Judge Facciola Rules that Privilege Protects Lawyer–Consultant Communications in Limited Circumstances

In an opinion by noted e-discovery expert Magistrate Judge Facciola, the USDC for the District of Columbia held that, under the Kovel doctrine, the attorney–client privilege extends to communications between a lawyer and a consultant when the consultant is “providing assistance in developing litigation and legal strategies.”  But the court refused to preclude the consultant’s entire testimony, requiring instead that the lawyer assert privilege objections on a question-by-question basis.  Goldstein v. FDIC, 494 B.R. 82 (D.D.C. 2013) (Facciola, M.J.).

Magistrate Judge Facciola

Magistrate Judge Facciola

In Goldstein, the trustee of a bank placed in receivership retained Protiviti, Inc. to provide financial and tax assistance to the Trustee’s management of the bank’s estate.  The Trustee sued later the FDIC asserting that it improperly rejected the trustee’s claim to certain loan proceeds,, and the FDIC issued a subpoena seeking testimony from Protiviti.  The Trustee, citing the Kovel doctrine, moved to quash the entire deposition on the grounds that Protiviti’s participation was necessary for the effective consultation between client and attorney.  Judge Facciola, citing D.C. Circuit precedent, ruled—

if a consultant is so intertwined with the attorney in a case, such that he is providing assistance in developing litigation and legal strategies in a manner similar to multiple attorneys working on a case in a law firm, the attorney–client privilege extends to those consultants.

Here, the Trustee submitted a fairly straightforward declaration stating that he retained Protiviti to “assess potential litigation against the FDIC-R and other parties and to provide assistance and advice to counsel and the estate with respect to certain potential claims.”  You may access the Declaration here.  Judge Facciola found these statements sufficient to cause the Trustee concern about Protiviti disclosing privileged communications at a deposition.

But Judge Facciola also noted that the attorney–client privilege does not apply to every communication; rather, the fundamental question is whether the communication was made for the purpose of securing either an opinion on law, legal services, or assistance in some legal proceeding.  And because of this limitation, the judge refused to quash the entire deposition, but ruled instead that Protiviti witnesses should answer questions at a deposition and Trustee’s counsel should object “to certain questions on a case by case basis, as questions implicating privileged conversations arise.”