Limiting Intra-Company Conversations About Disputes is Critical

by Burns & Levinson LLP

When an employee talks to in-house or outside counsel for the purpose of obtaining legal advice for the company, that communication will be privileged and can be protected from disclosure.  Likewise, when in-house counsel is meeting with several employees at the same time for the purpose of gathering information to be used for legal advice, the communication that takes place will be privileged.

Notwithstanding the fact that the attorney-client privilege applies to communications between a lawyer and a client, many people still believe that communications amongst employees are protectable even if no attorney is present, as long as they are discussing an ongoing or potential litigation.  That is a misguided notion, and looking at the facts of a 4th Circuit case, US v. Tedder, reveals how dangerous having such a misconception can be.

Tedder was an attorney who was implicated in a drug smuggling and money laundering operation.  A grand jury was investigating the matter, and Tedder was called to testify.  After giving his testimony, Tedder confided in another attorney at his firm that he had lied to the grand jury about various critical matters.  Eventually, Tedder was indicted, and one of the counts on which he was tried was perjury.  At Tedder’s trial, the prosecution sought to have the colleague in whom Tedder had confided that he had lied to the grand jury testify against Tedder.  Tedder objected, claiming that because his colleague was an attorney at the firm at which they both worked, and because the firm was representing him in connection with the matter at hand, the communication was protected from disclosure by the attorney-client privilege.  The District Court overruled the objection, and Tedder was convicted. Tedder then appealed his conviction but the 4th Circuit affirmed, noting that Tedder’s admission about lying to the grand jury was made to his colleague as a friend and not because she was an attorney from whom he was seeking legal advice.

Plainly, if Tedder’s statement to an attorney was not protectable because the communication was not for the purpose of seeking legal advice, communications amongst employees of a company about an ongoing or potential litigation have virtually no chance of being shielded.  Thus, it is imperative that once a dispute appears on the horizon, in-house counsel identify who has information about it and make sure that they know to avoid any discussions about the matter except with in-house or outside counsel.  Similarly, if, as sometimes happens, news of a dispute and/or suit leaks out generally to the workforce, it may make sense for in-house counsel to send out an email to all employees to let them know that they should come to you if they have any questions about the matter and not to ask other workers who may have relevant information about the matters in dispute.

Finally, and as I discussed in a more general post called In-House Counsel and the Attorney-Client Privilege, in-house counsel should be wary about trying to make non-privileged communications protectable by having themselves cc’d on emails or attending meetings where legal advice is not necessary or sought.  In addition to the problems noted in my prior post, I recently came across a decision out of the Northern District of Illinois holding that:

[W]here the court finds that a party used in-house counsel to apply a veneer of privilege to non-privileged business communications, the court should impost costs on that party.

As such, in-house counsel should not think that there is no risk in trying to cloak a communication in the veil of the attorney-client privilege where no such veil is justified.

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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