March 31, 2016 Top Story

Attorney-Client Privilege Trumps Advice-of-Counsel Defense

Waiver of privilege is prerequisite to employee's assertion of advice-of-counsel defense

Theresa A. Vitello

Employees relying upon the advice of their corporate counsel may not assert the advice-of-counsel defense in civil suits unless their employer agrees to waive the attorney-client privilege. In one of the few cases to address this issue, the court in United States v. Wells Fargo Bank, N.A. held that the attorney-client privilege is absolute and will not yield to the advice-of-counsel defense absent a waiver. The court also cast doubt on the validity of cases holding that the advice-of-counsel defense can trump the attorney-client privilege in the criminal context, highlighting the beginning of a jurisdictional split over the issue.

Clash Between Attorney-Client Privilege and Advice-of-Counsel Defense

The U.S. government sued Wells Fargo in the U.S. District Court for the Southern District of New York for alleged violations of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act. The government later added as a defendant Wells Fargo's vice president of quality control, citing his critical role in the bank’s alleged violations. The vice president asserted that he had relied upon the advice of Wells Fargo attorneys concerning statutory compliance. In support of his defense, he sought to reveal his communications with Wells Fargo's attorneys. It was undisputed that the vice president lacked authority to waive the privilege, which belonged to Wells Fargo.

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