predominant purpose test

If you’re corporate counsel to an organization, you know how hard it can be to navigate privilege issues.  In a single day, you can be involved in talking to business managers, communicating with your CEO and dealing with the board.  When are your communications privileged, and how can you protect them?  A recent Colorado district court opinion has some pointers, based on a finding that a memo partly authored by in-house counsel was not privileged.

Legal advice, or just business?

In class action litigation, the plaintiffs asked the court to compel defendant Marriott to turn over an unredacted version of a nine-page financial and business growth strategy memo that corporate officers addressed to the organization’s Corporate Growth Committee.  Various lawyers in the law department had significant responsibility for preparing the memo, and the court found that some sections of the final memo had been written by in-house lawyers.

But the fact that a lawyer prepares a document is not sufficient to make the communication privileged.  Rather, the privilege’s proponent must “clearly demonstrate that the communication … was made for the express purpose of securing legal, not business advice.”

Further, the court said, the “primary purpose” of the communication must be getting or giving legal assistance, rather than business advice.

Mixed messages

So what to do with a document that contains a mixture of business advice and legal advice, which the court found were “intertwined” in the memo?  Citing the lack of Colorado precedent, and applying a case from the District of Columbia, the court held that the legal advice must “predominate for the communication to be protected.”  It did not predominate here, said the court.  Instead, while the strategy memo involved some legal advice, most of it was “ordinary and customary business strategy advice.”

Tips to protect the privilege

This case has some take-home lessons for in-house counsel on how to protect the privilege over legal advice.

  • It’s on you:  “The legal duty to protect the privilege falls on the legal department,” said the court, noting that Marriott’s team was “large and experienced.”  But even if you’re a one-person shop, you are the point-person for privilege issues.
  • Educate the stakeholders:  Those tasked with advising on and writing parts of the Marriott memo had “a duty to inform the Corporation of the privilege and to take steps to protect their advice,” said the court.  Schooling your company’s managers on the privilege is key to helping protect it.  For instance, do they know that cc-ing you does not necessarily make a document privileged?
  • Don’t intermix business and legal advice:  If the legal advice in the strategy memo had been in “separate paragraphs or pages,” or in a “confidential addendum or even a separate memorandum,” the court hinted that it might have protected those parts as privileged and only ordered disclosure of part of the memo.  Instead, the information was so intertwined that redaction “would be impractical.”

And some related pointers:

  •   Label!  If you are giving legal advice, start your communication with “You’ve asked me for my legal opinion on …” or “my legal advice regarding…. .”  Head those documents “Attorney Client Privilege.”  But don’t over-use the header.  If everything that comes out of your office is marked “Privileged,” that might be deemed to cancel out the effect.
  • Don’t overshare:  Remember, e-mail has a way of getting out of control.  Long threads where you are an early addressee may be deemed not privileged after going to people within or outside the company who shouldn’t receive the information.

Different outcome?

The court in this case adopted the “primary purpose” standard, but there are others — for instance, whether legal advice is “one of the significant purposes” of the communication.  We’ve discussed that test, which the  D.C. Circuit adopted in 2014, here and here.  Over at Presnell on Privileges, Todd Presnell wonders whether the result in the Marriott case would have been different under that standard, and it’s a good question.  Privilege disputes can be very fact-specific, and the test the court applies can certainly dictate the outcome.