Two recent cases have taken a very narrow approach to the attorney-client
privilege available to in house lawyers. Although every corporate lawyer should
be alarmed by these courts' approach, the fact that both cases involve
pharmaceutical companies highlights the threat to the privilege in the
Not surprisingly, every court takes a more skeptical view of attorney-client
privilege claims for communications to or from in house lawyers. Because in
house lawyers are more likely to provide non-legal advice (especially business
advice), courts have always demanded evidence that the in house lawyer had his
or her "legal" hat on when communicating with clients. As an abstract matter,
courts have occasionally pointed to a widespread circulation of communications
within a company as evidencing the non-legal nature of those communications.
However, only a handful of courts had actually stripped away the privilege for
In In re Vioxx Products Liability Litigation, 501 F. Supp. 2d 789 (E.D. La.
2007), the judge handling the Vioxx product liability cases against Merck sought
the assistance of a special master after having been criticized by the Fifth
Circuit for the way he conducted his own privilege review. The judge hired
well-known American University law professor Paul Rice. Not surprisingly,
Professor Rice and his assistant spent approximately $400,000 reviewing 2,500
representative Merck documents over three months -- $160 per document. Professor
Rice provided both an abstract discussion of the attorney-client privilege
(essentially a law review article) and also listed a series of guidelines to use
when reviewing Merck's privileged documents.
Professor Rice eventually outlined, and the court ultimately adopted, a
remarkably narrow view of the attorney-client privilege in the corporate
setting. Professor Rice first noted that Merck's in house lawyers provided
everything from legal advice to grammatical guidance. He insisted that Merck's
in house lawyers demonstrate that the "primary purpose" of each communication
involved legal advice rather than some other type of advice. He specifically
rejected Merck's argument that pharmaceutical companies operate in such a
heavily regulated context that essentially every internal communication involves
legal advice. He also rejected Merck's argument that narrowly interpreting the
privilege would allow Merck's adversaries to "reverse engineer" documents and
uncover protected legal advice.
Perhaps the most worrisome approach involves Professor Rice's explanation that
the "distribution pattern" of Merck's internal documents often demonstrated
unprotected non-legal purposes. Specifically, he adopted a presumption that
documents Merck's employees simultaneously sent to an in house lawyer and
another businessperson for their review did not deserve privilege protection.
Even worse, Professor Rice also adopted what is called the "derivative" approach
to communications going the other way -- from lawyer to client. Under that
approach, a lawyer's communications to a client deserve privilege protection
only to the extent that the communications disclose confidences that the client
shared with the lawyer. Because Professor Rice presumed that many communications
to Merck's in house lawyers did not deserve privilege protection (because they
were simultaneously circulated to many non-lawyers in the company), the lawyers'
responses to those communications usually did not deserve protection either -- because they did not tend to disclose any protected communications from the
client. Professor Rice even applied this principle to Merck's in house lawyers'
electronic changes to the document the lawyers received from their clients, and
returned with the lawyers' changes incorporated in them.
All in all, Professor Rice's academic approach (which the court adopted) would
generally protect only communications between the particular Merck employee who
needed the legal advice and Merck's in house lawyer, without including anyone
else in the e mail message traffic.
More recently, another court explicitly endorsed the very narrow view
articulated by Professor Rice. In re Seroquel Prods. Liab. Lit., Case No.
6:06-md-1769-Orl-22DAB, 2008 U.S. Dist. LEXIS 39467 (M.D. Fla. May 7, 2008).
Although that case also discussed AstraZeneca's alleged failure to properly log
withheld documents, the opinion extensively quotes from the Vioxx opinion. The
court also rejected AstraZeneca's regulatory context argument.
Given the breadth of Professor Rice's approach, presumably every American
corporation is at risk. The only way to assure privilege protection is for a
company's in house lawyers to engage in e mail communications only with those
specific employees who need the lawyer's advice -- without including other company
employees in the e mail message traffic. In many, if not most, American
companies, switching to that mode of communication would require a major
As indicated above, a number of courts had previously taken this narrow view.
However, most courts looked at internal corporate communication "distribution
patterns" as part of a waiver analysis acknowledging but hardly ever finding
that widespread internal corporate communications forfeited the privilege. By
taking the analysis back to an analysis of whether the privilege even existed in
the first place, Professor Rice severely limited the attorney-client privilege's
applicability to internal corporate communications. And now that his analysis
has found favor in another federal district court, all American corporations
should take note.
Pharmaceutical companies should be especially concerned, both because of the
severe view taken by these courts, and because of the courts explicit rejection
of Merck's and AstraZeneca's argument that the heavily regulated nature of the
pharmaceutical industry entitled the companies to a greater degree of privilege