Upjohn Warnings and External Consultants: What You Need to Know

Corporate counsel’s internal investigations often reveal that a third-party consultant maintains relevant information.  Yet, in-house and outside counsel have relatively little instruction on whether to interview these consultants and, if so, whether an Upjohn warning is necessary.  Courts have recently addressed two related concepts, however, that provide excellent guidance on this front.

Courts, notably the 9th Circuit, have reiterated the importance of providing Upjohn warnings to corporate employees prior to conducting an interview.  In United States v. Ruehle, 583 F.3d 600 (9th Cir. Cal. 2009), consultantfor example, the Ninth Circuit noted the “treacherous path” that counsel take when conducting internal investigations and called counsel’s lack of Upjohn warnings “troubling.”  And relatedly, courts have increasingly held that the corporate attorney-client privilege covers consultants considered the “functional equivalent” of corporate employees.  Together, these concepts provide corporate counsel informed guidance when interviewing consultants as part of an internal investigation.

In my recent article, Upjohn Warnings and External Consultants, published by InsideCounsel, I explore these concepts in greater detail. The article, accessible here, discusses the importance and preferred content of Upjohn warnings.  It also discusses the “functional equivalent of employee” test, including how Model Rule 1.3 and its official comments dictate that corporate counsel provide Upjohn warnings to consultants meeting the test.

For further elaboration on the functional equivalent employee test, see my post discussing a recent ruling that a Google consultant was a “functional equivalent of an employee” for purposes of the attorney-client privilege coverage.  You may also find helpful my recent post regarding the discoverability of witness statements, as these issues will apply to external consultants.

My thanks to InsideCounsel for permission to reprint my article in this post.

Great Article on the Taxpayer Privilege

Yes, there is a taxpayer privilege.  It is narrow, to be sure, but it exists.  On July 22, 1998, President Clinton signed into law the Internal Revenue Service Restructuring and Reform Act of 1998. taxpayerThis amendment of the Internal Revenue Code, which included the so-called Taxpayer Bill of Rights, contained provisions intended to enhance taxpayers’ rights with the IRS.  Included in this amendment was a limited evidentiary privilege that protects confidential communications between taxpayers and non-lawyer tax practitioners, including accountants.  The amendment is codified at 26 U.S.C. § 7525.

For a detailed look at the taxpayers’ privilege, you should read Washington, D.C. lawyer Christine S. Hooks’ well written article, The Tax-Related Privilege You May Have Already Waived.  Published in the March 2013 issue of The Federal Lawyer, and accessible here with permission, Ms. Hooks’ article explains the privilege’s relation to the attorney-client privilege and defines who qualifies as a tax practitioner for purposes of establishing the privilege.  The article addresses the privilege’s scope and its exceptions.  And, importantly, Ms. Hooks discusses how easily one can waive the privilege without careful attention to its application.

The article is a must-read for those dealing with tax-related communications, whether to an attorney or to a non-lawyer tax practitioner.  My thanks to Ms. Hooks and the Federal Bar Association for permission to reprint the article in this post.

Protecting Witness Statements from Discovery 1

A critical part of an attorney-led investigation involves interviewing witnesses, whether corporate-employee witnesses, outside consultants, or independent, third-party witnesses.  Corporate counsel must determine whether to document the witness’s interview and, if so, whetherwitness by summary memorandum, audio- or video-recording, signed witness statements, or otherwise.  The questions become whether documented witness statements are discoverable and how in-house and outside corporate counsel should handle these statements to maximize the potential for protection.

Several issues arise in answering these questions.  While the corporate attorney-client privilege may (depending on your jurisdiction) protect counsel’s employee-interview notes, does it also protect a signed an employee’s signed statement? The work-product doctrine, which is a preclusion doctrine rather than an evidentiary privilege, may protect a lawyer’s summary memoranda of witness interviews, but the protection is not absolute and may give way upon a sufficient showing of need.  And federal and state civil procedure rules may differ, causing a witness statement to be discoverable in a state forum even if not in a federal forum.

In my article, Protecting Witness Statements from Discovery, recently published by InsideCounsel, I explore all these issues.  The article, accessible here, distinguishes the too-often-conflated work-product doctrine and the attorney-client privilege.  It also outlines legal arguments for protecting witness statements of corporate employees and independent witnesses, and concludes with a set of practice tips for in-house or outside counsel when dealing with witness interviews.  My thanks to InsideCounsel for permission to repost my article in this blog.