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Lawyers in high-stakes litigation have long relied on trial consultants, secure in the generally held belief that their discussions over strategies and files would not have to be shared with adversaries. Their faith has now been vindicated by the 3rd U.S. Circuit Court of Appeals, which held on Sept. 16 that work product of a trial consultant is protected by the attorney work-product privilege. The judges overturned a district court ruling that the privilege did not cover predeposition preparation of a witness by a nontestifying trial consultant hired by Ernst & Young in litigation with Cendant. U.S. District Judge Williams Walls had reversed a special discovery master’s finding that the work-product and attorney-client privileges protected Dr. Phillip McGraw’s efforts to help prepare the witness, Simon Wood, a former Ernst & Young senior manager who prepared the financial statements at issue in the litigation. Wood was represented by Ernst & Young counsel. “Compelled disclosure of the substance of conversations between Wood, his counsel and Dr. McGraw would require disclosure of communications protected by the work product doctrine,” Chief Judge Anthony Scirica wrote in In re Cendant Corporation Securities Litigation, No. 02-4386. He was joined by Thomas Ambro and Leonard Garth. The appeals court left to Walls what questions Cendant could ask Wood in light of the privilege, but it did say that Cendant could ask whether Wood had rehearsed or practiced his testimony. The circuit court did not reach the issue of whether the attorney-client privilege also applied. Garth, however, filed a concurring opinion that it did. He said it would be impossible to carve out communications between counsel and consultant made in the client’s presence. The court also found that not only were communications with McGraw shielded by work-product privilege but they enjoyed the heightened protection afforded “core” work product, which receives “near absolute protection from discovery” that can only be overcome by extraordinary circumstances. Though the Cendant panel did not define such circumstances, a footnote provided an example: “[P]rotection afforded opinion or core work product may be breached when there is a charge of falsified testimony.” The court pointed out, however, that Cendant conceded it was not accusing Ernst & Young of false testimony and concluded that the special master, Robert Tarleton, had correctly found such special circumstances lacking. The court distinguished core from noncore work product, which can be disclosed on a lesser showing of substantial need for the information as well as undue hardship in obtaining it elsewhere. “Core” or “opinion” work product includes an attorney’s mental impressions, conclusions or legal theories, Scirica wrote. Core work product protection was due in Cendant for “frank and open discussions … regarding counsel’s view of the important facts of the case, the contentions of the parties, and Ernst & Young’s trial themes, theories, and strategies.” All these were understood and intended to be confidential by the participants, the court said. In addition, McGraw was shown documents reflecting counsel’s mental impressions and legal theories, and took notes that reflected them. Cendant had argued that a jury was entitled to know factors that might affect witness credibility. The questions Cendant tried to ask Wood included whether he ever met McGraw, how often, whether Wood knew McGraw was a consultant and whether he rehearsed testimony in McGraw’s presence. Tarleton had upheld Ernst & Young’s objections based on attorney-client and work-product privileges. Cendant could ask about the date and duration of meetings with McGraw and who else was present but not whether testimony was practiced or notes taken, said Tarleton. LAWYER VS. CONSULTANT Walls overturned Tarleton by drawing a line between matters that are legal in nature and those in the realm of the consultant “who is not dealing with the law but telling someone how to prepare it,” held Wall. He relied on Blumenthal v. Drudge, 186 F.R.D. 236 (D.D.C. 1999), which found no attorney-client privilege for communications between a client and a political consultant when no attorney was involved in the communication. In reversing, the appeals court noted that the work-product privilege is broader than the attorney-client privilege. The court rejected Cendant’s argument that Fed. R. Civ. P. 26(b)(4)(B), which allows discovery of expert opinions, supersedes Fed. R. Civ. P. 26(b)(3), which protects attorney work product. The work-product rule is independent of Rule 26(b)(4)(B), held the court, citing Bogosian v. Gulf Oil Corp., 738 F.2d 587. If Wall had been affirmed, it would have been bad news for the consulting industry. Ernst & Young had argued that without an expectation of privilege, it would not have retained McGraw or would have severely curtailed what it said to him. “If we were suddenly precluded from consulting about witnesses and witness evaluations, a lot of our work would be cut off,” says consultant Beth Bochnak, who had been following the case. “We have been operating under the assumption it was privileged as long as an attorney was present,” adds Bochnak, of National Jury Project/East in Madison. In accordance with guidelines from the American Society of Trial Consultants as well as good practice, “I would never interview a witness without an attorney being present,” she declares. Society president Richard Gabriel says that even though the ruling involves preparation of witnesses, he sees its logic as extending to other consultant functions like mock trials, focus groups and jury selection. The Cendant litigation began as a securities fraud class action suit over a $20 billion market capitalization loss. The main part of the case settled in 2000 with a $3.2 billion payment to shareholders — $2.85 billion from Cendant and $335 million from Ernst & Young, the company’s former auditors. In re Cendant Corp. Sec. Litig., 109 F. Supp. 2d 235. The settlement left pending cross claims by Cendant and Ernst & Young blaming each other for the loss. Under the settlement, the plaintiffs are entitled to half of any amount Cendant recovers from Ernst & Young. Lawyers for Cendant and Ernst & Young decline to comment on the case. Lead plaintiffs’ lawyer Daniel Berger, however, says the ruling on privilege is consistent with what most attorneys have understood. “As an attorney you want to have the ability to sit down with a consultant and get the benefit of their knowledge and throw out ideas,” says Berger, a partner with New York’s Bernstein, Litowitz, Berger & Grossmann, who represents the pension systems of the states of California and New York and the City of New York. Ernst & Young’s lawyers are Lowenstein Sandler partner Douglas Eakeley, and Alan Salpeter, a partner with Mayer Brown Rowe & Maw in Chicago. Cendant is represented by Gregory Diskant, a partner with New York’s Patterson, Belknap, Webb & Tyler.

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