Tips for Preventing or Limiting In-House Counsel Depositions 2

Deposing in-house lawyers was once considered taboo, but has now become a litigation trend.  And these depositions are not limited to an in-house corporate lawyer in business litigation over a deal gone bad; trial lawyers increasingly seek to depose in-house litigation managers as well.  When these deposition requests arise, lawyers should appropriately consider the significant attorney-client privilege issues that will inevitably become center stage.

Several questions arise in this situation.Business man pledging  Is there anything in-house and outside counsel can do to prevent the deposition from occurring?  How should counsel handle the privilege-related issues if the deposition goes forward? How can in-house counsel avoid becoming a deposition target in the first place?

Federal and state courts provide divergent views on the subject.  Some follow the so-called Shelton rule, originating in Shelton v. American Motors Co., 805 F.2d 1323 (8th Cir. 1986), which permits a protective order preventing in-house counsel depositions unless the party seeking the deposition shows (1) that no other means exist to obtain the information; (2) the information sought is relevant and non-privileged; and (3)  the information is crucial to the party’s case preparation.

Many courts, notably the Second Circuit, decline to follow Shelton and prefer to review all relevant facts and circumstances before deciding whether to permit a deposition, such as the deposition need, the lawyer’s role in the matter on which discovery is sought, and the risk of encountering privilege and work-product issues. In re Subpoena Issued to Dennis Friedman, 350 F.3d 65 (2d Cir. 2003).

In my recent article, Preventing or Limiting In-House Depositions, published by Inside Counsel, I explore the still-developing law on this important issue.  I also provide tips on how in-house counsel can lessen their chances of becoming a deposition target, how to address the privilege-related issues, and whether the in-house lawyer needs separate counsel.

You may access the article at this link.   My thanks to Inside Counsel for publishing the article and allowing access through this post.

Corporate Attorney-Client Privilege “Cautiously and Narrowly” Applied to In-House Counsel 1

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 none of the lawyer’s emails at issue were privileged.  And in issuing the ruling, the court provided helpful lessons and reminders for in-house lawyers.

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 all these emails were privileged 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 employess 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; however, the court held that all other emails were not privileged and must be produced.  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.  The court 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 the communications are actually privileged.  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 a Wisconsin court and an Idaho court 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 communication was created for the purpose of the in-house lawyer rendering legal advice or is otherwise for legal-advice purposes.

The Adair court also criticized the in-house attorney’s affidavit filed in opposition to the motion to compel.  Courts clearly require in-house lawyers to “specifically show,” via affidavit, that the communication was for legal-advice purposes, and Adair emphasizes this point. 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.  The Adair decision is silent on whether another state’s privilege law was implicated, but a conflict of privilege law analysis should be considered in diversity cases where state privilege law applies.