Many times your best testifying subject-matter expert is right under your nose—your corporate client’s own employee. If properly handled, the attorney–client privilege protects from discovery in-house and outside counsel’s communications with the client’s employees. But if you turn an employee into a testifying expert, does the privilege evaporate?
Federal Rule of Civil Procedure 26(b)(4)(C), at least since 2010 and subject to minor exceptions, expressly protects lawyer–expert communications, whether an employee or third-party. But many state civil-procedure rules do not follow the federal model, and the issue remains subject to a mixture of evidence rules, civil-procedure rules, and common-law interpretations.
Texas has now spoken. The Texas Supreme Court held that the attorney–client privilege covers a lawyer’s communications with an employee–expert, including the lawyer’s revisions to the expert’s affidavit. In re City of Dickinson, 2019 WL 638555 (Tex. Feb. 15, 2019). You may read the opinion here.
Let’s discuss the Court’s reasoning, and how it may affect other states where the issue remains unanswered.
Privilege issues always arise after some event triggers litigation, and here it was Hurricane Ike, the devastating 2008 storm that tore through Louisiana and Southeast Texas, including the City of Dickinson. The City sued Texas Windstorm Insurance Association seeking relief under a commercial windstorm policy for alleged Ike-induced property damages.
Texas Windstorm filed a response to the City’s summary-judgment motion on causation by, in part, submitting an expert affidavit from its “corporate representative and senior claims examiner.” The affidavit, as it turned out, was the product of revisions contained “in a series of emails” between Texas Windstorm’s employee–expert and its lawyer. The City wanted those emails, and moved to compel them.
There was no dispute that the privilege protected the “series of emails” if the employee was not designated as an expert. But he was, and the City argued that TRCP 192.3(e)(6) permitted discovery of all documents “provided to” or “reviewed by” the expert, including, under TRCP 192.5(c)(1), an attorney’s work product. Read the City’s brief here.
Texas Windstorm refuted this broad interpretation by pointing out, correctly, that the work-product doctrine is distinct from the attorney–client privilege, and that the work-product waiver under 192.5(c)(1) was inapplicable here—the issue was discoverability of the “series of emails” containing the employee’s communications to the lawyer.
Texas Windstorm also argued that, although 192.3(e)(6) permits discovery of all documents provided to the expert, this disclosure rule remains subject to evidentiary privileges. Read Texas Windstorm’s brief here.
The International Association of Defense Counsel and the Association of Corporate Counsel filed an amicus brief arguing that the need for a lawyer’s communications with an employee–expert does not override the public policy behind the privilege—encouraging candid communications so the lawyer can provide optimal legal advice.
The amici also argued that the City was, in effect, seeking an exception to Texas’s attorney–client privilege. The privilege, codified at Tex. R. Evid. 503, contains four exceptions, such as the crime–fraud exception, none of which involves an employee–expert exception. Read the amicus brief here.
Following oral argument, which you may watch here, the Texas Supreme Court, applying a rule-interpretation analysis, held that, while 192.3(e)(6) permits discovery of documents provided to an expert, that rule remains subject to evidentiary privileges. And, while the rule allows discovery of an attorney’s work product supplied to an employee–expert, the privilege is distinct from the work-product doctrine.
The Court also refused to adopt a common-law employee–expert exception to the attorney–client privilege. The privilege is “quintessentially imperative to our legal system,” the Court held, and an attorney cannot fulfill his or her “professional duty” if unable to give clients candid advice. And this “candid advice and counseling is no less important when a client also testifies as an expert.”
While the issue is settled in favor of non-disclosure in federal courts, many state courts have not addressed whether the privilege gives way when a company designates one of its employees as a testifying expert. With Texas weighing in heavily in favor of the privilege, the succeeding issue is how this opinion will influence other state courts faced with the discovery of a lawyer’s communications with an employee–expert.
Full disclosure: Along with a terrific group of lawyers and clients, I authored the IADC/ACC amicus brief mentioned in the Court’s opinion. As the brief recounted, the amici were, in part, concerned about abrogating the sacrosanct privilege simply because a party designates an employee–rather than retaining a third-party–as its expert.
The amici saw that, without the privilege’s protections, companies face the difficult choice of using an employee but losing the privilege, or hiring an outside expert at a greater cost. This choice’s difficulty, the amici argued, is exacerbated for small businesses with lesser ability to pay for third-party expert services.
Other states will surely weigh in at some point, and the Texas Supreme Court’s decision will influence those deliberations. The question is whether the Court’s decision, and the amici’s policy arguments, will succeed elsewhere.