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Attorney-Client Privilege: Use with Care

A bedrock principle of our legal system is the protection that the law gives to communications between an attorney and the client.

Like most legal rights, however, attorney-client privilege has limits. Every word shared between a client and attorney isn’t protected. If you’re talking to a lawyer about a sensitive matter, don’t take attorney-client privilege for granted. The law provides exceptions, case law sometimes offers muddled guidance and opposing parties may litigate vigorously over what is covered. Your attorney can advise you as to how it applies to your circumstances, but here are some guidelines about relying on attorney-client privilege and waiving it.

LLC members should seek guidance before using or waiving privilege

We often see misunderstandings about privilege when LLCs get involved in legal matters. The LLC is the attorney’s client, not the individual members. If an LLC has a designated manager, that person’s confidential communications with an attorney are privileged. Whether Individual member’s communications with the LLC’s attorney are privileged depends on the circumstances, including the number of members, the involvement of the member in the operation of the LLC and the subject matter of the communication. In a manager-managed LLC, only the manager can waive the privilege for the company.   

This can be hard for LLC members to accept, but we generally recommend that the LLC’s attorney speak only with the manager if the LLC is manager-managed (as opposed to member-managed), and that person becomes the middle person to inform the members about the progress of a matter. Ethically, the attorney’s loyalty of confidentiality is to the client – in this case the LLC, which is represented by the manager. Members are not necessarily clients, and they should keep this in mind before disclosing compromising information about their own conduct to the LLC’s lawyers. 

LLCs, as well as corporations, cannot necessarily hide information behind the cloak of attorney-client privilege if managers or directors are accused of fiduciary malfeasance. LLC members or corporate shareholders may succeed in piercing the veil of privilege if they can show a court that managers are using the privilege to hide misconduct.

Employees usually are covered by the privilege

The courts recognize that employees must be able to communicate to a company’s attorney in confidence. This applies only to matters that directly involve the employee’s job.

For example, an attorney representing a company that is the defendant in a personal injury lawsuit can ask employees who witnessed an accident what they saw. The opposing party can depose the employees, but can’t ask for the record of their conversations with their lawyers.

The mere presence of your lawyer in a meeting doesn’t shroud the proceedings in secrecy

If your lawyer is offering legal advice, then a meeting likely is covered by privilege. But don’t think you can shield meetings from disclosure just because you invited a lawyer into the room. The same principle applies to email and documents. Legal advice is privileged; general business discussions, where no legal opinions or guidance are requested, are not. Sometimes the two are difficult to separate, and the issue may end up in a courtroom. 

Sharing may gut the privilege

If you bring a third party who doesn’t have a role in the legal matter into a meeting or copy them on an email, you may have inadvertently made everything discussed subject to discovery. The principle here is that while your communication to your lawyer is confidential, what you say to other people is not. If you share something with a third party, you may lose privilege for that specific communication as well as every email, document and communication related to that topic.

There is an exception for consultants or experts hired by your lawyer to provide advice on a case, although factual parts of their reports may be subject to discovery.

On the advice of counsel

We’ve seen clients respond to uncomfortable questions in depositions by saying they took an action based “on the advice of counsel.” Don’t say this unless you’ve discussed it in advance with your attorney. Courts may see this as using the privilege as a sword ("I did it because my lawyer told me to do so") and a shield ("but I can’t tell you why"). The problem is that you cannot have it both ways.

In short, all sorts of strings attach to the attorney-client privilege and what’s covered frequently ends up being contested in litigation. Ask your attorney at the beginning of an engagement how it applies to your matter and how to preserve it.

Audra M. Byrd is a shareholder in the Myrtle Beach office of Turner Padget, where she has an active commercial and business torts litigation practice. She routinely assists her corporate clients with debt collection and contract disputes. She may be reached at (843) 213-5520 or by email at abyrd@turnerpadget.com.

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