judge, juror, prospective juror, or other official by means prohibited by law, and cites the case of a Louisiana lawyer disbarred for, among other things, using an internet petition campaign to contest the rulings of a judge presiding over a custody dispute involving her client.  That kind of conduct can also obviously lead to trouble.

All in all, the new opinion is a straightforward application of Rule 1.6 to this age of public commentary; but it is a good wake-up call for those who need one.

One of Bill Cosby’s accusers can continue with her defamation suit, the California state court of appeals said in an opinion late last year, holding that the trial court erred when it used the state’s anti-SLAPP law to partially strike Janice Dickinson’s complaint against the entertainer. Dickinson had based one of her claims on statements reacting to Dickinson’s claims that Cosby’s lawyers made in letters to media outlets.

The case could be a caution flag – at least under California law – for lawyers who label accusations against their clients as “lies.”

“Fabricated” and “an outrageous … lie”

Immediately after Dickinson went public on Entertainment Tonight with her claims that Cosby drugged and raped her in 1982, Cosby’s lawyer, Martin Singer, sent demand letters to Good Morning America and several other media outlets calling her assertions “fabricated and … an outrageous defamatory lie,” and explicitly threatening to sue them if they disseminated Dickinson’s claims further. The next day, Singer also issued a press release calling Dickinson’s accusations against Cosby “a lie.”

Dickinson sued for defamation based on the statements in the demand letter and the press release; Cosby responded with a motion to strike the complaint, under California’s anti-SLAPP law.

The trial court issued a divided opinion. It found the statements in the demand letter to be protected by the absolute litigation privilege; but the trial court rejected Cosby’s argument that the press release statements merely expressed a protected opinion, and held that Dickinson had shown a probability of prevailing on her defamation claim as to the press release. Both sides appealed.

The state court of appeals unanimously agreed that the trial court had gotten it right as to the press release, but reversed as to the demand letter, holding that the litigation privilege did not shield Singer’s statements on behalf of Cosby.

Litigation privileged?

California law, like that in other jurisdictions, extends an absolute privilege to statements made in connection with judicial proceedings. (California’s privilege is codified here.) The privilege is broad, and includes pre-litigation statements made in furtherance of the objects of the litigation.

A demand letter can qualify for the litigation privilege — but only when it relates “to litigation that is contemplated in good faith and [is] under serious consideration.” “Even a threat to commence litigation will be insufficient to trigger application of the privilege if it is actually made as a means of inducing settlement of a claim, and not in good faith contemplation of a lawsuit,” noted the court of appeals, citing a key 2007 state supreme court case.

Here, the court of appeals said, the letter was sent only to media outlets that had not yet run the story of Dickinson’s rape accusations, but indicated that they planned to; and when some of the news outlets ignored the demand letter and ran the story anyway, Cosby never followed through on the litigation threat in Singer’s demand letter, and never sued.

The court ruled that this evidence supported a prima facie inference that the demand letter was sent without good faith contemplation of seriously-considered litigation; rather, said the court of appeals, the letter “was a bluff intended to frighten the media outlets into silence (at a time when they could still be silenced), but with no intention to go through with the threat of litigation if they were uncowed.” Thus, the letters were merely “hollow threats of litigation” that did not qualify for the absolute litigation privilege.

Results may vary

The court of appeals noted and rejected the applicability of federal court decisions arising out of other claims against Cosby, including other statements that Singer made on his behalf; those cases were decided under Michigan and Pennsylvania law.

The point that the outcome in a defamation case is extremely dependent on particular state-law wrinkles is important. California’s strong authority on the litigation privilege and especially the high bar for showing that pre-litigation communications are serious threats of litigation, not settlement “bluffs,” spelled the difference here.

The law in your own jurisdiction may differ. In my home state of Ohio, for instance, similar authority appears lacking. But for cases under California law, the Dickinson ruling is instructive on the limits on privilege when it comes to calling the other side a liar.

Holiday parties are great times to socialize and network with colleagues.  But the casual atmosphere and the sometimes-plentiful adult beverages can also tempt you to tell war stories that reveal too much about your past clients, potentially violating your continuing duty of confidentiality under Model Rule 1.9.  But what’s “too much”?  If something about a previous case or transaction you were involved in is in the news, or is contained in court pleadings, can you discuss it?

The simple answer is “Not really.”  Model Rule 1.9(c)(2) says that you have the same duty not to reveal information relating to the representation of your former client as you do to a current client.  That’s a very broad duty:  it extends to all information “relating to the representation” (i.e., much broader than the attorney-client evidentiary privilege).  That effectively rules out war stories that would be detailed enough to let your audience figure out who you are talking about.

When is former-client info “generally known”?

Outside of the cocktail party context, how about using information adverse to a former client?  For instance, you might be in a position to use information you have acquired about the workings of a former client’s business without actually revealing it.  Rule 1.9(c)(1) says that such use is prohibited, subject to an interesting exception — it can be used “when the information has become generally known.”  That seems like a common-sense exception that strikes an appropriate balance between the former client’s valid interest in continuing confidentiality and the fact that you are no longer counsel to that client.

However, the definition of “generally known” can seem pretty narrow.  Last year, we wrote about a disqualification case holding that even information that’s “of record” in a court file may not be “generally known” for purposes of meeting the exception.  Now comes the ABA Ethics Committee’s take on that issue, published last week.

In Opinion 479, the committee agreed that information is “not generally known merely because it is publicly available or …[is] a matter of public record,” and noted numerous authorities that have reached that conclusion.  So when is former-client information “generally known”?

Citing New York rules commentator Roy Simon and a 2013 New York state ethics opinion, the ABA committee said that for Rule 1.9 purposes, information is generally known under two circumstances:

  • it’s widely recognized by the public in the relevant locale; or
  • it’s widely recognized in the former client’s industry, profession or trade.

“Workable definition”

This “workable definition,” said the ABA committee, encompasses publicity through traditional media sources, the internet and through social media — channels that can lead to public notoriety.  And publicity in leading sources in a particular field can meet the “generally known” test if members of the industry, trade or profession would widely recognize those sources.  “Information may be widely recognized within a former client’s industry, profession, or trade without being widely recognized by the public,” said the ABA committee.

But the committee reiterated that unless information has become widely recognized by the pubic, or within the former client’s industry, the fact that the information may have been discussed in open court, or may be available in court records does not necessarily signal that it is “generally known.”

Party safely and ethically

When you’re at a holiday gathering with your brother- and sister-members of the bar, have fun — but at the same time, watch what you imbibe (and designate a driver) and watch what you say.  Being judicious in both regards is the best way to enjoy the season without regret.

A lawyer representing an eBay seller in a dispute with the seller’s trading agents drew a defamation claim from the agents.  But the case had a happy ending for the lawyer, as the New Jersey court of appeals held last month that two letters the lawyer wrote to eBay were protected by the Garden State’s broad litigation privilege.  (H/t to Pete Gallagher, blogging over at Pete’s Take.)

The case spotlights the scope of the privilege, a “backbone” of the American judicial system, widely adopted in some form throughout the U.S., and enshrined in § 588 of the Restatement of Torts (Second).

“Dear eBay personnel…”

The underlying case started out in small claims court, where the two trading agents sued the seller.  The seller, represented by Lawyer, roared back with a multi-prong counterclaim that sought treble damages under the state consumer fraud act, plus punitive and other damages.  The counterclaim, which took the case out of small claims court, was based on an agreement for the trading agents to help seller sell goods on eBay.  The underlying case later settled.

But during the course of the underlying case, Lawyer wrote two identical letters to eBay, which was not involved as a party.  The letters were not addressed to anyone in particular at eBay.  They said that: seller had hired the trading agents based on eBay’s representations regarding its trading assistant program;  the trading agents had refused to pay money due to the seller; the trading agents “likely” never had a fidelity bond with eBay; and that eBay should suspend them from its program.  Lawyer also asked how eBay intended to “handle this matter.”

In their later complaint against Lawyer, the trading agents alleged claims including defamation and interference with contract, based on the letters.  The trial court dismissed the case, and the appellate division, in its unpublished opinion, affirmed.

Explore the truth — no recrimination

The privilege “provides immunity from suit to permit unfettered expression” in connection with litigation, noted the court of appeals.  Its contours under New Jersey law apply broadly to give absolute protection to:

  • any communication;
  • made in judicial or quasi-judicial proceedings;
  • by litigants or other participants;
  • to achieve the objects of the litigation;
  • where the communication has some connection or logical relation to the action.

Citing long-standing precedent, the privilege applies, said the court, even to statements spoken maliciously; even if connected to a not-yet-pending action; and even if addressed to a non-party to the litigation.

Here, the court said, Lawyer’s detailed letters were related to and relevant to the underlying case between Lawyer’s client and the trading agents.  They were in line “with the type of inquiry deemed … to be necessary to a thorough and searching investigation of the truth, and therefore, essential to the achievement of the objects of litigation.”  EBay’s response could have led to a claim against eBay; or could have prompted eBay to investigate the trading agents’ practices, possibly leading to additional support for seller’s claims against them.

The Lawyer’s statements, held the court, were well within the scope of the absolute privilege and its policy to “explore the truth of a matter without fear of recrimination.”

But don’t go wild

The litigation privilege is obviously good for lawyers and allows us broad scope to make statements relevant to litigation.  But a caveat:  as always, state wrinkles may apply.  (See this 2015 law review article, at n. 14, commenting about Georgia and Louisiana, for instance.)  And you should be aware that for disciplinary purposes, your motivation counts.  In representing a client, Model Rule 4.4 bars using means that have no substantial purpose other than to embarrass, delay or burden a third person.

You’ve probably read about the New York Times reporter who says that he overheard lawyers for President Donald Trump discuss the ongoing Russia investigation at a Washington, D.C. restaurant, and then reported on the talk — which revealed details of a strategy debate, the alleged existence of documents “locked in a safe,” and other purported insight on the internal workings of the President’s legal team.

(If you somehow missed the story — maybe you just stopped paying attention — check out the Times reporting, the backstory on how the reporter overheard the conversation, and the ABA Journal’s report.)

Every reporter’s dream

The NYT reporter, Kenneth P. Vogel, wrote that he overheard the conversation when he happened to be seated at a steakhouse at the next table over from Ty Cobb and John Dowd.  Cobb was brought over from Hogan Lovells in July to run point on the Russia investigation; Dowd, another member of the White House legal team, retired from Akin Gump Strauss Hauer & Feld in 2015.

Vogel later wrote, “I have always thought of overhearing conversations as an underappreciated journalistic tool.”  The Washington Post commented, “It is every Washington reporter’s dream to sit down at a restaurant, overhear secret stuff, and get a scoop.”

Don’t let this happen to you!

Our take on this cautionary tale, of course, centers on Model Rule 1.6 — client confidentiality.  We often have occasion to warn you to consider particular wrinkles in the rules that affect your particular jurisdiction.  But not this time.  In every U.S. jurisdiction, lawyers have an obligation not to disclose confidential information relating to the representation of a client without the client’s consent.

That duty covers a wide swath of information learned through the representation.  It’s much broader than information that is protected by the evidentiary attorney client privilege.

And so many ordinary things you might do without thinking twice can jeopardize your client’s confidential information — as Cobb and Dowd have perhaps discovered.  (Some have suggested that the incident was so blatant that it must have been intentional.  But intentional or not, disclosure still requires client consent.  The Times reported that, according to its sources, the disclosure prompted White House counsel Donald F. McGahn II to “sharply reprimand[] Mr. Cobb for his indiscretion.”)

The list could go on ad infinitum, but here are just a few examples of every-day things that can breach your duty of confidentiality:

  • schmoozing about work while standing in line at Starbucks;
  • doing client pitches;
  • sharing war stories with friends over cocktails;
  • talking on a cell phone in a public place;
  • reading client documents on a laptop while sitting next to someone on a train or plane;
  • forgetting documents on a restaurant table or in a cab;
  • forwarding client-related emails to people outside your firm;
  • sharing documents or forms created for a client with friends or other clients.

You must remember this…

Remember, confidential information also includes “disclosures by a lawyer that do not in themselves reveal protected information but could reasonably lead to the discovery of such information by a third person.”  (Model Rule 1.6 cmt. 4.)  In other words, just leaving out names doesn’t help, if someone can figure out who you are talking about.

And, as the President’s lawyers perhaps learned, when your client realizes that you have disclosed confidential information, “oops” may not be a complete excuse.

Bottom line:  You might never work at the White House, but make it your default mode not to discuss client business outside of your office, and you won’t go wrong.

The ACLU and the Electronic Frontier Foundation have sued the Department of Homeland Security to block U.S. Customs and Border Protection personnel from searching travelers’ electronic devices without warrants.  This has implications for lawyers who cross in and out of the U.S. with phones and laptops  containing confidential client information.  The CBP’s policy, which the ABA also has questioned, currently authorizes such searches even without a suspicion of wrongdoing.

We first wrote about the issue last month, when the New York City Bar Association published an ethics opinion raising the client confidentiality issues and advising that in some circumstances lawyers should consider using “burner” phones, and avoid taking client confidential information across borders.

The ACLU and EFF’s lawsuit, in Massachusetts district court, alleges violations of the First and Fourth Amendments on behalf of 11 plaintiffs whose electronic devices were searched as they reentered the U.S.  None were subsequently accused of any wrongdoing.

The plaintiffs include journalists, students, an artist, a NASA engineer and a business owner — but no lawyers.  Despite the absence of lawyers from the roster of plaintiffs, the client confidentiality issues are obvious, and have received a lot of notice.  See here for the New York Times story on the lawsuit, and here and here for commentary on the N.Y. City bar ethics opinion.

I’d be interested in hearing whether lawyers have personal experience with border searches of their electronic devices.

Stay tuned for additional developments on this issue.

Travelling abroad for work?  What should you do if a Customs and Border Patrol agent, claiming lawful authority, demands that you unlock your computer or thumb drive or cell phone — full of client confidential information — and hand it over to be searched as you cross the U.S. border?

New York City bar association ethics opinion issued on July 25 offers some practical tips, and spotlights the ethical duties of confidentiality and client communication involved in this increasingly-common scenario.

Cause for concern

The confidentiality concern is more than hypothetical.  According to the Department of Homeland Security, in February 2017 alone, CBP agents searched more than 5,000 cell phones, laptops and other devices.  That’s as many searches as in all of 2015.  CBP policy apparently permits U.S. customs agents to review any information that physically resides on travelers’ electronic devices, with or without any reason for suspicion, and to seize the devices pending inspection.

The ABA voiced concern in May, requesting that the Department of Homeland Security revise CBP’s procedures in order to better protect client confidential information from search or seizure at border crossings.

Evasive tactics necessary?

Under every state version of Model Rule 1.6, you have an ethical duty to safeguard the confidentiality of client information in your possession, and “few principles are more important to our legal system,” the opinion notes.

The thoroughly-reasoned and detailed New York opinion concludes that Rule 1.6, coupled with Rule 1.1 (Competence), raises obligations before a lawyer approaches the U.S. border; at the border when an agent seeks access to a device; and after an agent has reviewed clients’ confidential information.

  • Before crossing the border, Rule 1.6(c) and its comments, which require “reasonable efforts to prevent … unauthorized access to” client confidential information, means that you must take reasonable precautions in advance to avoid disclosing such information unless authorized by the client (which is unlikely).  Depending on the circumstances, including the sensitivity of the information, these efforts may include not carrying any client confidential information across the border.  If so, the opinion suggests:  securely backing up client information and then crossing the border with a blank “burner” phone or laptop; turning off syncing of cloud services; signing out of web-based services; and/or uninstalling applications providing local or remote access to confidential information.
  • At the border, Rule 1.6(b)(6) and its comments come into play.  It permits lawyers to disclose confidential information to the extent reasonably believed to be necessary when required “to comply with other law or court order,” including “a governmental entity claiming authority pursuant to … law.”  But, the opinion cautions, disclosure is not “reasonably necessary” to comply with law if there are reasonable lawful alternatives to disclosure.  The opinion concludes that “it would be an unreasonable burden” to require a lawyer to forgo entering the U.S. or to allow herself to be taken into custody or litigate the lawfulness of a border search. But the opinion also says that lawyers have a duty not to comply “unless and until” the lawyer “undertakes reasonable efforts to dissuade border agents from reviewing clients’ confidential information or to persuade them to limit the extent of their review.”  To facilitate that challenge, you should carry ID confirming that you are a lawyer, notify agents that your device has client confidential information on it, request that the agents limit their review, and ask to speak to a superior officer, says the opinion.
  • After a search or seizure of client confidential information, Rule 1.4 (Communication) requires that you notify affected clients about what occurred and the extent to which their confidential information may have been reviewed or seized.  That communication will let the client decide on possible responses, including a potential legal challenge.

Globe-trotting implications

Tennessee ethics lawyer Brian Faughan shared his comments on this opinion under the headline “Practicing law like it’s espionage.”  The ways to carry out the potential duty to avoid taking confidential information across U.S. borders, as well as the other recommendations in the New York opinion, indeed make me think of spy craft, and to wonder if we are entering the world of novelist John LeCarre.  That’s an uncomfortable thought — but under the reasoning of this opinion, such considerations are necessary as a matter of ethics.

The former general counsel for clothing retail giant Zara USA, Inc. can’t claim privilege in his discrimination-wrongful discharge suit for e-mails he created on a company-issued computer, said New York’s First Department court of appeals in an opinion last month — but the same material might be protected by the work-product doctrine, the court held.

The discovery dispute and ruling arose from a now-common scenario:  an employee who uses a company computer for personal communications about litigation against the company — and apparently, even corporate GC’s do it.

GC suit alleges discrimination, harassment

The backstory starts in June 2015, when the former GC sued his employer for bias and harassment.  In his complaint, the GC alleged that, for instance, after learning that he is gay and Jewish, company personnel sent sexually-charged e-mails to him, used Yiddish expressions in speaking to him and sent his long-time partner an e-mail with an image of a tattooed penis.  The GC alleges that after he complained about his treatment, company leaders told him that his job was in jeopardy, and eventually terminated him.

During discovery, Zara sought documents from the former GC’s laptop, asserting that it and its contents were company property under a policy that the GC had helped draft.  The policy was in the company employment handbook, and like many such policies, it:

  • restricted use of company-owned devices to “business purposes”;
  • specified that content created/stored company resources belonged to Zara “exclusively”;
  • emphasized that employees lacked any expectation of privacy in information transmitted or stored on company computers; and
  • said that Zara could access such information without prior notice.

No privilege for documents on employer-issued computer

In the trial court, the GC won a motion for protective order.  The judge wrote that Zara seemed to be “merely trying to gain litigation advantage by accessing documents that may be privileged,” referring to 101 documents on his computer that the GC created after the litigation began.

But the First Department found no privilege, reasoning that given the employee handbook provisions (which he had at least constructive knowledge of), the GC had no reasonable expectation of privacy, and thus lacked “the reasonable assurance of confidentiality that is foundational to attorney client privilege.”

This ruling is consistent with the case law in most jurisdictions, holding that attorney-client privilege does not apply to communications between an employee and the employee’s personal lawyer if made using the employer’s computer network and if the employer has informed employees that they have no expectation of privacy with respect to communications using the employer’s e-mail system.

Will work-product work?  

However, the appeals court also said that even though Zara reserved the right to access company-issued computers, it never did so, and so there was never any actual disclosure to any third party of the material that the former GC sought to shield.

As a result, even though attorney-client privilege was unavailable, the work-product doctrine might be applicable if no one other than the former GC and his counsel had actually reviewed the materials.  Accordingly, said the court, the GC’s use of Zara’s computer “for personal purposes does not, standing alone, constitute a waiver of attorney work product protections.”

Now, on remand, it will be up to the trial court to review the documents in camera and determine the work-product question.

At the crossroads

This case is at the intersection of employment law and privilege law, with facts that have become more common recently.  In fact, the First Department cited its own privilege decision earlier this year in a similar dispute over access to e-mails that Marvel Entertainment’s CEO exchanged with his wife using the company e-mail system.  There too, the court found no privilege (spousal, this time), but possible work-product protection.

The twist in this latest case is that it was Zara’s former chief legal officer who used his company-issued computer to communicate with his private counsel — making this decision one that GC’s should take note of.

ContractWhether you are in-house or outside counsel, your clients want the attorney-client privilege and/or work-product shield to apply to materials created as part of an internal corporate investigation.  But the applicability of these doctrines is very fact-specific, and difficult facts can doom that desired outcome.  That was the conclusion of the Washington, D.C. district court in an opinion last month involving the D.C. transit authority  board.

Development dispute

The transit authority  was negotiating with a developer on a construction project.  After discussions broke down in March 2010, the developer sent a letter to the transit board detailing what it believed to be improper actions of the authority and its board, and indicting that it would seek its available “remedies at law or in equity” if negotiations did not resume.  The alleged “improper actions” (set out in an earlier decision), centered on a transit board member who was also a D.C. city council member and who favored a different developer — a major campaign contributor — for the project.  The situation generated a “public outcry.”

Over two years later, the transit authority hired Cadwalader, Wickersham & Taft to “provide investigative and legal services” regarding the board’s actions in connection with the failed project.

The investigation included interviews with current and former transit personnel as well as non-transit-personnel.  It generated 51 interview memos, each marked “Attorney Work Product.”

After Cadwalader submitted its report and recommendations, the board decided to release it to the public.  The report cited and referred to the interview memos prepared during the investigation.  The developer sued the board, and sought the memos, arguing that the work-product doctrine did not apply and that the board had waived any attorney-client privilege.

The district court agreed, denied the board’s motion for protective order, and ordered the transit authority to turn over all the memos, subject only to some limited redaction.

Timing is (nearly) everything

The work-product shield did not apply to the 21 memos of interviews with non-transit-board personnel, the court said, because too much time had elapsed between the letter threatening legal action and the preparation of the memos.  Even if litigation could reasonably have been anticipated at the time the board received the letter, it did not hire Cadwalader until two years later, and did nothing in the interim.  Although acknowledging that  “there is no standard or rule regarding how close in time potential litigation must be,” two years was too long, the court said.

Further, the D.C. Circuit has adopted the “because of” standard to assess the motivation for creating materials later claimed to be attorney work product.  For instance, Cadwalader’s recommendation to the board said it had been retained “to provide general governance recommendations” and to evaluate the board’s code of ethics.  The court said the evidence showed that the board did not commission the investigation “because of” possible future litigation, and would have conducted an  investigation to evaluate its business and ethics practices even without any anticipated litigation.

Attorney-client privilege waived

Citing D.C.’s strict definition and narrow construction of privilege, the court also held that no privilege shielded the remainder of the memos, created after interviews of transit authority personnel.

Cadwalader’s report, with its legal and factual conclusions about the construction project negotiations, had originally been intended to  be disclosed only to the transit board.  Intentionally releasing the report to the public, with multiple references to at least 23 different witness interviews, was not consistent with “zealously protect[ing]” the privileged materials.  Rather, publication constituted a subject-matter waiver of the privilege as to the memos used to compile the report, and “fairness dictat[ed]” that the memos be considered together with the report, the court said.

Takeaways? 

In the investigation context, facts dictate the outcome of a privilege battle.  Here, the transit authority couldn’t get out from under some difficult facts that sank its work product and privilege arguments:  waiting so long after the threat of litigation to launch an investigation; and making the report public, which was likely a political necessity in any event.  The court’s strict holdings were the result.

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Thinking of using a public relations firm to help manage a corporate crisis?  Divergent interpretations of the privilege rules have led to differing legal opinions on whether communications between a PR firm and the company or defense counsel are privileged.  A California state court of appeals decided last month that such communications were not privileged, illustrating the privilege risk that can arise in communications with PR firms.

No California exception available

Behunin v. Superior Court involved an unsuccessful real estate investment deal.  “As part of a plan to induce the Schwabs to settle” the resulting lawsuit, Behunin’s lawyers hired a public relations firm to create a website linking the Schwabs and their Indonesian investments to the family of former Indonesian dictator Suharto.

In Schwab’s suit against Behunin for libel and slander, he sought to discover communications among Behunin, his counsel and the PR firm about the creation of the website.

The court of appeals, denying a writ of mandamus, concluded that although California law may extend privilege to some communications with a PR consultant, privilege did not apply here:  Behunin failed to prove that communications with the PR firm were reasonably necessary for his lawyer to represent him in the underlying case.

Section 952 of California’s evidence code codifies exceptions to the usual rule that disclosing a lawyer-client communication to a third person destroys the privilege. But the Behunin court bluntly said in this case that “There is no ‘public relations privilege’ in California,” and that no exception to the general rule applied to the PR firm’s involvement in generating negative publicity that “would help get the Schwabs to the settlement table.”

  • Behunin did not provide evidence proving that the communications among the lawyer, the PR consultant and himself were reasonably necessary to assist the lawyer in representing him, the court ruled.  Rather than being able to show that the lawyer and consultant were involved together in “developing, discussing, or assisting in executing a legal strategy,” it appeared that the lawyer only acted as a liaison in hiring the PR firm.
  • Nor, said the court, was the PR consultant the functional equivalent of the client’s employee (a status which could potentially raise the privilege shield).  There was no detailed factual showing that the consultant was responsible for a key corporate job, had a close working relationship with the company’s principals on critical matters, and had information that no one else at the company possessed.

Differing opinions on PR firms

The application of privilege and work-product principles has generated opinions that have extended the privilege to communications among lawyers, clients and PR firms.  See King Drug Co. v. Cephalon, Inc. (E.D. Pa. 2013) (privilege applied; consultants preparing business and marketing plans were the client’s “functional equivalent”).  Other opinions are to the contrary.  See Kirby Pemberton v. Republic Services, Inc. (E.D. Mo. 2015) (no privilege; no Missouri authority extends privilege to public relations consultants, and privilege should be narrowly construed); McNamee v. Clemens (E.D.N.Y. 2013) (no privilege; PR firm only provided standard services not necessary in order to provide legal advice, and therefore disclosing documents to firm resulted in waiver).

Takeaway – caution required

Managing the media can be an important part of managing a corporate crisis.  Creating and preserving privilege in this setting demands caution, and involves a nuanced analysis that can be both fact-specific and jurisdiction-specific.

  • Stephen Williger, of Thompson Hine’s Cleveland office,  will present the keynote address, “Legal Aspects of Corporate Crisis Management,” at the 2017 Continuity Insights Management Conference in Denver, April 24-26.  He will speak on the legal aspects of pre-crisis planning, mitigation, remediation, and recovery.  Conference program   Registration