DISPUTE RESOLUTION: Business Litigation: Preserving the Attorney-Client Privilege Between Client, Attorney, and Independent Technical Consultant by Keri Smith

by King & Spalding
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Energy companies may sometimes need to hire a non-expert independent technical consultant or engineer to perform sensitive environmental or related work, whether it be remediation/cleanup, conduction of environmental studies, or the development of a program to bring a client into compliance with applicable laws and regulations. When a company retains a consultant who is not a litigation expert, information related to legal strategy may sometimes be exchanged between a client, their attorney, and a consultant. In many such situations, the attorney and client will desire that certain information exchanges be privileged. Courts that have addressed the issue generally agree that documents associated with work done by technical consultants are not privileged unless it can be shown that the consultant was hired to provide legal advice. Unfortunately, making such a showing may be harder than it sounds.

Indeed, the Occupational Safety and Health Review Commission recently directed a refining company to produce for in camera review a consultant’s draft technical report for which OSHA issued a subpoena following an explosion and fire. Delek Refining, Ltd., 23 BNA OSHC 1567 (No. 09-0844, 2011). Because situations such as this occur with some frequency, this article explains the necessary showing to maintain attorney-client privilege protection for work by non-expert environmental and technical consultants, discusses relevant cases, and concludes with some practical tips for protecting work and communications.

The Second Circuit long ago, in a case involving the engagement of an accountant as consultant, held that the attorney-client privilege can attach to reports of third parties made at the request of an attorney or client where the purpose of the report was to put in usable form information obtained from a client. United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). A party seeking to withhold documents from a consultant or other agent as privileged in such circumstances should be able to make a showing that the consultant was hired to assist counsel in providing legal advice.

However, in most cases involving a consultant’s provision of technical advice, courts seem unwilling to extend the attorney-client privilege. For example, in In re Grand Jury Matter, 147 F.R.D. 82 (E.D. Pa. 1992), an intervenor sought to quash a subpoena issued to a retained environmental consulting firm. The intervenor argued that their consultant had been retained to provide environmental legal advice related to the preparation of a waste management plan that would help to achieve regulatory compliance for the company’s waste disposal practices. The court reviewed the relevant documents in camera and rejected the application of the attorney-client privilege because the documents “were made solely in the course of the expert consultant’s preparation” of the waste management plan. In other words, these documents provided business advice, not legal advice. The court similarly rejected the work product doctrine because the documents did not reveal legal theories or opinions of a law firm.

Similarly, in U.S. Postal Service v. Phelps Dodge Refining Corp., 852 F. Supp. 156 (E.D.N.Y. 1994), an engineering firm was hired by the client to conduct environmental studies of the soil and oversee remedial work, and a consultant was hired to develop a supplemental remedial program. The documents exchanged between either consultant and client were not protected by the attorney-client privilege because neither consultant was employed to assist in the rendition of legal advice. The consultants’ functions were to collect information not obtainable directly from the client, rather than converting client information into a format that would better enable the client’s attorneys to render legal advice. The Western District of New York reached a similar conclusion with regard to the work of an environmental engineer in Occidental Chemical Corp. v. OHM Remediation Services Corp., 175 F.R.D. 431 (W.D.N.Y. 1997).

Following the line of reasoning fashioned in the above cases, courts are likely to focus on the purpose served by a consultant when determining the applicability of the attorney-client privilege to documents exchanged between consultants, clients, and attorneys. A party seeking to withhold documents from a consultant or other agent as privileged in these circumstances needs to convince a decision-maker that the consultant was hired to assist counsel in providing legal advice, and that the consultant was indispensible in facilitating attorney-client communications. See, e.g., Phelps Dodge, 852 F. Supp. at 160; Occidental, 175 F.R.D. at 435. A claim of privilege may be bolstered in situations where a consultant was retained directly by an attorney, a written and specific engagement letter is used to retain that consultant, and an attorney oversees all communications between the consultant and client. See Kovel, 206 F.2d at 922.


  Keri Smith
  Houston
  +1 713 276 7310
  ktsmith@kslaw.com

  View Profile »

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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