Disclosure to the Government: The Critical Difference Between Facts and Communications

March 7, 2007

In the current debate about the so-called “culture of waiver” created by government demands for corporations’ privileged communications and work product material, many commentators ignore the critical difference between disclosing facts and disclosing communications to the government. Unfortunately loose judicial analysis and language exacerbates this confusion.

In the United States v. Reyes, No. R 06-0556 CRB, 2006 U.S. Dist. LEXIS 94457 (N.D. Cal. Dec. 22, 2006), Brocade Communications hired Morrison & Foerster and Wilson Sonsini to conduct an internal corporate investigation of its stock-option grants. Both law firms provided oral briefings to the SEC and DOJ. After the United States indicted Brocade’s former CEO, he sought access to the law firms’ background material. The court ultimately found that the law firms had waived both the privilege and the work product protection — but the court’s troubling imprecision casts doubt on its conclusions. At various points, the court explained that the two law firms waived both protections when they disclosed the materials’ “contents,” “the substance of their investigative interviews,” and “information contained in any of the written material.” Id. at *24, *32. However, elsewhere, the court noted that the law firms had “shared their confidential communications and work product” with the government. Id. at *28. The opinion nowhere deals with the distinction between disclosing: (1) historical facts uncovered and compiled during the investigation; and (2) communications occurring during the investigation. Disclosing the latter usually causes a waiver, and often triggers a subject matter waiver. But because historical facts are not privileged, disclosing them does not waive anything — and therefore does not trigger a subject matter waiver.

If everyone (including courts) understood and properly applied the difference between disclosing facts and disclosing communications, the “culture of waiver” debate would at least focus on the right questions.