Businesses, especially small businesses, have limited resources within the business to address risks and challenges, and the prospect of involving someone outside the business causes privacy concerns. Attorney-client privilege is a unique aspect of the attorney relationship that empowers a business to seek counsel while maintaining confidentiality.
The privilege protects both the communication from the business to the attorney and the attorney’s communications to the business. The purpose of the attorney-client privilege is to encourage and promote open and honest communication with legal counsel.
Understanding how the attorney-client privilege works is important for businesses of all types and sizes. Here’s three key things every business should know about attorney-client privilege.
1. Communications related to legal issues are protected.
The privilege applies where legal counsel is requested by the business and the advice provided by the attorney relates to the legal issue. For example, if a business seeks legal advice related to whether a term in a contract is enforceable under the laws of Arkansas, that communication along with the advice rendered is protected by the privilege.
Sometimes attorneys are called upon for other types of advice that are more of a business nature, such as whether the provisions of a contract meet certain business objectives. While an attorney who is familiar with the business’ objectives can provide valuable input on strategy and business decisions, it is important to understand that these types of communications are most likely not protected by the attorney-client privilege. Key to this distinction is whether the advice sought requires legal expertise.
Businesses, as well as their attorneys, should be mindful of this distinction between legal and non-legal advice, and carefully consider how they frame their communications.
Where the business expects the communication to be protected by the attorney-client privilege, the communication should reflect that the business requested legal counsel, and the advice provided by the attorney should be limited to the legal issue. The attorney can still provide the business advice, but it should be handled through a separate communication without the expectation of privilege.
2. Communications are privileged — not the underlying facts.
When a business consults an attorney for legal advice and provides him or her documents to review, the nature and substance of the communication with the attorney are protected by the privilege. The business is protected in the sense that it cannot be compelled to answer questions about what documents were provided to the attorney or what advice was rendered.
But this does not mean that a business can shield records from disclosure by simply providing them to an attorney for review. The business records are not protected from disclosure by the privilege —only the communications with the attorney about the records is entitled to protection.
3. Disclosure to third parties waives the privilege.
The attorney-client privilege does not protect communications disclosed to someone outside the attorney-client relationship.
For example, if a business has its accountant or another type of consultant sit in on meetings with the attorney, most likely those communications will not be protected from disclosure.
Likewise, a business must pay attention to which employees participate in the communications. As a general rule, for attorney-client privilege to apply, only employees involved with the subject matter of the legal issue being discussed may participate in the communications. This limitation means that businesses and their attorneys must pay careful attention to who (within and outside the business) is being included on communications.
In instances where separate expertise (such as tax, engineering, technology, etc.) is required in connection with the legal advice requested, it is often preferred for the attorney to hire the consultant instead of the business. So long as the attorney has been requested to provide, and is providing, legal counsel, the work of consultants on behalf of the attorney is protected by the privilege.
The attorney-client privilege is a valuable right for businesses — especially small businesses where internal resources are limited. When understood and handled correctly, the privilege allows a business to address its challenges and learn its rights without fear that the information will be subject to unwanted disclosure.
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Rodney Moore, an attorney of counsel with the Wright Lindsey & Jennings law firm in Little Rock, represents clients in the health care, banking, technology and insurance industries. Email him at rpmoore@wlj.com. |