Law Firm Internal Privilege: Update

If you attended our law firm risk managers' lunch forum in April, you will recall that two closely-watched cases - one in Georgia the other in Massachusetts - were then pending, involving the scope of the attorney - privilege for internal law firm communications. 

On July 10, the Massachusetts Supreme Judicial Court issued its decision in RFF Family Partnership, LP v. Burns & Levinson, LLP.   

On July 11, the Georgia Supreme Court issues its decision in St. Simons Waterfront, LLC v. Hunter, Maclean, Exley & Dunn, P.C.

In both cases, the courts recognized broad protection for communications between law firm attorneys and their firm's in-house or ethics counsel, including those relating to defending potential claims against the firm by an existing client. 

The Massachusetts court held that notwithstanding the acknowledged "personal interest" conflict created when an existing client threatens a malpractice claim or a disciplinary complaint, a law firm does not, by reason of adversity with the client, forfeit the privilege.  The court therefore rejected the argument that the conflict rules remove in firm consultations from prosecution unless the firm "either withdraws from the representation or fully advises the client about the conflict of interest and [also] obtains the consent of the client to engage in" such consultations.

The court also recognized that while a client is "entitled to full and fair disclosure of facts that are relevant to the representation, including any bad news..." occasioned by the firm's mistake, the client "is not entitled to revelation of the law firm's privileged communications with [either] its in-house or outside counsel where" such "communications were conducted for the law firm's own defense against the clients adverse claims." 

The Georgia court likewise concluded that "the potential existence of an imputed conflict of interest between in-house counsel and the firm client is not a persuasive basis for abrogating the attorney-client privilege between in-house counsel and the firm's attorneys." The court also held that with respect to potential claims against the firm by an existing client, the same in-firm consultations protected by the attorney-client privilege also are protected by the work-product rule. 

In connection with in-firm risk management and ethics consultations both courts refused to apply the so-called fiduciary exception to the attorney-client privilege.

For law firm counsel the practical "best practices" pointers to be gleaned from the two decisions:

  1. The "more formality associated with the position of firm in-house counsel" - including use of a title such as "general counsel" and separate tracking of time devoted to risk management activities - the stronger the argument supporting the "existence of [an] attorney-client relationship between the counsel and the firm;" 
  2. Ensure that the firm's general counsel did not personally perform any work relating to the client representation at issue; and
  3. No firm attorneys should bill the client for any time relating to consultations with in-firm counsel about the client's claims and the firm's defenses. 

(David Atkins, a member of the national Association of Professional Responsibility Lawyers (APRL), assisted in the amicus brief the organization filed in support of the defendant law firm in each case.)
 
A copy of the Massachusetts decision can be found at: http://socialaw.com/slip.htm?cid=22195&sid=120.

A copy of the Georgia decision can be found at: http://www.gasupreme.us/sc-op/pdf/s12g1924.pdf

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