IV. Key Considerations When Advising the Corporate Client on Protecting Privilege and Work Product
Given these recent developments, external and internal counsel should take certain steps when advising the corporate client on these protections.
First, counsel should brief corporate clients on the operation and importance of attorney-client and work product privilege as quickly as possible once the client is alerted to a government investigation. In addition to explaining to the corporate client how both the privilege and work-product work and why these protections exist, counsel should be sure to advise clients that neither the privilege or work product is sacrosanct. There are many scenarios, often not fathomable at the beginning of an investigation, that may lead to a later disclosure and the loss of privilege, such as disclosure to cooperate in a government investigation, to preserve the reputation of the company, a change in control at the client, or later conduct that waives the privilege.
Second, lawyers should work to develop a communication structure to ensure that privileges and work product are protected. One area that should be clearly resolved when determining the communication structure is the role of a client’s general counsel or other internal counsel. In-house counsel often wear two hats, leaving privilege at risk. In the corporate context, the privilege applies to employee communications with corporate counsel “concern[ing] matters within the scope of the employees’ corporate duties,” where the employees are “aware that they were being questioned in order that the corporation could obtain legal advice.” If corporate counsel also discusses business matters with employees, privilege claims may be weaker.
Further, as part of this communication structure, lawyers should work with clients to establish a centralized communication structure at the beginning of an investigation, with outside counsel included on all key communications to ensure the efficacy of the privileges.
Third, as is often the case in government investigations, lawyers must involve third parties such as auditors, experts, or public relations consultants. Whether information and documents shared with these third parties will retain privilege or be afforded work-product protections depends on the circumstances. The best practice in these situations is to execute a written common interest agreement between the third-party and outside counsel that clearly sets out, at a minimum, (1) the scope of the engagement; (2) the existence of a common interest; (3) the lawyer’s need for services in delivery of specified legal advice to client; (4) an agreement that the third-party will maintain confidentiality, including by safeguarding and marking records; and (5) an agreement that the third-party will direct substantive communications to the lawyer.
Similarly, lobbyists can be another tricky issue with respect to attorney-client privilege. Many lobbyists were dual hats, as both lobbyists and lawyers. Whether communications between a lawyer-lobbyist and a client are protected by the attorney-client privilege depends on a fact-specific inquiry of whether “legal advice” is being given.
Attorney-client privilege protects communications in which the lawyer-lobbyist is “acting as a lawyer.” The types of communications that likely would be protected include the legal analysis of legislation, such as the interpretation and application of legislation to factual scenarios; legal advice on pending legislation; and legal advice on how to proceed with lobbying efforts. Conversely, the attorney-client privilege does not protect communications with lawyer-lobbyists that do not provide legal advice. Examples of communications that likely would not be protected include summaries of legislative meetings; updates on legislative or lobbying activity; and updates on the progress of certain legislation.
As a result, when corporate clients work with lobbyists, it is important to define the scope of work, particularly in what capacity the lobbyist will be advising the client. A well-defined statement of work with a lawyer-lobbyist may faciliate protecting attorney-client communications in the instance that the lawyer-lobbyist is providing legal analysis on legislation. However, if the lobbyist is not providing legal counsel, then, the engagement letter should be clear on that as well.
Fourth, when the government, whether prosecutors, regulators, or Congress request information that requires the client to waive its protections, outside counsel should carefully consider government requests for information balanced against the risk of waiver. Usually, counsel can work with the government to negotiate waiver concerns; neither the United States Department of Justice nor the SEC require a privilege waiver in connection with cooperation credit. To the extent a client decides to share information, keep it as high-level as possible.
Fifth, counsel should advise clients to proceed cautiously with joint defense and common-interest agreements. Joint defense or common-interest agreements allow parties to mount a common defense in civil or criminal matters while maintaining privilege over communications. These can be with other investigated parties (e.g., other suspected co-conspirators), other co-investigators (e.g., Audit Committee or an outside audit firm), or client constituents (e.g., officers or employees). Lawyers should work with corporate clients to assess balancing the benefits of joint defense and common-interest agreements against potential loss of cooperation credit. If a client enters into any such agreement, counsel should reinforce for the client that privilege is vulnerable to attack, and anything shared as a result of the shared defense could end up in the government’s hands.
As these examples illustrate, privilege and work product considerations may conflict with a client’s ability to fully defend itself in the face of a government investigation. It is important to discuss privilege issues with clients regularly, assess potential concerns at each stage of a government investigation, and develop both strategic and tactical approaches to either maintaining these protections or strategically determining to waive them.