While safeguarding the company’s attorney-client privilege usually is one of counsel’s highest priorities in a government investigation, there are times that intentionally waiving the privilege may be advantageous. The reasons for contemplating a waiver of privileged information vary. For instance, asserting the affirmative defense of reliance on advice of counsel, which may negate intent in civil and criminal actions, generally requires disclosure of attorney-client communication. See In re Grand Jury Proceedings, 219 F.3d. 175, 182 (2d Cir. 2000) (discussing the waiver required in an advice-of-counsel defense). Sharing an internal investigation into alleged wrong-doing with the government also requires some disclosure of privileged communication.
Regardless of the reason, the decision to waive privilege should be made within a consistent framework that evaluates the risks and rewards it presents to the company. This framework, which is discussed below, will assist counsel in advising a client about whether to waive the privilege in an investigation.
It is commonly accepted that privilege cannot be used as both a shield and a sword. See, e.g., Willy v. Administrative Review Bd., 423 F.3d 483 (5th Cir. 2005); U.S. v. Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991). A client cannot rely on privileged communications to its benefit and then shield the underlying communications from the scrutiny of an opposing party. Although this principle is clear, there are two practical points that warrant further understanding.
First, the breadth of the privilege waiver in a pending investigation can be difficult to predict. For instance, the company may intend to waive privilege over only one email string. Pursuant to Federal Rule of Evidence 502(a), however, the waiver of privilege may expand if the following two circumstances exist: “the disclosed and undisclosed communications or information concern the same subject matter”; and “they ought in fairness to be considered together.” Fed. R. Evid. 502(a). Thus, disclosing one email may result in waiver over an entire subject. Subject-matter waiver is designed for “unusual situations” in which additional information must be disclosed “to prevent a selective and misleading presentation of evidence to the disadvantage of the adversary.” Id. (advisory notes). This standard, though, leaves room for interpretation and the possibility of litigation concerning it.
Second, the decision to waive privilege in an investigation likely means that the privilege is waived in subsequent litigation. Currently, only the U.S. Court of Appeals for the Eighth Circuit maintains a “selective waiver” approach to privilege disclosures, which means that waiver in a government investigation is not necessarily waiver for all future litigation. See Diversified Industries Inc. v. Meredith, 572 F.2d 596, 611 (8th Cir. 1977). There are no other circuits that support that view. As the D.C. Circuit explained, a client “cannot be permitted to pick and choose among his opponents, waiving the privilege for some and resurrecting the claim of confidentiality to obstruct others, or to invoke the privilege as to communications whose confidentiality he has already compromised for his own benefit.” Permian Corp. v. U.S., 665 F.2d 1214, 1216-17 (D.C. Cir. 1981). Most recently, the Ninth Circuit adopted the majority approach by declaring that “voluntarily disclosing privileged documents to third parties will generally destroy the privilege.” In re Pacific Pictures Corp., 679 F.3d 1121, 1127-28 (9th Cir. 2012) (following the First, Third, Sixth, Seventh, Tenth and D.C. circuits in rejecting selective waiver). A client must understand that disclosing information to the government essentially is agreeing to disclose it in any future lawsuit.
With those legal principles in mind, there are five overarching considerations for deciding whether to intentionally waive the attorney-client privilege:
• 1. Thoroughly investigate the privileged relationship. The first step in making a waiver decision is conducting a thorough review of all privileged information related to the subject matter of the investigation. This may be intuitive, but it can be tempting to short-circuit this process in the interests of time and resources. Although the company may have a legal basis to argue against subject-matter waiver, counsel must have a firm grasp of the potential pitfalls of the worst-case scenario. Electronic and paper communication, calendar appointments, handwritten notes and saved voicemail messages belonging to the company and to outside counsel should be analyzed.
Outside counsel should be interviewed to determine whether they possess pertinent information that is not contained in the documents. And key company employees should be interviewed to determine whether they shared all relevant information with outside counsel. This last step is particularly important if the reason for contemplating waiver is to assert a reliance on counsel defense, as that is one of its elements. Each of these steps will inform the company whether the waiver of privilege would be a net gain in the investigation even if it resulted in subject-matter waiver.
• 2. Assess the entirety of the information for unintended consequences. The second strategic consideration is to assess the nongermane information that is contained in the privileged material. Reviewing email messages for unrelated information is particularly important because many emails include comments about several different subjects. There may be messages that could educate the investigating agency about unrelated potential violations of law that otherwise would remain undetected. It also is possible that counsel’s handwritten notes contain detrimental information about the company’s planned actions or its key executives. Disclosing such information to the government, and potentially having it admitted into evidence at a trial, could have unfortunate unintended consequences for the company and its leadership.
• 3. Consider the company’s risk of litigation after the government’s investigation ends. Counsel also must evaluate the likelihood of future litigation on topics that would be disclosed to the government. As discussed above, the company likely loses control of the privileged information after the government receives it. This means that the company cannot disclose confidential information without assessing the likelihood of private-party litigation that may be initiated after the government inquiry ends. The assessment should include potential federal as well as state law claims. For each claim, the company will want to review the statute of limitations, as some of them may be time-barred. Additionally, the company will want to consider the likely damages if the claims were successful. Depending on the issues involved, it is possible that the penalty to be imposed by the government is not as burdensome as the likely result of future private-party litigation. In those situations, the benefits of waiver generally do not outweigh the risk of disclosure.
TIMING IS CRUCIAL
• 4. Evaluate the timing of a waiver. If the company is leaning toward waiving privilege, timing becomes an issue. The company’s timing consideration often is complicated when the government plans to take sworn testimony from employees. Depending on an employee’s knowledge, the waiver decision may affect an employee’s ability to present a cohesive version of events without concern for violating the company’s privilege instructions.
Deciding whether to waive the privilege prior to sworn testimony requires making a decision in at least a partial vacuum. Companies generally gain a clearer understanding about the government’s investigation as employees are questioned. Accordingly, postponing a final decision on waiver until after testimony begins may allow the decision to be more informed. It also is possible that the government’s interest in a subject either refocuses or terminates after interviews or testimony.
On the other hand, the consequences of waiting must be considered. If waiver occurs after testimony begins, the government may seek additional testimony from the employees. Having witnesses provide multiple statements to the government creates separate risk considerations in the investigation.
• 5. Explore options in lieu of document production. Finally, after the waiver of privilege appears to be the correct decision, counsel should weigh options in lieu of producing documents. For instance, the government may permit counsel to give an attorney proffer about the information. This would provide the government with the key information while avoiding a large-scale document production that can be a road map for private litigants. Alternatively, the company may be able to develop a privilege log that contains sufficient information without producing actual documents. Taking these interim steps may at least narrow the government’s interest in reviewing the paper record.
Making the decision to waive attorney-client privilege can be resource-intensive, and it may be tempting to make it based on a minimal review of the relevant information. Even if the intended waiver is fairly discrete, though, that disclosure can have long-term implications for the company. Accordingly, in most situations, investing the resources in a thoughtful analysis is worthwhile and will pay dividends if the company is faced with future litigation.
Lisa Krigsten, a partner in the Kansas City, Mo., office of Husch Blackwell, has a white-collar criminal defense practice. She is a former federal prosecutor with the U.S. Department of Justice in Washington.