Perhaps corporate executives' most common and dangerous
privilege misperception is that they may safely disclose
privileged communications to their outside consultants
without waiving that protection. And perhaps their lawyers'
greatest misperception is that the lawyers can rescue the
privilege protection by claiming that the consultants were
helping the lawyers provide legal advice.
In SEC v. Navellier & Associates, Inc., Civ.
A. No. 17-11633-DJC, 2018 U.S. Dist. LEXIS 215003, at *2
(D. Mass. Dec. 21, 2018), defendant NAI had retained
outside consultant ACA Compliance Group "to conduct a
compliance review of NAI's marketing materials." NAI
claimed privilege and work product protection for
ACA-related communications and documents when the SEC
sought them. The court rejected the privilege claim,
holding that: (1) ACA could not satisfy the client
consultant privilege standard, which applies only if the
consultants' involvement is "nearly indispensable or
serve[s] some specialized purpose in facilitating the
attorney-client communications" (id. at *6), and
(2) ACA could not satisfy the lawyer consultant privilege
standard because it "was not serving an interpretive role
and was not 'necessary, or at least highly useful' to
defendants' counsel in providing legal advice to
defendants." Id. at *9 (citation omitted).
Significantly, contemporaneous documents showed that NAI's
president communicated with ACA "without any mention of
counsel." The court bluntly said that it "discounts" NAI's
lawyer's affidavit stating that "ACA was retained . . . to
assist [him] in providing legal advice to NAI in
anticipation of possible litigation." Id. at *3-4
(alterations in original). The court also rejected NAI's
work product claim, noting that "the SEC did not commence
an investigation into NAI until more than two years after the end date of the time
period for documents sought in the subpoena." Id.
The privilege rarely protects communications with corporate
clients' outside consultants. Lawyers may claim privilege
protection for communications with their consultants, but
only if they can support a bona fide argument that they
needed the consultant.