Courts Assess Whether Client and Lawyer Agents are Inside or Outside Privilege Protection: Part I

July 15, 2015

Lawyers and most clients understand that disclosing privileged communications to adversaries waives that delicate protection. But clients lose privilege protection far more frequently when they or their lawyers disclose privileged communications to friendly third parties — such as agents or consultants working with the clients or with the lawyers.

In Malbco Holdings, LLC v. Patel, No. 6:14-cv-00947-PK, 2015 U.S. Dist. LEXIS 62501 (D. Ore. May 13, 2015), plaintiff argued that defendants forfeited their privilege protection by including their adult children in otherwise privileged communications with their lawyer. The court found that the children were inside the privilege, noting that Oregon’s statutory privilege allowed “the inclusion of a client’s family members on privileged communication regarding matters of joint concern.” Id. at *6. The court then considered whether (1) defendants’ “[accountant] was assisting [defendants’ lawyer] in the rendition of his legal services,” and thus inside the privilege, or (2) defendants’ lawyer “was enlisted to advise [the accountant] in her work preparing gift tax returns” for the defendant, which would have placed the accountant outside the defendants’ privilege. Id. at *8. The court ordered an in camera review of the withheld communications so it could determine the privilege’s applicability.

Clients and their lawyers involving any third parties in their communications should consider the waiver risks, and assure that the communications would support a valid privilege claim if courts review them in camera. Next week’s Privilege Point will address another example.