In Part V of this series I offer the last of my guiding observations as you consider consultations with legal counsel:
4. In some circumstances here in the U.S. you may be better off consulting a lawyer in outside, independent, private practice rather than in-house counsel — because of the way that U.S. courts respond to those two types of attorneys in their application of the attorney-client privilege.
Case study: In Bhandari v. Artesia General Hospital, et al., the State of New Mexico’s Court of Appeals applied to communications with in-house counsel a tougher standard than it applied outside, private, and independent attorneys.
In determining whether or not the attorney-client privilege applied to advice from an in-house lawyer that court asked if the attorney involved was giving pure legal advice versus business advice:
“Application of the [attorney-client] privilege can be difficult when the client is a corporation seeking legal advice regarding a business transaction and when the client’s attorney is in-house counsel who wears ‘two hats’ by performing a dual role of legal advisor and business advisor.”
A physician sued a hospital corporation for malicious and willful breach of her employment contract.
The general counsel of a hospital corporation had prepared “talking points” for the corporation’s CEO to use in speaking with that physician about her employment. The question before the court: Were those talking points protected from discovery by that physician (her legal counsel) under the hospital corporation’s attorney-client privilege?
The attorney-client privilege did not apply to in-house counsel’s advice on the facts of this case.
” … An in-house attorney is frequently presumed to be providing business advice, while outside counsel is presumed to provide legal advice ….
“Besides the status of the attorney, the court [should consider] the nature of the advice given, the context, content, and purpose of the communication when determining whether the communication was legal advice.
“… If the communication involves both business and legal issues, the court must determine the ‘primary or predominate purpose‘ of the communication”.
In the Bhandari case the court ruled that the talking points memo — prepared by the in-house attorney — was mostly about business strategy and not much about legal analysis. Therefore the attorney-client privilege did not apply.
This legal advice-versus-business strategy question comes up frequently when courts decide whether or not to apply the attorney-client privilege to communications with in-house counsel.
But it’s rare to see a case that raises this issue where outside, independent, private lawyers — and not in-house counsel –provided the relevant advice.
In fact, I’ve never seen it.
As I’ve been saying, legal systems have a hearty and (un)healthy appetite for proprietary information about your business.
What U.S. courts view as the mixed role of in-house counsel — in distinction from outside, independent, private lawyers — complicates your business’ efforts to secure the attorney-client privilege when in-house counsel are involved.
So … as I said in Part I:
You need skilled legal advice on how a judge might exercise that discretion in your situation. So protecting confidential information is no place for do-it-yourself lawyering.
Please bear in mind my DISCLAIMER for this publication. Nothing in my blog — including this three-part series — is intended as legal advice or to be the start of an attorney-client relationship.