Confidential Communications
As in our personal lives, when your company is involved in a lawsuit (“litigation”), unless a communication is “privileged” or otherwise protected, your company can be compelled via the “discovery” process to provide that communication to its litigation opponent, who then might be able to use that communication against your company in the litigation.
There are several different types of privilege, but the one that typically is most relevant to companies is the “attorney-client” privilege, which is fundamental to the relationship between a client and their attorney because it encourages clients to seek and receive legal advice and assists them in protecting their rights and complying with the law.
Understanding the Attorney-Client Privilege
Attorney-client privilege is a legal doctrine that can prevent litigation opponents from using litigation’s discovery process to force disclosure of certain confidential communications that occurred between a client and that client’s attorney. Such communications also can be protected from admission into evidence during a trial and from forced disclosure to the government. The privilege is based on the U.S. legal system’s recognition that by preserving confidentiality of such communications, the privilege encourages clients to engage in full, frank, and uninhibited dialog with their attorneys, who are then better able to provide candid legal advice and effective representation.
Generally, the attorney-client privilege arises when a client or potential client seeks legal assistance from a licensed attorney. The privilege then applies (or “attaches”) to each related confidential communication that results. Protectable communications can include legal theories, analysis, inferences, opinions, conclusions, strategies, and tactics, along with draft documents that incorporate or describe such things. The privilege can be particularly important to the client when the communication includes legal advice or services that can be construed negatively or taken out of context by the government or an opponent regarding a legal right or responsibility of the client.
The attorney-client privilege generally will not attach to communications that:
- are not kept confidential;
- do not seek or provide legal assistance; or
- are made to further a crime or fraud.
The privilege also will not apply to any underlying facts that are conveyed to an attorney if those facts can be discovered from a non-privileged source.
For companies, a communication with the company’s attorney can be privileged if made by or to a director, officer, or employee of the company and it seeks or provides legal assistance regarding an issue that is directly related to their responsibilities within the company. U.S. courts generally protect communications between the company’s attorney and any company employee when pertaining to information the attorney needs to provide legal advice to the company. In these kinds of communications, attorneys must identify themselves, describe the purpose of the communication, and advise the employee of the confidentiality of the communication.
Importantly, courts have applied privilege even to communications to/from former employees and independent contractors that are the “functional equivalents” of employees. Courts also recognize that the entity that controls a company also controls privilege. This can include the buyer of a company’s subsidiary or even bankruptcy trustees.
Privilege can be “waived” (i.e., destroyed) by breaching the confidentiality of the communication. Privilege can be waived intentionally or inadvertently, and once waived the privilege is destroyed forever and for all purposes.
Most courts have ruled that privilege is waived when otherwise confidential communications are shared with outside “agents” such as financial advisors, consultants, bankers, potential investors, marketers, etc. Once the privilege is waived, it is waived not only to that specific communication, but potentially to any communication involving the same general topic. In other words, disclosing a single privileged communication can destroy the privilege of many related communications. Conversely, if not waived or destroyed, attorney-client privilege survives indefinitely – even after the attorney-client relationship ends (e.g., voluntary termination, death, etc.).
Therefore, attorneys and their clients must protect privileged communications and resist the temptation to breach confidentiality with any agent outside the company. Note, however, that when these kinds of agents are directly involved in assisting the attorney with giving legal advice, the courts do tend to protect communications between the attorney and client’s agent.
Communications that are not privileged, or for which privilege has been waived, can be discovered during litigation, meaning that your company can be forced to provide to its opponent a copy of that communication and/or testimony regarding it.
In the patent context, protecting the attorney-client privilege from waiver can be vital when discussing issues regarding inventorship, ownership, patentability, infringement, preparing and prosecuting patent applications, and required disclosures to a patent office. In the trademark context, maintaining the attorney-client privilege for communications regarding use of a mark, prosecuting registration applications, required disclosures to a trademark examiner, and enforcement strategies can be of utmost importance. And it goes without saying that by their very nature, the confidentiality of trade secrets must be maintained, regardless of whether the attorney-client privilege also attaches to communications that include those trade secrets.
Preserving Attorney-Client Privilege
To protect the attorney-client privilege, your company should keep confidential (from any outside party) each communication to your attorney seeking legal advice, and each communication from your attorney that responds to that request for legal advice. Allow such a communication to be disclosed only to attorneys representing you or people within your organization who have a “need to know” the content of that communication. If there is a need to pass along facts included in that communication, those facts should be presented without reference to the communication or the attorney it involved. In other words, extract the facts, present them without any accompanying legal advice, and present them with only your name mentioned. This applies equally to verbal and written communications.
For example, rather than saying “My attorney says that…”, one can say, “I understand that…”.
Here are a few more tips for preserving privilege:
- Prominently mark relevant written communications with “Confidential and/or Privileged Communication”. Note that the labeling, by itself, doesn’t protect the communication, but it serves as a reminder to handle with care.
- Be smart about using your email’s Carbon Copy feature. Ask yourself if all the intended recipients have a genuine need to know the content of the message. Start a new email chain if necessary.
- Clearly document your attorney’s attendance in any applicable meeting’s notes/minutes.
- Be careful when sharing draft documents: privilege is waived once a draft document/agreement is shared with a counterparty.
- Educate employees and outside agents that interact with your company’s attorney and provide them guidelines for preserving privilege.
- Use password-protected online meetings and protocols for preventing unauthorized recordings.
To summarize, when handling a privileged communication, remember:
- a privileged communication should never be treated as an ordinary business document;
- no one outside the company should be given a copy, excerpt, or summary of a privileged communication in any form without your attorney’s explicit and specific written approval; and
- if there are other people outside the company who you believe need to receive a privileged communication or its substance, contact your company’s attorney and let the attorney determine the best manner to provide the information.
The law pertaining to attorney-client privilege varies by jurisdiction and isn’t always clear-cut. So if there’s ever any doubt, check with your company’s attorney before disclosing a potentially privileged communication (or any legal advice it contains) to a third party.
Finally, keep in mind that the courts of most foreign countries do not provide as much protection of attorney-client privilege as U.S. courts. If your company has operations overseas, don’t assume you’ll be afforded the same level of protection as in the U.S. Find out what precautions are necessary to protect attorney-client privilege in each country of operation.