Court Highlights the Risk of Having Outsiders Attend Board of Directors Meetings

March 3, 2010

The presence of third parties during otherwise privileged communications between clients and their lawyers usually prevents the privilege from ever protecting those communications. Clients and lawyers who might be careful not to disclose privileged communications to such third parties sometimes forget to ask them to leave a meeting during privileged discussions.

In Pakieser v. Michigan Nurses Ass’n, Civ. A. No. 08-CV-14219-DT, 2009 U.S. Dist. LEXIS 118389 (E.D. Mich. Dec. 18, 2009), the defendant discovered that outsiders (including guests) attended plaintiff American Nurses Association’s board meetings, at which the board engaged in otherwise privileged communications. The Association’s General Counsel filed an affidavit explaining that “‘third parties and members of the ANA [Association] staff that do not need to know the legal advice being sought or provided are not permitted to participate in the portion of the meetings where those discussions take place.'” Id. at *7. However, the court found this affidavit (and the board’s minutes) to be “devoid of any indication . . . that individuals were asked to leave the room before confidential discussions were initiated.” Id. at *8-9. The court ordered the Association to “state with specificity which individuals were dismissed from the room during privileged communications.” Id. at *9.

The obvious inference from the court’s opinion is that the presence of outsiders at the board meeting would destroy any otherwise applicable privilege protection. Most if not all courts would take the same view – and apply it to outside auditors, investment bankers, environmental consultants, etc.