Five Cases, Five Lessons: Emails and Privilege for In-House Counsel

Courts employ a heightened standard when companies attempt to shield their employee–in-house lawyer communications under the attorney–client privilege. The dominant reason for this scrutiny is the recognition that employees often involve in-house counsel in business and legal-related conversations, forcing courts to scrutinize whether the putatively privileged communication pertained to legal or business advice.Legal Advice Computer Key In Blue Showing Attorney Guidance

Emails, which serve as the primary (and too often exclusive) means of communications, exacerbate the business–legal dichotomy because they offer employees an easy avenue to “run a (business) issue by” the in-house lawyer. But emails also increase the chances of privilege waiver due to the lawyer’s lack of, or loss of, control. Employees may easily copy or blind copy non-lawyers with an email or forward an email to internal and external colleagues without restraint.

Unsurprisingly, courts face an increasing number of discovery-privilege disputes that involve email communications. Email privilege disputes do not necessarily arise because an email is involved—indeed, an email is, at bottom, simply a form of communication. But privilege issues that otherwise may not ripen for dispute resolution arise because the communication occurred via email.  In my latest article, Emails and Privilege for In-House Counsel, published in ALM’s
The Corporate Counselor law journal newsletter, I briefly review five 2013(ish) cases involving privilege issues that arose in the email context, and offer take-aways for in-house counsel’s use in 2014 and beyond.

You may access the article here.  I hope you enjoy the read.  And for other posts pertaining to emails and the attorney-client privilege, see my posts about corporate executives’personal emails on company networks, dual-purpose emails, and why emails, privilege, and in-house lawyers present a tricky mix.

Dual–Purpose Emails to In-House Counsel: Are They Privileged? 5

Whether the corporate attorney–client privilege protects an in-house attorney’s email communication depends on whether the communication was made for the purpose of counsel rendering legal advice.  This determination often depends whether the in-house lawyer was acting in a legal or business-related capacity.

But many emails constitute dual-purpose communications, meaning they combine business advice and legal advice.  Courts apply two standardsSlide1 to determine whether these dual–purpose emails receive privilege protection.

Because-of Standard

The so-called “because of” standard requires in-house lawyers to prove that, under the totality of the circumstances, including the nature of the document and the factual situation, the document was prepared because of litigation or a legal purpose.  Courts borrow this standard from the work–product doctrine, but apply it where mixed communications involve both business and legal advice.  See In re CV Therapeutics, Inc. Sec. Litig., 2006 WL 1699536 (N.D. Cal. June 16, 2006).

Primary Purpose Standard

Under the primary purpose standard, the privilege protects in-house lawyers’ communications involving business and legal advice if the primary purpose of the communication is to obtain or give legal advice.  See United States v. ChevronTexaco Corp., 1996 WL 264769 (N.D. Cal. May 30, 1996).

The “because-of” standard requires a lesser burden of proof, demanding that in-house lawyers simply show that the putatively privileged communication was prepared because of legal issues.  The primary purpose standard requires a higher burden of proof, focusing on whether each communication was for the primary purpose of rendering legal advice.

In a thorough opinion, the USDC for the District of Nevada recently evaluated both standards and applied the primary purpose standard to in-house counsel email communications.  Although noting that the “because of” standard had supplanted the “primary purpose” standard in some jurisdictions, the court found that the Ninth Circuit had not done so.  And noting that “merely copying or ‘cc-ing’ legal counsel, in and of itself, is not enough to trigger the attorney–client privilege,” the court reviewed each challenged email to determine whether the primary purpose of its creation was legal-advice related.  See Phillips v. C.R. Bard, Inc., 290 F.R.D. 615 (D. Nev. 2013).  You may access this educational decision here.

Inadvertent Disclosure of 347 In-House Counsel Emails Waives Attorney-Client Privilege

Another federal court reminds companies and their in-house counsel that (1) the fact that in-house lawyers send or receive internal emails does not automatically render the emails privileged; and (2) the failure to take steps to prevent inadvertent disclosure will result in privilege waiver.

The federal court for the Southern District of Ohio, in Inhalation Plastics, Inc. v. Medex-Cardio-Pulmonary, Inc., 2012 WL 3731483 (S.D. Ohio Aug. 28, 2012), ruled that the attorney-client privilege covering 347 emails involving 3 in-house lawyers was waived through an inadvertent disclosure.  Medex Cardio-Pulmonary, Inc. produced 7500 documents that contained 347 emails either sent or received by in-house counsel.  When the plaintiff attempted to depose two of these lawyers based on the production, Medex asserted the attorney-client privilege and claimed the emails were inadvertently produced.

The court first questioned whether Medex met its burden of proving the emails were privileged, noting that “[t]he mere fact that [the in-house lawyer] was the sender or recipient of the documents at issue does not render them privileged.” The Court found that the burden was not met because Medex did not identify which of the 347 emails were privileged, did not provide a privilege log, and offered little factual evidence that the communications pertained to legal advice.

But the Court’s in camera review revealed that some emails were, in fact, privileged and evaluated whether the inadvertent disclosure of these documents constituted waiver. The Court considered the following 5 factors in its analysis: (1) the reasonableness of the precautions taken in view of the extent of document production; (2) the number of inadvertent disclosures; (3) the magnitude of the disclosure; (4) any measures taken to mitigate the damage of the disclosures; and (5) the overriding interests of justice.

The Court ruled that reasonable precautions were not proven because Medex did not specify who reviewed the documents pre-production or the steps taken to review for privilege, and did not provide a privilege log. The disclosure of 347 of 7500 privileged emails was significant and, although Medex acted promptly upon learning of the disclosure, it failed to comply with Fed. R. Civ. P. 26(b)(5)(B) to identify the privileged documents with specificity and explain why they are protected from disclosure.  And for these reasons, the Court found that the attorney-client privilege had been waived.

PoP Analysis.  The Inhalation Plastics decision reminds corporate and outside counsel that producing a significant number of documents requires diligent efforts on the front-end and back-end of the production.  In-house and outside counsel must not only conduct a pre-production privilege review, but must be able to specify the measures taken to prevent inadvertent disclosure. And while inadvertent disclosures may nevertheless occur in large productions, counsel must act swiftly to notify the other party and be disciplined in providing a detailed privilege log and detailing, in writing, the basis for the privilege claim.