Accountants Implicate Subtle Privilege and Work Product Issues: Part II

May 20, 2020

Last week’s Privilege Point described a case applying the generally-accepted view that accountants assisting clients rather than the clients’ lawyers are outside privilege protection — so copying them on privileged emails waives that fragile protection. An equally well-settled rule is just the opposite on the work product side — disclosing protected work product to a non-adverse accountant does not waive that robust protection.

In United States v. Petit, No. 19-cr-850 (JSR), 2020 U.S. Dist. LEXIS 21338 (S.D.N.Y. Feb. 6, 2020), the Southern District of New York (Judge Rakoff) addressed a different work product issue. The court held that documents created by Ernst & Young themselves deserved work product protection. The court explained that “the fact that E&Y, not [King & Spalding], took the notes at issue does not disqualify the materials from receiving work product protection.” Id. at *4. The court correctly noted that non-lawyers can create protected work product if they are primarily motivated by litigation or anticipated litigation.

Nearly every court agrees that: (1) accountants assisting clients cannot engage in privileged communications; and (2) disclosing privileged communications or documents to accountants usually waives the privilege. On the work product side, nearly every court agrees that: (1) disclosing work product to non-adverse accountants does not waive that protection, and (2) in some circumstances, accountants themselves can even create protected work product.