Wednesday, August 3, 2016

On In-House Attorney-Client Privilege



Karen Rubin at Thomson Hine writes: "Firm counsel privilege prevails; New York joins favorable trend in recognizing doctrine" --
  • The attorney-client privilege covers ethics advice that lawyers get from their law firm’s general counsel, and the communications do not need to be disclosed to the client, said a unanimous five-judge panel of the New York Appellate Division last week, in a closely-watched case. In Stock v. Schnader Harrison Segal & Lewis LLP, the court ruled that the law firm was the “real client” in getting the advice from the GC, and held that the fiduciary exception didn’t apply.
  • In an arbitration before the Financial Industry Regulatory Authority (FINRA), the employer said that it was going to subpoena the lawyers who handled the separation agreement negotiation, and indicated that it was seeking to point the finger at the law firm as being partly responsible for any loss to the client.
  • The court put particular emphasis on two facts:  first, that the Schnader firm’s general counsel had never participated in the client’s representation; and second, that the firm did not bill the client for the lawyers’ ethics consult with the GC.  That solidified the court’s view that the firm and its lawyers were the clients, and entitled to the privilege protection available to other clients.
  • In reaching its conclusion, the Stock court cited similar recent holdings from state high courts in Georgia and Massachusetts.  The ABA has also taken the position that the fiduciary exception does not apply to confidential communications between law firm personnel and the firm’s in-house or outside counsel, even regarding the firm’s duties or potential liability to a current client.  That favorable trend continues, with the opinion of this influential court.
For more detail on this specific decision, see also: "In-House Privilege In The First Department."

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