Company Executives Represented in Their Official Capacity Do Not Own the Attorney-Client Privilege

July 20, 2005

When companies and former executives become adversaries, courts sometimes must determine whether lawyers who had dealt with the executives represented them in their personal capacity (in which case the executives own the privilege) or in their official capacity (in which case the company owns the privilege).

In Applied Technology International, Ltd. v. Goldstein, Civ. A. No. 03-848, 2005 U.S. Dist. LEXIS 1818 (E.D. Pa. Feb 7, 2005), the plaintiff company sued its former president Goldstein, and sought to compel answers to questions about his earlier communications with a patent lawyer. Goldstein claimed that the patent lawyer represented him personally, but the court disagreed – pointing to a widely used five-part test that individual executives must satisfy to prove an individual relationship with a company lawyer. Among other things, the court pointed to the letter in which the lawyer (who had moved from Eckert Seamens to Duane Morris) had sent withdrawing from working for the company and the president. The lawyer wrote that “I have had a long relationship with Sam [Goldstein] and also with [the company], and we have never been called on to distinguish between the two.” Id. at *11. The court explained that “if an attorney himself admits that he was never called on to distinguish between a corporate officer and a larger corporate entity, and if the first time the attorney was alerted to any possibility of conflicting interests was more than ten years into the representation, it is clear that the corporate officer has not satisfied [the five-part test].” Id. at *11-12 .

Lawyers representing companies and dealing with executives should always define the relationship, to avoid future disputes like this.