PRIVILEGES AND THICAL CONSIDERATIONS...Attorney-Client Privilege Review • Limits of...

Copyright © 2014 Bradley & Riley PC - All rights reserved.

March 27, 2015ISBA Government Practice Seminar

Timothy J. Hill

PRIVILEGES AND ETHICALCONSIDERATIONS

BRADLEY & RILEY PCATTORNEYS AND COUNSELORS

www.bradleyriley.com

Privileges and Ethical Considerations

1. Attorney-Client Privilege Recent Issues2. Confidences When Claims by Counsel 3. When Elevator Talk = Conflict / DQ4. Litigating in the Court of Public Opinion5. Iowa Ethics Opinions (Most Recent)



Attorney-Client Privilege Review

• Limits of attorney-client and work product doctrines in internal investigations– Attorney-client privilege:

• Iowa Code 622.10• “Control Group” test – extends to those in control

– Rejected by Upjohn v. US (S. Ct. 1981)

• Iowa Supreme Court, in Keefe v. Bernard et al., 774 N.W.2d 663 (Iowa 2009) adopted subject matter test



Attorney-Client Privilege Review

• “Subject Matter” test:– If employee discusses her own actions relating to potential

liability of corp. (with in-house counsel), then those protected

– Employee to in-house re: legal advice on behalf of corp. = protected

– If employee is interviewed as “witness” to actions of others, then communication not protected A-C.

– Facts and circumstances analysis – need to be clear.



Work Product Doctrine Review

– Work-product privilege• Iowa R. Civ. P. 1.503(3)• Protects materials “prepared in anticipation of

litigation or for trial”• By or for party or party’s representative

– Attorney, consultant, insurer, agent



Internal Fraud Investigation

• Issue: motion to compel documents re: internal “code of business conduct” (COBC) investigation– Investigation conducted by non-lawyers, reported to

corp.’s lawyers after investigation concluded

• Question: protected by A-C, WP?



Protecting A-C and WP in Internal Investigation

• Motion to compel granted, internal investigation documents not protected A-C, WP.– United State ex rel. Barko v. Halliburton Co., 2014 WL

1016784 (D.D.C. 3/6/14)• Investigation conducted by corp. non-lawyers, per

COBC, before (and without) involvement of legal dept.

• Cf., Upjohn (protected – investigation done aft. consult with legal dept. and outside counsel)




• Also, no WP protection– Use of non-lawyers made it hard to argue documents were

prepared in anticipation of litigation

– Investigation conducted 2004-06– Complaint not filed until 2009



But DC Circuit Reverses

• 756 F.3d 754 (D.C. 6/27/14) (rehearing en banc denied 9/2/14)– KRB’s privilege assertion indistinguishable from Upjohn

(S. Ct. 1981)(1) Fact that corp.’s consultation of only in-house counsel

(not outside, as in Upjohn) of no moment – in-house does not dilute privilege

(2) non-lawyers conducting interviews at direction of counsel does not dilute privilege



DC Circuit Reverses, Upholds Privilege

(3) Upjohn does not require “magic words” when informing employees they are assisting counsel in legal investigation

(4) Re: COBC investigation (not seeking legal advice) – DC Cir.: if obtaining legal advice “one of the significant purposes of communication”, then privileges apply-- even if other purposes were regulation compliance (requiring investigation)



On Remand from DC Circuit:Shut Up Already!

• 2014 WL 6657103 (D.D.C. Nov. 20, 2014)– KRB’s repeated assertions that internal investigation

yielded “no evidence of fraud” waived privilege– R. 30(b)(6) deposition of KRB rep. – instructed not to

answer about investigation– But on re-direct, KRB counsel elicited testimony that if

fraud had been found, in normal course this would have triggered reporting (repeatedly said investigation yielded nothing)

– Court: this placed reports at issue – “fairness” requires production



Barko In Practice

• Chevron Midstream Pipelines v. Settoon Towing, 2015 WL 65357 (E.D. La. Jan. 5, 2015):– Chevron in-house attorneys initiated “legally chartered”

root cause investigation– Court rejects work product protection:

• Chevron engineer testified Chevron ordinarily conducts root cause investigations, to prevent similar accident in future

• To protect this, Company must demonstrate its investigation was different from ordinary – demonstrate prepared in anticipation to litigation



Barko In Practice

• Renton v. Kone, Inc., 2014 WL 5472111 (Conn. S. Ct. Sept. 26, 2014)– General Counsel directs Compliance Director to conduct

internal investigation, re: improper HR practices– Employees file “bill of discovery”, seeking production of

investigation report– Court: citing KRB (DC Cir. 2014), ruled in favor of

internal investigations led by Company attorneys



Barko In Practice

• In re General Motors Ignition Switch, 2015 WL 221057 (S.D.N.Y. Jan. 15, 2015):– GM outside counsel conduct 350 interviews of 200 current

and former employees– Court: both A-C and WP apply to protect from disclosing:

• Interviews conducted in light of GM’s request for legal advice;• Outside counsel started each interview stating purpose of

interview was to assist with providing GM with legal advice; and• Interview materials shared only with GM, its outside counsel




• Best Practices:– COBC investigations, other internal investigations – use

in-house and outside counsel as early as possible– Use Upjohn letters – formally document initiation of

internal investigation – legal advice for the corp.– Give Upjohn warning to employees interviewed –

investigation done per corp. legal, for corp.– Mark documents A-C, WP– Involve outside legal where feasible – in-house sometimes

perform tasks in business capacity




• Issue: same facts (and follow best practices above) –but instead of non-lawyer employees, corp. uses outside consultants– Company shares confidential information with outside

consultants– Such as public relations firm, re: Penn State scandal

• Question: A-C, WP waiver?




• Answer: it depends– In re Bristol-Myers Squibb Securities Litigation (D.N.J.

2003) – communications with PR, marketing firms were not privileged, because not hired for litigation purposes

– But see In re Bieter (8th Cir. 1994) – “inappropriate to distinguish between those on client’s payroll and those who are instead, and for whatever reason, employed as independent contractors.” – “Functional Equivalent” test




• Best Practices:– When using consultants, use confidentiality and retention

agreements– Limit disclosure of communications to between consultant and

corporate counsel– Define which employees of consulting firm have access to

confidential info– Consultant must agree decision to waive/disclose rests with

company– The more exclusive relationship the consultant has, the more

authority she has to make key corp. decisions -- the better– Self-critical analysis privilege apply?



Inadvertent Waiver Responding to Public Records Request

• Ardon v. City of Los Angeles, 181 Cal. Rptr. 3d 324 (Cal. App. 2014)– Public records request to City, per statute, re: potentially

contaminated site (the subject of lawsuit; City not a party)• City produced privileged documents

– PL counsel notified City, refused to return privileged docs– Court: unlike litigation discovery, public entity waives

privilege if it discloses pursuant to public records request• Doesn’t matter if discloser was “low level employee” who did not

have authorization from City Counsel or City Attorney



Corp. Confidences When Claims by In-house Counsel

• Facts: Former in-house counsel, acting as relator in qui tam action under Fed. False Claims Act– Gone from corp. for 5+ years before suit– Discloses confidential corp. info – his corp. provided

below-cost services to health care providers to induce referrals of gov’t-paid services

• Question: duty of confidentiality v. encouraging whistleblowing?



Corp. Confidences When Claims by In-house Counsel

• Held: violation of Rule 1.9(c) of Rules of Prof. Conduct by using confidential client information against former company– Fair Laboratory Practices v. Quest Diagnostics Incorp.,

734 F.3d 154 (2d Cir. 2013)– Court: False Claim Act does not authorize person to

violate state laws in order to assert claim– Take-away: if attorney had issue, should have first gone to

board to stop fraud; if board does not act, then o.k. to disclose.



Claims by In-House Lawyers

• Issue: when can in-house attorney, as Pl. in wrongful discharge action, disclose client (employer) confidences?

• Iowa Rule 1.6(b)(5) – lawyer shall not reveal client confidences, except “to establish a claim or defense” for lawyer in lawyer-client dispute– So here, in-house can offensively use client confidences to

establish claim against client




• But see D.C. Rules and Ethics Committee:– Rule 1.6(e)(3): D.C. Bar members may only reveal client

confidences and secrets as a defense to an employer claim, not offensively to establish a claim

– Ethics Committee: in-house lawyer can’t use when filing claim, but can if employer puts confidences at issue, such as with affirmative defense or counterclaim




• D.C. Ethics Cmt.: lawyer knowing confidences might be put at issue does not preclude asserting claim– Assoc. Corp. Counsel Legal Strategist: “difficult to

navigate”, as chief desire is to protect client confidence

• Strategy for Employer:– Check ethics rules in this situation– Determine if you can protect confidential info, by not

putting at issue



When Elevator Talk = Conflict/DQ

• Issue: when does consulting attorney’s informal chat with another lawyer, not associated to matter, become an ethical violation and/or DQ event?

• In Re Liebnow v. Boston Enterprises, 2013 WL 453912 (Colo. 2013): CO S. Ct. affirms lower court’s order disqualifying Pl.’s pro hac vice motion, where Def. counsel previously consulted out-of-state counsel at same firm, on same case




• Facts -- Pl. child, ill from E. coli in salad, sues Def.– CO Def. counsel called Seattle lawyer in small firm

specializing in food-borne illnesses– Had one call, several emails– Def. counsel did not ask consulted lawyer to keep

confidential– Def. counsel had no bad intent – not done to DQ– Discussed case theories, trial expert, adding another Def.

– Months later, Pl. counsel tries to add another from same Seattle firm to case (potential conflict imputed)




• CO S. Ct. Ruling:– Abuse of discretion standard of review (had lower court

allowed, unclear if there would have been reversal)– Consulted lawyer subject to DQ (unclear if consulting

attorney subject to ethics violation)– Rule 1.7(a)(2) – conflict of interest = risk that

representation of one client (Pl.) here limited by lawyer’s responsibility to . . . “a third person” (Def., from the consultation)




• Dissent: majority deprived Pl. child of “fundamental tenet” of choice of counsel– And, elevator talk, “vital to profession,” won’t happen

• Best Practices:– Use hypothetical– Do not disclose privileged, confidential information– Consulted attorney should ask if confidential– Ask for waiver of confidentiality and right to DQ (?)



Litigating in Court of Public Opinion

• Constitution protects right of lawyer to speak in defense of clients, and right of public to learn about case

• But, Rule of Prof. Conduct 3.6 sets limits:– Lawyer in matter “shall not make extrajudicial statement”

that lawyer knows/should know will be publicly distributed and is likely to prejudice the proceeding




• Criminal trials most sensitive• Civil jury trials also sensitive• Non-jury, arbitration proceedings less so

• Standard may govern distribution of court pleadings, transcripts without comment (PA Op. 96-45)– Especially if information is likely inadmissible




• Timing of disclosure a factor – eve of trial disclosure more likely to prejudice proceeding

• For sanctions, proof of actual prejudice not required (just “likelihood”)

• Applies only to lawyers “participating or has participated” in proceeding – APPLY TO GC?– Does not apply to clients (but GC subject to R. Prof. Conduct)– Rule 3.6(d) – applies to lawyers associated in firm handling

matter




• Protected Conduct:– Does not apply to in-court statements– Except where confidential (settlement, court order), can

state claim, defense involved, ID people

– Information contained in public record (court-filings)– Scheduling or result of any step of litigation

• My practice, without comment• But see – protective orders, must be admissible




• Rule 8.2 Limits Criticism of Judges– Lawyer shall not make statement she knows is false or

with reckless disregard to the truth/falsity concerning qualifications, integrity of judge

– Applies to public and private (letter to opposing counsel) comments

– Applies even where lawyer acting as private citizen– Does not apply to true statements or statements of opinion

(narrowly construed – to judicial elections)



Iowa Ethics Opinion 14-02(October 2014)

• Issue: propriety of calling opposing counsel’s conduct unethical?– Rule 32:8.3 mandates reporting unethical conduct– Rule 32.8.4(c): professional misconduct to engage in

misrepresentation– ABA Formal Op. 94-383: “despite the absence (in R. Prof.

Conduct) of an express prohibition on the subject[, s]uch a threat may not be used as a bargaining point . . .”



Iowa Ethics Opinion 14-02(October 2014)

• If warning issued as threat or to coerce, it violates Iowa S. Ct. Rule 33.1(1): “lawyers conduct should be characterized . . . by personal courtesy and professional integrity”.

• Violates Iowa S. Ct. Rule 33.1(3): uncivil conduct delays and denies justice.

• Bottom-line: wrongfully accusing fellow lawyer of unethical conduct = “antithesis of professionalism”



Iowa Ethics Opinion 15-01(January 2015)

• Issue: lawyer communicating with client via email– Warn client about risk of sending, receiving email using

device which a 3d party may access (i.e., employer access to employee email accounts);

– Lawyer responsibility to first consider “whether, given client’s situation, there is a significant risk that third parties” will have access;

– If so, then lawyer must use “reasonable care to protect” confidentiality of communications



Iowa Ethics Opinion 15-02(January 2015)

• Issue: interception of confidential or attorney-client communication

• Starting point – assume lawyer was not involved in interception of communication (as this would violate Rule 32:1.2(d) (lawyer shall not counsel client to engage in criminal, fraudulent activity)

• Rule 32:4.4(b): lawyer who receives document relating to representation of another lawyer’s client and knows document inadvertently sent “shall promptly notify the sender.”



Iowa Ethics Opinion 15-02

• Reliance on Iowa R. Civ. P. 1.503(5)(d) – “additional requirement” – after being notified of inadvertent production, recipient must sequester or destroy the info, and can’t disclose it until issue is resolved.– Recipient may present info to court under seal to resolve.

• Conclusion: Stop, Notify and Returninadvertently produced documents




• Interception under color of right (e.g., employer intercepts, claims employee violated rules re: non-business use of work computers)– ISBA Ethics and Guidelines Cmt. rejects ABA Opinions

contending no need to notify and return– ISBA: “Stop, Notify and Return” apply here, too – so all

parties are on notice and can litigate claim of right




• Wrongful Interception (e.g., client intentionally intercepts confidential communication between other party, her attorney)?– “Crime-fraud exception” to obligation of client

confidentiality, Rule 32:1.6(b)(2) – lawyer may reveal info where lawyer “reasonably believes necessary” to prevent client from committing crime/fraud that is reasonably certain to result in substantial injury to financial interests or property of another




• Wrongful Interception:– Advise client of counsel’s duty to stop, notify and return– If client objects, counsel should vet “crime-fraud

exception” to client confidentiality under Rules of Prof. Conduct

• If this mandates disclosure, return the documents to lawyer involved or file same under seal with court “without explanation” and withdraw

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PO Box 2804Cedar Rapids, Iowa 52406

Ph: 319.363.0101Fax: 319.363.9824

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Ph: 319.466.1511 Fax: 319.358.5560

THANK YOU



Follow up questions can be directed to Timothy J. Hill [email protected]

PRIVILEGES AND THICAL CONSIDERATIONS...Attorney-Client Privilege Review • Limits of...

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