Lawyers are obligated to make clear what 
information is privileged.

I am a corporate counsel. Most of my communication, particularly in-house, is through email. As the in-house counsel, I give both legal advice and business advice, when asked. Are my emails covered by attorney-client privilege?

The issue of corporate in-house counsel and emails and attorney-client privilege is one that, in this modern age, is evolving. This was never a problem in the past. Lawyers wrote letters that dealt either with a legal issue or a nonlegal issue. Everything else was by telephone and there was nothing to recover, unless there were memos of the conversation. Email creates a challenge as to what is privileged and what is not.

The life of a corporate in-house counsel presumably is an extremely busy life where one is constantly putting out fires and/or responding to issues that deal with pending litigation, in-house corporate legal issues, employment issues, business issues, etc.
Where is the line to be drawn?

There is an excellent book out called The Attorney-Client Privilege and Work-Product Doctrine in Pennsylvania, Third Edition. It is written by attorney Kevin Allen and published by the PBI Press. This is a good book for any lawyer to have on his or her desk because every lawyer at times faces attorney-client privilege issues.

The author addresses email and in-house counsel issues on pages 87-90. The author notes nonlawyer employees within the business might copy or blind copy in-house counsel on their emails. This is particularly true if there are negotiations ongoing.

The author notes that the in-house counsel might comment on the emails from a legal perspective, but also from a business perspective. The author notes that although the issues of attorney-client privilege and emails are being slowly addressed by the courts, there is still a great deal of uncertainty as to where the line is drawn.

The author notes that because of the “multi-faceted” skills of the in-house counsel, corporations often have their in-house counsel do more than “traditional legal services, but rather are business functions.”

Allen points out it is particularly difficult to find out if the email is within the attorney-client privilege if the email is sent to the in-house counsel for a legal opinion or advice and at the same time to other nonlawyers in the corporation for their business thoughts.

The author suggests relying on the case of In re Vioxx Products Liability Litigation, 501 F.Supp. 2nd 789 (Eastern District Louisiana, 2007).

That case suggested the attorney-client privilege will only apply “when the primary purpose of the communication is for legal advice.” The author notes that corporations should be very careful and recognize the consequences of “mixed-purpose communications.”

Allen notes that an attorney’s changes to a legal document would normally be privileged, but changes by the lawyer to nonlegal documents such as reports would not normally be in the attorney-client privilege.

The author notes if the email goes to both lawyers and nonlawyers, then “the corporation usually can’t claim the privilege because the communication served both business and nonlegal purposes.”

Allen suggests that emails, if they are directed to a lawyer, might be easily classified as attorney-client privilege, even though nonlawyers are copied. If the emails are sent directly to nonlawyers and then copied to lawyers, that may create an opposite issue.

The author suggests if the lawyer’s advice is being sent throughout the corporation, it’s better if it comes from a lawyer as opposed to a nonlawyer regurgitating the advice.

The issue of in-house corporation emails and attorney-client privilege does not appear to be resolved in Pennsylvania yet. But every lawyer who works in a corporation and/or his or her corporate clients must be aware of the changing landscape as to how these emails made in real time with multiple constituents in the corporation are going to be viewed later if there are legal issues that arise.

Every lawyer must be aware of the line where attorney-client privilege does not apply and in-house lawyers must be acutely aware to protect their clients.

Obviously, everyone must be aware when they are communicating with a lawyer what is going to be privileged and what is not. The obligation falls on the lawyer to make that clear.

Lawyers should never keep their own funds in their IOLTA accounts.

I am a young lawyer and my question is if there is ever any reason I can deposit my own funds into my IOLTA account and/or escrow account?

The answer is very, very clear. A lawyer cannot place his or her own funds in his or her trust account. Whether it is an IOLTA account or an old-fashioned escrow account, only clients’ monies can be in that account.

Of course, when settlement checks come in, which contain both attorney fees and the client’s award, that obviously goes into escrow, but then it must be timely distributed. A lawyer cannot keep his or her fees sitting in the escrow account if already earned. The same applies to a criminal defense lawyer who receives a fee that is not categorized as nonrefundable. That fee then goes in the escrow account. But once the lawyer earns the fee, then it must come out.

Rule of Professional Conduct 1.15(h) reads as follows:

“A lawyer shall not deposit the lawyer’s own funds in a trust account, except for the sole purpose of paying service charges on that account and only in an amount necessary for that purpose.”

Some lawyers have a bad habit of keeping legal fees in an escrow account, sometimes for a substantial period of time. Some lawyers use that in a manner to avoid paying more taxes in a particular year by not making distribution until the following year. Although that might be a good tax strategy, it is improper. The lawyer is also commingling funds at that point. Further, the IRS might take a dim view and see that as tax evasion.

Some lawyers will place their employees’ taxes in their escrow account until they make payment to the taxing authority. Although perhaps the better practice is to have a separate account for employee taxes, that would not be prohibited, because the funds for the employees’ taxes are the employees’, not the lawyer’s. Therefore, those monies could be properly placed in an escrow account.

In conclusion, an escrow account is the client’s account. There should be no lawyer’s money in that account, except for unearned fees or fees that are going to be distributed immediately.

That is why no personal bills can be paid out of an escrow account, although obviously, client costs can be paid out of the escrow account.

Other than that, the lawyer’s rental checks, salaries, etc., can’t come from the escrow account. The reason they can’t is because there should be no lawyer’s money in there.

Unfortunately, this simple proposition is honored in the breach by many lawyers and often to their great detriment. Therefore, to answer the question, no lawyer’s money belongs in the escrow account with the exception of minor bank cost reimbursement.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pa. 19381.