Nearly five years ago, the ABA House of Delegates passed a resolution voicing the organization’s support for the law firm in-house counsel privilege. It urged courts and legislatures to recognize that attorneys’ communications with their own firm’s in-house counsel are privileged, even when those communications relate to ongoing client matters. See 2013 ABA House of Delegates Resolution 103. That resolution came on the heels of decisions from the highest courts of Massachusetts and Georgia, which both held that attorneys can share an attorney-client privilege with their firm’s in-house counsel.
Although the majority of courts who have reviewed this issue have recognized and enforced a privilege shared between law firm attorneys and their in-house counsel, there is some uncertainty nationwide, particularly where the local courts have not addressed the issue directly. Some courts have recognized the tension that can exist between a law firm’s obligations to a client and the law firm’s interest in protecting its internal communications that could arise out of a concern or mistake in the representation of that client.
Although Connecticut courts have yet to directly address this question, a decision in the corporate context may shed some light. In Blumenthal v. Kimber Manufacturing, 265 Conn. 1, 826 A.2d 1088 (2003), the Connecticut Supreme Court confirmed the four criteria that must be present in the corporate context for the attorney-client privilege to attach: “1) the attorney must be acting in a professional capacity for the [corporation], (2) the [communication] must be made to the attorney by current employees or officials of the [corporation], (3) the [communication] must relate to the legal advice sought by the [corporation] from the attorney, and (4) the [communication] must be made in confidence.” Id. at 10–11.
These factors may have some relevance in the context of law firms, too. By reviewing the applicable corporate privilege law in Connecticut, along with decisions from those states that have expressly protected communications between law firm lawyers and their in-house counsel, attorneys can identify those steps that can help them avoid waiver of any protections.
Designate In-House Counsel in the Firm
Consistent with the first Blumenthal factor, formally appointing an attorney or group of attorneys as the law firm’s in-house counsel can provide benefits to both the firm and its clients. Because in-house counsel will generally handle multiple intrafirm matters, creating and using this position, for many firms, leads to increased efficiency and expertise. Handling firm matters on an ad hoc basis can be much less efficient. Designating in-house counsel can help prevent malpractice claims and may even help the firm reduce its insurance premiums.
Formally appointing an in-house counsel often means that the in-house counsel dedicates significant time to the representation of the firm’s interests, from maintaining confidentiality to ensuring conflicts of interests are avoided. Many larger firms decide to employ full-time in-house counsel that represent, at most, a limited number of clients.
Other firms may only have the need to appoint part-time in-house counsel. In those instances, the in-house counsel will usually represent outside clients in addition to the representation of the firm. To help bolster the privilege, the in-house counsel can clarify when she is acting as the firm’s counsel and when she is acting as counsel to her outside clients.
For some firms, depending on their size or need, they may choose not to formally designate an in-house counsel. Instead, they may delegate the in-house counsel responsibilities to firm attorneys on a case-by-case basis. This method may create additional risk because it may be harder for the firm to prove that certain communications were made pursuant to that attorney’s role as in-house counsel. If an attorney is acting as counsel to the firm with regard to a specific matter (for example, a client’s fee dispute), most firms will ensure that that attorney does not and has not represented that client previously. If no firm attorney can provide that role, firms may look to outside counsel.
Keep Client Files Separate From In-House Counsel Files
Another step firms can take to help safeguard the privilege is to segregate files maintained by in-house counsel from other attorneys’ files relating to client representations.
If the in-house counsel’s files are maintained in close proximity to or interspersed with client files, the privilege may be contested. If a communication or report, prepared by the in-house counsel, is stored as part of the client’s file and not a separate internal file, the client may stake a claim to those materials. Indeed, a former client challenging the privilege may argue that the failure to segregate in-house counsel files actually supports the client’s claims of firm misconduct or ethical rule violations. Physically separating the files, both electronic and paper, can reduce this risk.
Assign Appropriate Responsibilities to the In-House Counsel Position
To safeguard against this ambiguity and disputes, many firms will ensure that in-house counsel are categorically treated as such when rendering legal advice to the firm’s attorneys, in both form and substance. While the use of an official title like “General Counsel” is a starting point, some firms will assign the in-house counsel additional responsibilities such as investigating matters involving firm or attorney exposure, showing that the in-house counsel’s role is not in name only.
Other responsibilities that may be assigned to the in-house counsel include purchasing the firm’s legal malpractice insurance, resolving conflicts of interests, providing updates to firm attorneys on ethical obligations, documenting and reporting potential claims to the firm’s insurance carrier, and maintaining and updating the firm’s partnership agreement when necessary.
To further show legitimacy of the position, many firms will update their administrative procedures such that the in-house counsel treats the representation of the firm like that of a firm client. This process can include creating a unique billing number for in-house counsel matters or recording the hours billed to the firm. This can also help safeguard against an attorney seeking legal advice from the in-house counsel accidentally billing this time to the client.
Consideration of these steps may help firms protect their internal privilege while continuing to engage in client representations.
Alanna G. Clair is a partner at Dentons US in Washington, D.C., and focuses on professional liability defense. Shari L. Klevens is a partner at Dentons US in Atlanta and Washington, D.C., and serves on the firm’s U.S. board of directors. She represents and advises lawyers and insurers on complex claims and is co-chairwoman of Dentons’ global insurance sector team. Klevens and Clair are co-authors of “The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance.”