August 28, 2019 Feature

The Privilege Applied In-Firm

Some courts have struggled in applying the attorney-client privilege to communications within a law firm about disputes with clients.

Steve Merouse

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It can happen to even the most careful, diligent lawyers. Despite your best efforts, a mistake has been made: a deadline missed, a winning argument ignored, a contract provision erroneously drafted. Maybe you discover the error before your client does, or maybe you first learn of the error when your client threatens you with a malpractice claim. No matter how you learn of the error, you want and need legal advice when you get into trouble, just like your clients.

Lawyers are familiar with the attorney-client privilege from law school, the bar exam, and day-to-day practice. We expect that confidential communications between a lawyer and client regarding legal advice are normally protected from discovery. When a lawyer practicing at a firm has made a mistake, or just needs some guidance on ethics, often the most logical person to turn to in such a situation is another lawyer in that firm—especially where that colleague is the firm’s general counsel or loss prevention partner. And the default assumption would be that those conversations would be protected by the attorney-client privilege. But things can get complicated when the “client” is a lawyer or the firm itself, the lawyer providing legal advice is another lawyer in the same firm, and the legal advice relates to a current client representation. While, in the United States, the attorney-client privilege protects communications between other organizational entities (like corporations) and their in-house counsel, some courts have struggled in applying the attorney-client privilege to communications within a law firm regarding disputes with a then-current client. We refer to this as the “in-firm privilege.” While a series of recent decisions have found that the in-firm privilege protects communications regarding a dispute between the firm and a current client, some older cases have held otherwise. Generally, those older cases took the view that even if the in-firm communication otherwise met the criteria for the attorney-client privilege, the underlying client at the heart of the matter was nonetheless entitled to that information due to the lawyer’s fiduciary duties of candor and loyalty to that client.

Whether the attorney-client privilege applies to in-firm communications regarding a firm’s dispute with, or ethical concern regarding, a then-current firm client depends on a series of considerations, discussed below.

Illustration by Jim Starr.

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