When the relationship between inside and outside counsel sours, courts have struggled to define which law-firm communications are discoverable by clients. Typically, attorney-client privilege is used to protect corporate clients. But increasingly, courts are applying the privilege to protect the internal communications of law firms in malpractice actions. Most recently, the Oregon Supreme Court in Crimson Trace Corp. v. Davis Wright Tremaine LLP, 355 Or. 476, (2014), applied attorney-client privilege to prevent disclosure of emails between law-firm attorneys and the firm’s in-house counsel.
Crimson Trace is a typical attorney-malpractice case dealing with client access to internal law-firm communications. The client, Crimson Trace,retained Davis Wright’s services to prosecute a patent and then later sued a competitor for infringing that patent. The competitor counterclaimed, alleging that the original patent application produced by Davis Wright was defective. Fearing that this counterclaim might create a conflict of interest, the Davis Wright lawyers consulted an internal firm committee that functioned as in-house counsel. Later, the relationship between Crimson Trace and Davis Wright deteriorated, culminating in a malpractice lawsuit.
During discovery in the malpractice action, Crimson Trace requested production of all communications between Davis Wright attorneys relating to possible conflicts of interest between the firm and Crimson Trace. Davis Wright refused to produce the documents, asserting that attorney-client privilege attached to communications with the firm’s in-house counsel. The trial court disagreed with Davis Wright and compelled disclosure. Although the documents were subject to attorney-client privilege, the court held that a fiduciary exception to privilege applied. The trial court emphasized that the duties of “candor, disclosure, and loyalty” prevented the firm from using attorney-client privilege to withhold documents from clients. 355 Or. at 483.