Federal Agency Policies that Erode the Attorney-Client Privilege

Overview

In recent years, many different federal agencies have adopted policies that erode or undermine fundamental attorney-client privilege and work product protections of individuals, companies, and other entities. For example, two agencies within the Department of Homeland Security (DHS)—U.S.  Customs and Border Protection (CBP), and Immigration and Customs Enforcement (ICE)—issued directives in 2009 claiming the authority to search lawyers’ (and all other travelers') laptop computers, cell phones, and other electronic devices at the border without any showing of reasonable suspicion or probable cause. Other federal agencies like the National Security Agency (NSA) have adopted “minimization” policies and practices that, while beneficial, may not adequately protect the privileged status of intercepted information.

In the corporate context, several federal agency policies—including the Justice Department’s 1999 "Holder Memorandum", 2003 "Thompson Memorandum", and 2006 "McNulty Memorandum"; U.S. Sentencing Commission’s 2004 amendments to Section 8C2.5 of the Federal Sentencing Guidelines; Securities and Exchange Commission's (SEC) 2001 "Seaboard Report"; Department of Housing and Urban Development’s (HUD) longstanding "guidance" to public housing authorities, and similar policies by other agencies—pressure companies and other organizations to waive their attorney-client privilege and work product protections as a condition for receiving full cooperation credit during investigations or other benefits from the agency. Other federal agency policies—including the Consumer Financial Protection Bureau’s (CFPB) 2012 "Confidential Treatment of Privileged Information Rule" and proposed 2016 “Disclosure of Records and Information Rule”, and similar policies adopted by other bank regulators such as the Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC)—claim the legal authority to require  entities to disclose privileged information during examinations and other regulatory processes and the authority to share such information with other regulatory agencies.

Status

In May 2017, the ABA sent a letter to DHS, CBP, and ICE officials that expressed concerns over the increasingly common practice of U.S. border agents conducting warrantless searches of lawyer electronic devices during border crossings. In response to the ABA’s letter and similar concerns raised during a meeting between the ABA and DHS officials in June 2017, CBP issued a revised Directive on Border Search of Electronic Devices on January 4, 2018 that includes several key ABA-requested reforms. While not all ABA recommendations were adopted—and more needs to be done—the new CBP border search directive significantly increases the protections for privileged and confidential client information contained on lawyer laptop computers, cell phones, and other electronic devices and is a clear improvement over the prior search policy. A brief summary of these useful changes in the new CBP policy is contained in the ABA Border Search Fact Sheet.

In addition to its efforts to protect the privilege at the U.S. border, the ABA has also urged other federal agencies to strengthen their existing privilege protection policies. For example, in response to press allegations in February 2012 that confidential communications between a U.S. law firm and its overseas client were intercepted by a foreign intelligence agency and shared with the NSA and other federal agencies, the ABA sent a letter to, and later met with, senior representatives of those agencies to ensure that the proper policies and procedures are in place to preserve fundamental attorney-client privilege protections for all clients. In its response letter, the NSA expressed its commitment to protect the attorney-client privilege and explained its various policies and procedures designed to minimize the acquisition, retention, and dissemination of privileged information.

The ABA also submitted a comment letter to the Legal Services Corporation (LSC) in June 2014 expressing concerns over its proposal to limit the scope of attorney-client privilege protections in the new Grant Assurances form that grantees would be required to follow starting in FY 2015 to just those protections covered by the “federal attorney-client privilege.” LSC later decided not to adopt the proposed language, and in its July 2, 2014 announcement explaining its decision, the agency specifically referenced the ABA’s written comments as a key factor.

The ABA worked closely for years with a broad coalition of business and legal groups—ranging from the U.S. Chamber of Commerce to the American Civil Liberties Union—and with many state and local bar associations in an effort to reverse the Justice Department and other federal agency privilege waiver policies referenced above. The ABA also sent letters to the Justice Department (May 2006), U.S. Sentencing Commission (March 2006), Commodity Futures Trading Commission (CFTC) (July 2006), HUD (December 2006 and February 2011), SEC (February 2007), General Services Administration/FAR Councils (June 2008), Treasury Department’s Office of Foreign Assets Control (OFAC) (November 2008), and other agencies urging them to reverse or modify their respective privilege waiver policies. In addition, the ABA and the coalition testified or submitted written statements at four Senate and House Judiciary Committee hearings in 2006 and 2007.

After considering the concerns raised by the ABA and its coalition allies, congressional leaders, former Justice Department officials, and others, the Sentencing Commission and the CFTC voted to reverse their privilege waiver policies in April 2006 and March 2007, respectively. In addition, the Justice Department replaced the Holder, Thompson, and McNulty Memoranda with the so-called "Filip Memorandum" and revised corporate charging guidelines in August 2008, which stated that while prosecutors may require companies to disclose all relevant facts during investigations in return for cooperation credit, they can no longer require or even ask companies to waive their attorney-client privilege or work product protections or to forego paying their employees’ legal fees. The Department's policy regarding disclosure of relevant facts and privilege waiver was reaffirmed and further clarified in the so-called "Yates Memorandum" in September 2015 and in the corresponding changes and updates to the Department's corporate charging guidelines for business organizations adopted in November 2015 and November 2017.

Similarly, the GSA/FAR Councils and Treasury Department’s OFAC issued final rules in November 2008 and November 2009, respectively, clarifying that parties will not be penalized for declining to produce privileged information. The SEC also issued a series of revised Enforcement Manuals, most recently on November 28, 2017, which instruct agency staff not to request waiver of the privilege without the prior approval of the Director or Deputy Director of the Bureau’s Enforcement Division. However, while the revised SEC manual is a significant improvement over the agency’s original privilege waiver policy outlined in the 2001 Seaboard Report, it still does not provide adequate protection for the attorney-client privilege or the work product doctrine.

In addition to its successful efforts to reform these federal agencies’ privilege waiver policies, the ABA submitted comments to the CFPB in April 2012 directly challenging the Bureau’s claims that it had the legal authority to force banks and non-bank supervised entities to provide privileged documents and information during examinations and other regulatory processes. However, because many financial institutions and other supervised entities choose to provide all requested documents, both privileged and nonprivileged, to federal banking regulators as part of the supervisory process, the ABA also worked closely with 13 state and local bar associations and the U.S. Chamber of Commerce to enact legislation during the 112th Congress designed to protect the privileged status of all such documents. H.R. 4014 and S. 2099 both provided that when banks or other supervised entities produce privileged information to the CFPB, the privilege would not waived as to any third parties. In February 2012, the ABA sent a letter to House leaders endorsing H.R. 4014, and a similar letter to Senate leaders endorsing S. 2099. Congress subsequently passed the legislation in December 2012, and President Obama signed it into law as P.L 112-215.

In October 2016, the ABA submitted additional comments to the CFPB opposing provisions in the Bureau’s proposed rule on Disclosure of Records and Information that would authorize it to share privileged information it receives from supervised and regulated entities with many different types of foreign, state, and other governmental agencies (including state bars). The ABA comment letter urged the CFPB to modify the rule to clarify that it cannot share such information with any other non-federal agency, as such sharing could threaten the privileged status of the information.

Several years ago, Congress considered, but declined to enact, comprehensive legislation known as the “Attorney-Client Privilege Protection Act” (ACPPA) (H.R. 3013 and S. 3217, 110th Congress; and H.R. 4326 and S.445, 111th Congress) that would have prohibited all federal agencies (except bank regulators) from pressuring companies and other organizations to waive their attorney-client privilege, work product, or employee legal protections during investigations. In November 2007, the House overwhelmingly approved H.R. 3013, but the Senate companion bill, S. 3217, and similar bills in the 111th Congress, H.R. 4326 and S.445, all failed to receive a vote. While the ABA views the current revised Justice Department policy and the other revised federal agency policies described above to be substantial improvements over the agencies’ previous waiver policies, the ABA continues to support comprehensive legislation like the ACPPA—or a similar Presidential executive order applying these reforms to all federal agencies—as the best means to permanently protect the privilege and the work product doctrine from government-coerced waiver.

Although the ABA is encouraged that the Justice Department, Sentencing Commission, CFTC, GSA/FAR Councils, and OFAC modified their respective waiver policies to better protect the privilege and work product, many other agencies—including the CFPB, Federal Reserve Board, FDIC, OCC, HUD, and others—still have policies in place that seek to compel entities to disclose privileged information. Meanwhile, while certain other federal agencies—such as DHS, CBP, NSA, SEC, and others—have adopted policies that provide significant protections for the privilege and work product, more needs to be done to adequately protect these important legal rights. Therefore, the ABA will continue to engage in a constructive dialogue with these agencies in an effort to further strengthen their existing policies to better protect the privilege, client confidentiality, and hence all parties’ fundamental rights to effective counsel.

Key Points

Federal agencies should adopt policies and procedures that recognize and fully protect the privilege and work product, and avoid measures that would erode or undermine these fundamental legal rights, because:

  • The attorney-client privilege is a bedrock legal principle of our free society that is important in both the civil and criminal contexts. The privilege enables both individual and organizational clients to communicate with their lawyers in confidence, which is essential to preserving all clients’ fundamental rights to effective counsel. The privilege also encourages clients to seek out and obtain guidance to conform their conduct to the law, facilitates self-investigation into past conduct to identify shortcomings and remedy problems, and enables lawyers to fulfill their ethical duties to their clients, all of which benefit society at large.
  • The work product doctrine, which protects materials prepared by or for an attorney in connection with litigation that is pending or reasonably anticipated, underpins our adversarial justice system and must be preserved. The work product doctrine allows attorneys to prepare for litigation or trial without fear that their work product, legal theories, and mental impressions will be revealed to adversaries, to the detriment of their clients. The protection accorded to work product is premised on the same basic policy rationale as that underlying the attorney-client privilege—that an attorney cannot provide full and adequate legal representation unless certain confidential client-related information is shielded from adversaries.
  • Federal agency policies that compel parties to disclose privileged or work product protected information violate longstanding common law principles and undermine both the confidential lawyer-client relationship and the fundamental right to counsel. The U.S. Supreme Court has long held that the privilege and work product apply to both individuals and companies. See Upjohn v. United States, 449 U.S. 383 (1981). The Supreme Court has also noted that effective legal representation requires that the privilege be clear and consistently applied, as “an uncertain privilege…is little better than no privilege at all.” Upjohn at 393. Therefore, federal agency policies that force parties to disclose privileged or confidential information—either routinely or in select cases—violate these fundamental legal protections established by the courts, undermine the confidential lawyer-client relationship and the right to counsel, and hinder the administration of justice.

ABA Policy

The ABA supports the preservation of the attorney-client privilege and work product doctrine and opposes governmental policies, practices, and procedures that erode these protections, including the practice by government officials of seeking to obtain a waiver of the attorney-client privilege or work product doctrine through the granting or denial of any benefit or advantage. The ABA also favors governmental policies, practices, and procedures that recognize the value of the attorney-client privilege and the work product doctrine. In addition, the ABA opposes governmental policies that have the effect of eroding the constitutional and other legal rights of employees by instructing or permitting law enforcement officials to pressure companies and other organizations to take certain punitive actions against the employees in return for cooperation credit. The ABA's views on the need for federal government agencies to preserve the privilege are summarized in its recent Privilege Waiver Fact Sheet, and the ABA's progress in helping secure new protections for lawyer electronic devices during border crossings are summarized in its recent Border Search Fact Sheet. In addition, the complete text of the ABA's privilege waiver and employee rights policies, letters to Congress and various federal agencies, and other related materials are available on the ABA Attorney-Client Privilege Materials webpage.

Updated September 2018

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