Do Regular Attorney-Client Principles Apply in the Governmental Setting?

October 12, 2022

Courts’ application of the attorney-client privilege to government lawyers’ communications reflects the tension between the public interest in government transparency and the societal benefit of public officials and employees obtaining legal advice. To make matters more complicated, it can be difficult to distinguish between government lawyers’ legal and policy advice. And some communications between government lawyers and employees carry the force of law, and thus do not deserve privilege protection.

In SEC v. Ripple Labs, Inc., No. 20-CV-10832 (AT) (SN), 2022 U.S. Dist. LEXIS 123141 (S.D.N.Y. July 12, 2022) (Magistrate Judge Netburn), SEC enforcement action defendant Ripple sought documents relating to a speech by then-Director of the SEC’s Division of Corporate Finance William Hinman. The court noted the SEC’s “hypocrisy” in arguing both: (1) that Hinman’s public statements were “not relevant to the market’s understanding of how or whether the SEC would regulate cryptocurrency,” and (2) that “Hinman sought and obtained legal advice from SEC counsel in drafting his Speech.” Id. at *8. The court condemned the SEC for “adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law.” Id. at *8-9. After an in camera review, the court ordered the speech-related documents produced — finding that the SEC lawyers’ comments did not provide legal advice (which “must be intended ‘to guide future conduct or to assess past conduct'”) — but instead amounted to policy advice. Id. at *10 (citation omitted).

Lawyers representing defendants in governmental actions should familiarize themselves with courts’ application of privilege principles in the unique governmental setting.