Keeping The Attorney-Client Privilege In-House: Guidelines for Corporate Counsel

Part Two of Two

Editor's Note: Part One of this article, in last month's issue, discussed the attorney-client privilege in general and how the Rules of Evidence and Civil Procedure impact the privilege.

Attorney-Client Privilege and In-House Counsel

Largely because in-house counsel have varying roles within their companies, the law regarding whether communications by in-house counsel are protected by the attorney-client privilege is still unsettled. (Stevens, supra note 2, at 292 (citations omitted). Adversaries are more likely to object to the use of privilege when brought by in-house rather than outside counsel.

Federal Case Law

In Upjohn Co. v. United States, (449 U.S. 383 (1981), the Supreme Court held that attorney-client privilege is available to in-house counsel depending on the subject matter of the communication rather than the status of the employee asking for advice. (The previous test was labeled the “control group test”, and held that only those conversations between in-house and a corporation's controlling executives and managers were eligible for protection. This test is still used in some jurisdictions). In Upjohn, the Supreme Court set the following guidelines for in-house counsel to preserve the attorney-client privilege:

1. Communication needs to be with a client or prospective client;
2. Communication must be with a lawyer who is a member of a bar of a court, or the lawyer's subordinate;
3. The lawyer must be acting in a capacity as a lawyer;
4. Communication must be for the purpose of obtaining legal advice, not business advice;
5. Communication cannot be made in the presence of strangers;
6. Communication cannot be for the purpose of committing a crime or tort;
7. The privilege must have been claimed; and
8. The privilege must not have been waived.

Focus is placed on the lawyer acting in the capacity of a lawyer and that communication is made for the purpose of obtaining legal advice.

The Third Circuit, among other circuits, has made it clear that attorney-client privilege applies in a corporate setting. (Koen Book Distributors v. Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C., 212 F.R.D. 283, 284 (E.D. Pa. 2002) (citing Upjohn, 449 U.S. at 389-90)). The Third Circuit Court of Appeals provided the following elements for the attorney-client privilege:

1. The asserted holder of the privilege is or sought to become a client;