LEGAL
In many companies, in-house counsel often perform two roles: attorney and business partner.
To be effective as an in-house attorney, counsel must fully understand the company’s business goals and objectives and be perceived as promoting rather than blocking strategic company initiatives. However, company personnel must understand that in-house counsel’s first priority is as a legal advisor to the company. This is especially true when in-house counsel is involved in intra-company communications that require confidentiality and also may be protected under the attorney-client privilege or work product protection.
Because of in-house counsel’s dual role within the company, application of the attorney-client privilege and work product protection to in-house counsel’s communications depends on context. The attorney-client privilege protects confidential communications between in-house counsel and company personnel if made for the purpose of obtaining or providing legal advice for the company’s benefit. The work product doctrine’s protection extends only to documents and tangible things prepared by in-house counsel in anticipation of litigation.
When an in-house attorney discusses a purely business matter with an employee, that communication is likely not privileged. Therefore, in-house counsel should avoid mixing business and legal advice when advising company personnel as that may jeopardize the application of the attorney-client privilege.
When advising the client in writing, in-house counsel should send legal and business advice in separate communications. If the communication contains legal advice, it should be clearly marked with a Privileged and Confidential or Work Product notation. Even if this step is taken, a court may still rule that the communication is not privileged if the issue is disputed.
Similarly, copying in-house counsel or the legal department generally on emails or other written communications does not protect those communications under the attorney-client privilege if the sender is not seeking legal advice. For a sample memorandum from in-house counsel to employees on how to maintain the attorney-client privilege, see Standard Document, Memorandum to Employees Regarding Proper Maintenance of the Attorney-Client Privilege.
If the company maintains overseas operations, in-house counsel should check the privilege rules of the relevant foreign jurisdiction before communicating legal advice to an employee located outside of the US. For example, most European countries do not recognize the attorney-client privilege for communications between in-house counsel and company personnel. For an overview of privilege law in 20 foreign jurisdictions, see Practice Note, A World Tour of the Rules of Privilege.
Courts closely scrutinize privilege claims for communications between in-house counsel and company personnel, especially given counsel’s dual legal and business role. Therefore, in-house counsel should consider retaining outside counsel to represent the company in legal matters that may become contentious inside or outside the company. For issues to consider before signing an engagement letter with outside counsel, see Standard Documents:
Upjohn warnings
To ensure the attorney-client privilege attaches to communications between in-house counsel and company employees, an in-house attorney should provide an Upjohn warning before advising an employee involved in litigation or a government investigation. The warning should explain that:
For more information on determining whether the attorney-client privilege attaches to corporate communications, see Practice Note, Attorney-Client Privilege: Identifying the Attorney and the Client: Corporate Clients. For more information about the attorney-client privilege and work product doctrine generally, see Attorney-Client Privilege and Work Product Doctrine Toolkit. For presentation materials for training employees about their role in maintaining the attorney-client privilege and work product protection, see Standard Document, Attorney-Client Privilege and Work Product Protection: Presentation Materials.
Many companies invite their general counsel to serve on the board of directors because of that person’s knowledge on certain issues including:
However, before accepting to serve in this dual role, in-house counsel should carefully consider whether:
In-house counsel may serve as a director after:
In-house counsel should periodically review the obligations required of this dual role to ensure the absence of conflicts and to maintain the attorney-client privilege over certain communications. Later situations may arise that require in-house counsel to resign from the board. For information about a director’s fiduciary duties, see Practice Note, Fiduciary Duties of the Board of Directors.
This look at the major issues on the horizon for corporate counsel comes from Practical Law – an online legal know-how service. View all the looming issues now compliments of Practical Law The Journal, which covers the latest transactional and compliance topics that impact your practice. To gain access to more related know-how resources, please visit www.us.practicallaw.com.
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