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An important component of doing business and defending a lawsuit is the ability to obtain open and candid advice from your lawyer knowing that the advice received will not be subject to disclosure. We highlight the key features of privilege law in the United States.
In an arbitration, matters of privilege are complex. This is because the recognition of privilege is generally based on the rules promulgated by the organisation that hosts the arbitration.1 What is clear from the rules of many arbitral organisations is that arbitral panels are given broad discretion with respect to the recognition of privilege. That being the case, it is important for the participants in an arbitration to be aware of all potentially applicable privileges.
“What is clear from the rules of many arbitral organisations is that arbitral panels are given broad discretion with respect to the recognition of privilege.”
How may parties to an arbitration know whether they have a valid privilege claim under United States law? There is no single law on privilege in the United States, as both federal and state laws may apply. There are two main types of privilege protection under US law that may protect a document against disclosure. These are the attorney–client privilege and work product protection.
Under US law, the attorney–client privilege generally protects communications between in-house or external counsel and their clients that are intended to be and are kept confidential; and that are made for the purpose of seeking or obtaining legal advice or assistance.2
Emails and other information provided by in-house lawyers to company personnel (and vice versa) about business (as opposed to legal) issues are not usually protected by the attorney–client privilege. As a corollary, a document or email will ordinarily not be protected by simply copying an attorney. The communication must be made with the primary purpose of obtaining or providing legal advice or services.
When external counsel is engaged for a company, there is a presumption that counsel represents the company that engaged him or her, rather than any employees of the company. A difficult question arises as to which individuals within the company can speak on behalf of the company to the lawyer so that the company privilege applies to their communications. In Upjohn Co. v United States, the Supreme Court helped resolve that question by finding that employee communications are protected by the company privilege if they are made to counsel at the direction of company superiors; they concern matters within the scope of employees’ in-house duties; the information is not available from upper-level management; and the employee was made aware that he or she was being questioned in order for the company to receive legal advice.3
Communications involving agents (of the attorney or the client) may also be protected by the attorney–client privilege. Communications between an agent of the attorney (such as an accountant) and the client may be privileged if the purpose of the communication is to facilitate the rendering of legal advice by the lawyer.4 Communications by an attorney with an agent of the client (who is not simply acting as a conduit or facilitator of attorney–client communications) may be privileged if the agent is authorised to act or speak for the organisation on the subject matter of the communication (i.e. if the agent is the functional equivalent of the client).
US law protects certain information, not otherwise protected under the attorney–client privilege, from disclosure when it qualifies for work product protection.5 This doctrine, known as the work product doctrine, protects both tangible and intangible work product6 and encompasses documents prepared in anticipation of litigation or for trial. Actual litigation is not necessary but there needs to be a threat of litigation. In some jurisdictions, a threat of litigation is present when litigation is imminent. In others, there need only be a credible probability that litigation will ensue. In the context of government investigations, courts generally find that litigation is imminent or that there is a credible probability that litigation will ensue once the investigation has begun.
There are two types of work product: ordinary work product and opinion work product.
Ordinary work product consists of factual material gathered by the attorney, and can include information obtained from the client and third parties. Ordinary work product is subject to a qualified privilege. It can lose its protection from disclosure if opposing counsel can show a substantial need for the workproduct material and a hardship in obtaining the needed material by other less intrusive means.
Opinion work product is work that includes the attorney’s mental impressions, conclusions, opinions, or legal theories and it is considered nearly sacrosanct and afforded strong protection against disclosure.
Notes or memoranda of interviews of company personnel conducted by in-house or external counsel may be protected by both the attorney-client privilege and attorney work product doctrine. To ensure strong work product protection, the notes should include the mental impressions of the lawyer where appropriate and should not be disclosed. The underlying facts may not be privileged and could be sought by third parties, including regulators, if relevant to a legal proceeding or government investigation.
Information or documents protected under the attorney– client or work product privileges can be waived, including through disclosure to government regulators,7 parties to legal proceedings, or a company’s outside auditors. Privilege can also be waived by broad dissemination within a company. The law varies among US jurisdictions and should be carefully reviewed prior to disclosure.
The sharing of information with experts, including accountants, retained for the specific purpose of assisting in-house or external counsel in an investigation or litigation may be protected by the attorney–client and work product privileges.
Sharing information with a third party that has a common interest in a pending or prospective litigation may also be protected under the common interest doctrine. The parties must agree to maintain the confidentiality of shared information at the outset and not after information is provided. The agreement may be oral or in writing.
An important concept under US law is subject matter waiver of privileged information. For instance, US Federal Rule of Evidence 502 provides that the disclosure of information covered by the attorney–client or work product privileges can result in the waiver of even undisclosed information on the same subject matter. The three factors considered by courts in making that determination are whether:
US law provides relatively strong protection for lawyer communication and materials prepared in anticipation of litigation. Privilege issues, however, are fact specific and must always be evaluated on a case-by-case basis.
Anne Rodgers is a partner and John Byron is an associate in the Houston office of Norton Rose Fulbright.
For example, while the United Nations Commission on International Trade Law Arbitration Rules allows the arbitration tribunal to require the production of documents and other evidence, it leaves the question of admissibility to the discretion of the tribunal and does not provide guidance on how to deal with a party’s assertion of privilege. As another example, the rules of the International Centre for Dispute Resolution, which is the international dispute division of the American Arbitration Association, explicitly direct the tribunal to account for issues of privilege.
The purpose of the attorney-client privilege is ‘to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.’ Upjohn Co. v United States, 449 US 383, 389 (1981).
Upjohn Co. v United States, 449 US 383 (1981).
In In re Kellogg, Brown & Root, Inc., the US Court of Appeals for the DC Circuit found that communications by and to non-attorneys serving as agents of attorneys in internal investigations are routinely protected by the attorney-client privilege. 756 F.3d 754 (DC Cir. 2014). This includes interview notes conducted by non-attorneys at the direction of an attorney. Id.
The work product doctrine is governed by the common law and various rules of civil procedure. See, e.g. Hickman v Taylor, 329 US 495 (1947); Fed. R. Civ. Proc. 26(b).
The Federal Rules of Civil Procedure only apply to tangible work product. See Hickman v Taylor, 329 US 495, 512-13 (1947); Fed. R. Civ. Proc. 26(b)(3). Intangible work product may be protected by the common law work product doctrine.
Compelled disclosure by a government agency of work product does not necessarily waive work product protection for the document.
IMO 2020 is almost upon us. Readers are well aware of the impending switch to 0.5 percent fuel mandated by Annex VI of MARPOL which will cause an anticipated drop in HSFO demand, the potential hazards of new untested LSFO blends, the concerns around scrubber operations, the debate over open loop versus closed loop, and the myriad of other risks associated with the impending regulatory change.