Corporate Attorney-Client Privilege “Cautiously and Narrowly” Applied to In-House Counsel

Another judicial decision reminds us that courts impose a heightened evidentiary burden on in-house counsel seeking to protect communications (particularly emails) under the corporate attorney-client privilege.

In Adair v. EQT Production Co., 285 F.R.D. 376 (W.D. Va. 2012), the court, reviewing a privilege log and an in-house lawyer’s affidavit, ruled that the privilege covered none of the lawyer’s emails at issue.¬† And in issuing the ruling, the court provided helpful lessons and reminders for in-house lawyers. You may read the opinion here.

In-House Counsel’s Emails at Issue

The Adair¬†case involves claims for royalties from gas fields operated by EQT¬†Production in Southwest Virginia. The plaintiffs moved to compelBusiness meeting with work on contract the production of several emails either sent or received by¬†an EQT¬†in-house lawyer.¬† During the time the emails were created, this in-house lawyer served in various legal capacities, including Vice-President and General Counsel, Vice-President of Legislative and Regulatory Affairs, Managing Director of External Affairs, and Deputy General Counsel.¬† And in each of these roles, the lawyer reported directly to EQT’s General Counsel.

The in-house counsel asserted that the privilege covered all these emails and produced a privilege log and supporting affidavit.¬† But the privilege log did not describe the emails as “seeking legal advice” and his affidavit did not specifically describe the emails were for providing legal advice.¬† The in-house lawyer merely stated that he communicated, in his legal capacity, with company employees when responding to a media inquiry, commenting on pending state legislation, and dealing with royalty issues before the state Oil and Gas Board.

The Ruling: Lessons and Reminders

The court decided to review¬†five emails in camera because the privilege log sufficiently described the emails as pertaining to legal advice. The court held that the privilege did not protect all other emails and ordered their production. The court’s ruling contains several lessons and reminders for in-house lawyers seeking to establish and maintain the corporate attorney-client privilege.

Burden of Proof for In-House Lawyers

The court provided a succinct yet alarming reminder of the heavy evidentiary burden for proving the attorney-client privilege applies to in-house counsel’s communications.¬† It bluntly stated that “the determination of whether the attorney-client privilege applies . . . becomes more difficult when the sender or recipient . . . is in-house counsel for a corporate entity.”

The court echoed other courts’ concern that in-house lawyers use the privilege to create a “large zone of secrecy” for corporate communications that are otherwise relevant to a particular dispute.¬† Because of this concern, the court “cautiously and narrowly” applied the corporate attorney-client privilege to communications involving in-house counsel.

Privilege Log

The Adair ruling emphasizes the growing importance of adequate descriptions of privileged documents in the party’s privilege log.¬† The court noted that the party seeking privileged information has little information to challenge a privilege claim and must rely on the opposing party’s privilege log descriptions.¬† The court held that the party withholding documents under a privilege claim “must specifically and factually support its claim of privilege by way of evidence, not just argument.”

And this burden begins with the privilege log.¬† The log’s privilege descriptions must meet the party’s burden of showing that the privilege actually protects the communications.¬† This requirement means, at the very least, that the privilege log identify each communication as created for the purpose of the in-house counsel rendering legal advice or as otherwise of a predominantly legal character.

In Adair, the court found that the majority of entries on the privilege log failed to indicate that the emails were for legal advice.  This failure in large part sunk the privilege claims without the need for an in camera review.

Conflict of Privilege Laws

Many lawyers and some courts neglect consideration of the conflict of privilege laws issue when considering whether an evidentiary privilege applies.¬† In Adair, the case at the time of the ruling involved only state-law claims. And although the case was pending in federal court, the court applied the law of the forum state–Virginia–rather than federal law.

POP Analysis

The Adair ruling represents yet another example of courts imposing a heightened scrutiny to in-house lawyers’ privilege claims.¬† Other recent decisions from courts in Wisconsin and Idaho¬†further illustrate the continued scrutiny of the corporate attorney-client privilege.

But the Adair court’s emphasis on how in-house counsel must satisfy their heightened burden is instructive.¬† Few courts highlight the importance of a company providing a specific description of the privileged communication in the privilege log. But Adair makes clear that the company must initially meet its burden in the privilege log by stating that the authors created the communication for the purpose of the in-house lawyer rendering legal advice.

The Adair court also criticized the in-house attorney’s affidavit, which you may read here, filed in opposition to the motion to compel.¬† It emphasized that courts require in-house lawyers to “specifically show,” via affidavit, that the communication was for legal-advice purposes. The court held that the affidavit was too general and contained mere conclusory statements that the in-house lawyer “considered the communications privileged” or that, “in his view, he was acting in a legal capacity.”¬† Adair shows that¬†in-house lawyers’ supporting¬†affidavits must be specific and tailored for each communication.

Finally, while the court correctly applied Virginia state privilege law (as opposed to federal privilege law) in this diversity case, it did not indicate whether that included Virginia’s conflict-of-laws rules.¬† Courts and lawyers should remember that application of state law in diversity actions includes that state’s conflict-of-laws rules. So, it could be that, based on the location and substance of the privileged communications, Virginia’s conflict-of-privilege-laws rules would direct the federal court to apply a different state’s privilege law.

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