Claiming Privilege or Work Product Protection During Discovery Can Risk Trial Disaster

October 28, 2015

Last week’s Privilege Point addressed the decreasing subject matter waiver risk of corporations’ pretrial disclosure of arguably privileged communications, or even their passing reference to legal advice in pretrial filings. When corporations are considering withholding documents or communications during discovery, they should also consider another risk.

In Mahli, LLC v. Admiral Insurance Co., Civ. A. No. 1:14cv175-KS-MTP, 2015 U.S. Dist. LEXIS 112542 (S.D. Miss. Aug. 25, 2015), defendant Admiral’s lawyer interviewed several witnesses during his investigation into plaintiff’s insurance claim. The court accepted Admiral’s pledge not to call its lawyer as a trial witness to testify about those witnesses’ statements to him. However, plaintiff sought to exclude any evidence of what the witnesses told Admiral’s lawyer during the investigation (presumably focusing on Admiral’s possible cross-examination of the witnesses at trial). When Mahli had sought those witnesses’ statements during discovery, Admiral claimed privilege and work product protection — which Mahli apparently did not contest. The court ultimately excluded such evidence, concluding that “it would be patently unfair for Admiral to hide the substance of [several witnesses’] statements to [Admiral’s lawyer] behind the attorney-client privilege or work-product doctrine during discovery, and to allow Admiral to use the statements against Mahli at trial.” Id. at *13.

Corporate defendants might win a discovery battle if plaintiffs do not challenge their privilege or work product claims, or if plaintiffs lose motions to compel. But those corporations might lose the war if they ultimately need those withheld documents or communications at trial — but have forfeited that opportunity by not having disclosed them during discovery.