PRIVILEGES AND ETHICAL CONSIDERATIONS

Privileges and Ethical Considerations 1. Attorney-Client Privilege Recent Issues 2. Confidences When Claims by Counsel 3. When Elevator Talk = Conflict / DQ 4. Litigating in the Court of Public Opinion 5. Iowa Ethics Opinions (Most Recent)

Attorney-Client Privilege Review Limits of attorney-client and work product doctrines in internal investigations Attorney-client privilege: Iowa Code 622.10 Control Group test extends to those in control Rejected by Upjohn v. US (S. Ct. 1981) Iowa Supreme Court, in Keefe v. Bernard et al., 774 N.W.2d 663 (Iowa 2009) adopted subject matter test

Attorney-Client Privilege Review Subject Matter test: If employee discusses her own actions relating to potential liability of corp. (with in-house counsel), then those protected Employee to in-house re: legal advice on behalf of corp. = protected If employee is interviewed as witness to actions of others, then communication not protected A-C. Facts and circumstances analysis need to be clear.

Work Product Doctrine Review Work-product privilege Iowa R. Civ. P. 1.503(3) Protects materials prepared in anticipation of litigation or for trial By or for party or party s representative Attorney, consultant, insurer, agent

Internal Fraud Investigation Issue: motion to compel documents re: internal code of business conduct (COBC) investigation Investigation conducted by non-lawyers, reported to corp. s lawyers after investigation concluded Question: protected by A-C, WP?

Protecting A-C and WP in Internal Investigation Motion to compel granted, internal investigation documents not protected A-C, WP. United State ex rel. Barko v. Halliburton Co., 2014 WL 1016784 (D.D.C. 3/6/14) Investigation conducted by corp. non-lawyers, per COBC, before (and without) involvement of legal dept. Cf., Upjohn (protected investigation done aft. consult with legal dept. and outside counsel)

Protecting A-C and WP in Internal Investigation Also, no WP protection Use of non-lawyers made it hard to argue documents were prepared in anticipation of litigation Investigation conducted 2004-06 Complaint not filed until 2009

But DC Circuit Reverses 756 F.3d 754 (D.C. 6/27/14) (rehearing en banc denied 9/2/14) KRB s privilege assertion indistinguishable from Upjohn (S. Ct. 1981) (1) Fact that corp. s consultation of only in-house counsel (not outside, as in Upjohn) of no moment in-house does not dilute privilege (2) non-lawyers conducting interviews at direction of counsel does not dilute privilege

DC Circuit Reverses, Upholds Privilege (3) Upjohn does not require magic words when informing employees they are assisting counsel in legal investigation (4) Re: COBC investigation (not seeking legal advice) DC Cir.: if obtaining legal advice one of the significant purposes of communication, then privileges apply -- even if other purposes were regulation compliance (requiring investigation)

On Remand from DC Circuit: Shut Up Already! 2014 WL 6657103 (D.D.C. Nov. 20, 2014) KRB s repeated assertions that internal investigation yielded no evidence of fraud waived privilege R. 30(b)(6) deposition of KRB rep. instructed not to answer about investigation But on re-direct, KRB counsel elicited testimony that if fraud had been found, in normal course this would have triggered reporting (repeatedly said investigation yielded nothing) Court: this placed reports at issue fairness requires production

Barko In Practice Chevron Midstream Pipelines v. Settoon Towing, 2015 WL 65357 (E.D. La. Jan. 5, 2015): Chevron in-house attorneys initiated legally chartered root cause investigation Court rejects work product protection: Chevron engineer testified Chevron ordinarily conducts root cause investigations, to prevent similar accident in future To protect this, Company must demonstrate its investigation was different from ordinary demonstrate prepared in anticipation to litigation

Barko In Practice Renton v. Kone, Inc., 2014 WL 5472111 (Conn. S. Ct. Sept. 26, 2014) General Counsel directs Compliance Director to conduct internal investigation, re: improper HR practices Employees file bill of discovery, seeking production of investigation report Court: citing KRB (DC Cir. 2014), ruled in favor of internal investigations led by Company attorneys

Barko In Practice In re General Motors Ignition Switch, 2015 WL 221057 (S.D.N.Y. Jan. 15, 2015): GM outside counsel conduct 350 interviews of 200 current and former employees Court: both A-C and WP apply to protect from disclosing: Interviews conducted in light of GM s request for legal advice; Outside counsel started each interview stating purpose of interview was to assist with providing GM with legal advice; and Interview materials shared only with GM, its outside counsel

Best Practices: Protecting A-C and WP in Internal Investigation COBC investigations, other internal investigations use in-house and outside counsel as early as possible Use Upjohn letters formally document initiation of internal investigation legal advice for the corp. Give Upjohn warning to employees interviewed investigation done per corp. legal, for corp. Mark documents A-C, WP Involve outside legal where feasible in-house sometimes perform tasks in business capacity

Protecting A-C and WP in Internal Investigation Issue: same facts (and follow best practices above) but instead of non-lawyer employees, corp. uses outside consultants Company shares confidential information with outside consultants Such as public relations firm, re: Penn State scandal Question: A-C, WP waiver?

Answer: it depends Protecting A-C and WP in Internal Investigation In re Bristol-Myers Squibb Securities Litigation (D.N.J. 2003) communications with PR, marketing firms were not privileged, because not hired for litigation purposes But see In re Bieter (8 th Cir. 1994) inappropriate to distinguish between those on client s payroll and those who are instead, and for whatever reason, employed as independent contractors. Functional Equivalent test

Protecting A-C and WP in Internal Investigation Best Practices: When using consultants, use confidentiality and retention agreements Limit disclosure of communications to between consultant and corporate counsel Define which employees of consulting firm have access to confidential info Consultant must agree decision to waive/disclose rests with company The more exclusive relationship the consultant has, the more authority she has to make key corp. decisions -- the better Self-critical analysis privilege apply?

Inadvertent Waiver Responding to Public Records Request Ardon v. City of Los Angeles, 181 Cal. Rptr. 3d 324 (Cal. App. 2014) Public records request to City, per statute, re: potentially contaminated site (the subject of lawsuit; City not a party) City produced privileged documents PL counsel notified City, refused to return privileged docs Court: unlike litigation discovery, public entity waives privilege if it discloses pursuant to public records request Doesn t matter if discloser was low level employee who did not have authorization from City Counsel or City Attorney

Corp. Confidences When Claims by In-house Counsel Facts: Former in-house counsel, acting as relator in qui tam action under Fed. False Claims Act Gone from corp. for 5+ years before suit Discloses confidential corp. info his corp. provided below-cost services to health care providers to induce referrals of gov t-paid services Question: duty of confidentiality v. encouraging whistleblowing?

Corp. Confidences When Claims by In-house Counsel Held: violation of Rule 1.9(c) of Rules of Prof. Conduct by using confidential client information against former company Fair Laboratory Practices v. Quest Diagnostics Incorp., 734 F.3d 154 (2d Cir. 2013) Court: False Claim Act does not authorize person to violate state laws in order to assert claim Take-away: if attorney had issue, should have first gone to board to stop fraud; if board does not act, then o.k. to disclose.

Claims by In-House Lawyers Issue: when can in-house attorney, as Pl. in wrongful discharge action, disclose client (employer) confidences? Iowa Rule 1.6(b)(5) lawyer shall not reveal client confidences, except to establish a claim or defense for lawyer in lawyer-client dispute So here, in-house can offensively use client confidences to establish claim against client

Claims by In-House Lawyers But see D.C. Rules and Ethics Committee: Rule 1.6(e)(3): D.C. Bar members may only reveal client confidences and secrets as a defense to an employer claim, not offensively to establish a claim Ethics Committee: in-house lawyer can t use when filing claim, but can if employer puts confidences at issue, such as with affirmative defense or counterclaim

Claims by In-House Lawyers D.C. Ethics Cmt.: lawyer knowing confidences might be put at issue does not preclude asserting claim Assoc. Corp. Counsel Legal Strategist: difficult to navigate, as chief desire is to protect client confidence Strategy for Employer: Check ethics rules in this situation Determine if you can protect confidential info, by not putting at issue

When Elevator Talk = Conflict/DQ Issue: when does consulting attorney s informal chat with another lawyer, not associated to matter, become an ethical violation and/or DQ event? In Re Liebnow v. Boston Enterprises, 2013 WL 453912 (Colo. 2013): CO S. Ct. affirms lower court s order disqualifying Pl. s pro hac vice motion, where Def. counsel previously consulted out-of-state counsel at same firm, on same case

When Elevator Talk = Conflict/DQ Facts -- Pl. child, ill from E. coli in salad, sues Def. CO Def. counsel called Seattle lawyer in small firm specializing in food-borne illnesses Had one call, several emails Def. counsel did not ask consulted lawyer to keep confidential Def. counsel had no bad intent not done to DQ Discussed case theories, trial expert, adding another Def. Months later, Pl. counsel tries to add another from same Seattle firm to case (potential conflict imputed)

When Elevator Talk = Conflict/DQ CO S. Ct. Ruling: Abuse of discretion standard of review (had lower court allowed, unclear if there would have been reversal) Consulted lawyer subject to DQ (unclear if consulting attorney subject to ethics violation) Rule 1.7(a)(2) conflict of interest = risk that representation of one client (Pl.) here limited by lawyer s responsibility to... a third person (Def., from the consultation)

When Elevator Talk = Conflict/DQ Dissent: majority deprived Pl. child of fundamental tenet of choice of counsel And, elevator talk, vital to profession, won t happen Best Practices: Use hypothetical Do not disclose privileged, confidential information Consulted attorney should ask if confidential Ask for waiver of confidentiality and right to DQ (?)

Litigating in Court of Public Opinion Constitution protects right of lawyer to speak in defense of clients, and right of public to learn about case But, Rule of Prof. Conduct 3.6 sets limits: Lawyer in matter shall not make extrajudicial statement that lawyer knows/should know will be publicly distributed and is likely to prejudice the proceeding

Litigating in Court of Public Opinion Criminal trials most sensitive Civil jury trials also sensitive Non-jury, arbitration proceedings less so Standard may govern distribution of court pleadings, transcripts without comment (PA Op. 96-45) Especially if information is likely inadmissible

Litigating in Court of Public Opinion Timing of disclosure a factor eve of trial disclosure more likely to prejudice proceeding For sanctions, proof of actual prejudice not required (just likelihood ) Applies only to lawyers participating or has participated in proceeding APPLY TO GC? Does not apply to clients (but GC subject to R. Prof. Conduct) Rule 3.6(d) applies to lawyers associated in firm handling matter

Litigating in Court of Public Opinion Protected Conduct: Does not apply to in-court statements Except where confidential (settlement, court order), can state claim, defense involved, ID people Information contained in public record (court-filings) Scheduling or result of any step of litigation My practice, without comment But see protective orders, must be admissible

Litigating in Court of Public Opinion Rule 8.2 Limits Criticism of Judges Lawyer shall not make statement she knows is false or with reckless disregard to the truth/falsity concerning qualifications, integrity of judge Applies to public and private (letter to opposing counsel) comments Applies even where lawyer acting as private citizen Does not apply to true statements or statements of opinion (narrowly construed to judicial elections)

Iowa Ethics Opinion 14-02 (October 2014) Issue: propriety of calling opposing counsel s conduct unethical? Rule 32:8.3 mandates reporting unethical conduct Rule 32.8.4(c): professional misconduct to engage in misrepresentation ABA Formal Op. 94-383: despite the absence (in R. Prof. Conduct) of an express prohibition on the subject[, s]uch a threat may not be used as a bargaining point...

Iowa Ethics Opinion 14-02 (October 2014) If warning issued as threat or to coerce, it violates Iowa S. Ct. Rule 33.1(1): lawyers conduct should be characterized... by personal courtesy and professional integrity. Violates Iowa S. Ct. Rule 33.1(3): uncivil conduct delays and denies justice. Bottom-line: wrongfully accusing fellow lawyer of unethical conduct = antithesis of professionalism

Iowa Ethics Opinion 15-01 (January 2015) Issue: lawyer communicating with client via email Warn client about risk of sending, receiving email using device which a 3d party may access (i.e., employer access to employee email accounts); Lawyer responsibility to first consider whether, given client s situation, there is a significant risk that third parties will have access; If so, then lawyer must use reasonable care to protect confidentiality of communications

Iowa Ethics Opinion 15-02 (January 2015) Issue: interception of confidential or attorneyclient communication Starting point assume lawyer was not involved in interception of communication (as this would violate Rule 32:1.2(d) (lawyer shall not counsel client to engage in criminal, fraudulent activity) Rule 32:4.4(b): lawyer who receives document relating to representation of another lawyer s client and knows document inadvertently sent shall promptly notify the sender.

Iowa Ethics Opinion 15-02 Reliance on Iowa R. Civ. P. 1.503(5)(d) additional requirement after being notified of inadvertent production, recipient must sequester or destroy the info, and can t disclose it until issue is resolved. Recipient may present info to court under seal to resolve. Conclusion: Stop, Notify and Return inadvertently produced documents

Iowa Ethics Opinion 15-02 Interception under color of right (e.g., employer intercepts, claims employee violated rules re: nonbusiness use of work computers) ISBA Ethics and Guidelines Cmt. rejects ABA Opinions contending no need to notify and return ISBA: Stop, Notify and Return apply here, too so all parties are on notice and can litigate claim of right

Iowa Ethics Opinion 15-02 Wrongful Interception (e.g., client intentionally intercepts confidential communication between other party, her attorney)? Crime-fraud exception to obligation of client confidentiality, Rule 32:1.6(b)(2) lawyer may reveal info where lawyer reasonably believes necessary to prevent client from committing crime/fraud that is reasonably certain to result in substantial injury to financial interests or property of another

Iowa Ethics Opinion 15-02 Wrongful Interception: Advise client of counsel s duty to stop, notify and return If client objects, counsel should vet crime-fraud exception to client confidentiality under Rules of Prof. Conduct If this mandates disclosure, return the documents to lawyer involved or file same under seal with court without explanation and withdraw

THANK YOU Follow up questions can be directed to Timothy J. Hill at thill@bradleyriley.com Cedar Rapids 2007 First Avenue SE PO Box 2804 Cedar Rapids, Iowa 52406 Ph: 319.363.0101 Fax: 319.363.9824 Iowa City Tower Place One South Gilbert Iowa City, Iowa 52240 Ph: 319.466.1511 Fax: 319.358.5560