Can an Outside Accountant Ever be the “Functional Equivalent” of a Company Employee?

March 18, 2009

In one of the favorable privilege trends over the last decade, courts have increasingly provided privilege protection to nonemployees who are the “functional equivalent” of employees. Such a finding means that the privilege can protect communications with those nonemployees, their presence during otherwise privileged communications does not destroy the protection, and disclosing privileged communications to them does not waive the privilege.

In RoDa Drilling Co. v. Siegal, No. 07-CV-400-GFK-FHM, 2009 U.S. Dist. LEXIS 4559, at *4 (N.D. Okla. Jan. 22, 2009), the court analyzed communications to and from an “accountant and tax consultant employed by his own firm,” who had not entered into either an employment or consulting agreement with plaintiff Roda. The court held that the accountant “functioned as an employee” and therefore deserved the same privilege protection as if he were an employee. Id. at *5.

Not all courts would be this generous, but lawyers should be looking for arguments like this to expand their clients’ privilege protection.