Another Court Applies the “Functional Equivalent” Doctrine to a Company Consultant

May 28, 2008

In the corporate context, the majority view only protects communications to or from (or in the presence of) client consultants/agents necessary for the transmission of the communications. Several years ago, courts began to extend privilege protection to communications involving independent contractors who are the “functional equivalent” of employees — looking at such factors as time spent at the company premises, the absence of any other clients, involvement in important corporate projects, etc.

In an encouraging trend, a number of courts have stretched the “functional equivalent” doctrine to include consultants/agents who traditionally have fallen outside the privilege. In Siegar v. Zak, 2008 N.Y. Slip Op. 50418U (N.Y. Sup. Ct. 2008), the court dealt with communications to and from a company’s business consultant. While the court did not precisely describe the consultant’s role, he appears to have been a traditional consultant/agent rather than the “functional equivalent” of a company employee. The court nevertheless cited the seminal “functional equivalent” case in concluding that the consultant “clearly had a significant relationship” with the company and therefore deserved privilege protection. Id. at *11.

Although corporations should not count on this “functional equivalent” doctrine expansion, they should be prepared to cite cases like this if the need arises.