1 EFFECTIVE IN-HOUSE COMMUNICATIONS AND PRESERVING THE PRIVILEGES Presented By: John Eldridge Haynes and Boone, LLP (713) and Chris Chaffin BMC Software August, 2006

2 PRIVILEGES (FRE 501) Attorney Client (Tx Rule 503) Work Product Doctrine (TRCP 192) Against Self-Incrimination (5 th Amendment) Husband – Wife (Tx Rule 504) Communications to Clergy (Tx Rule 505) FRE 501 Statutory Basis (States) and Common Law Basis (Federal) In Diversity Cases, State Law

3 General Overview of the Attorney- Client Communication Privilege In order to establish the attorney-client communication privilege, there must be a: Communication between a Lawyer and Client that was Confidential and remained Confidential for the purpose of seeking or giving Legal Advice, not business advice.

4 Who is the Lawyer?

5 Rule 503 Corporate Counsel Corporate Counsel, Licensed in any State Foreign Attorneys Outside Counsel

6 Who is the Lawyer? Rule 503 of the Texas Rules of Evidence: A “lawyer” is a person authorized, or reasonably believed by the client to be authorized, to engage in the practice of law in any state or nation.

7 Who is the Lawyer? Accountants Investigators Consultants Patent Agents Special Counsel Paralegals Agents or “Representatives” of the Attorney

8 Who is the Lawyer? A “representative of the lawyer” is: (A) one employed by the lawyer to assist the lawyer in the rendition of professional legal services; or (B) an accountant who is reasonably necessary for the lawyer’s rendition of professional legal services

9 In-House Counsel as Client or Attorney

10 Business Advice versus Legal Advice Where in-house counsel is also involved in the business matters of the company, e.g. as an officer of the company, the company must show that the advice was given when the lawyer was wearing the lawyer’s hat

11 Negotiating a Contract When in-house counsel is negotiating a contract, privilege not likely Negotiation is viewed more as business function Case specific decisions by courts Use outside counsel or have a business person involved in the negotiation Prepare a memo describing roles of the participants

12 Who is the Client? Rule 503 Agents or Representatives of the Client Employees Consultants & Independent Contractors Accountants Appraisers Insurance Agents

13 Who is the Client? Rule 503 of the Texas Rules of Evidence A “client” is a person, public officer, or corporation, association, or other organization or entity... who is rendered professional legal services by a lawyer, or who consults a lawyer with a view to obtaining professional legal services from that lawyer.

14 Who is the Client? A “representative of the client” is: (A) a person having authority to obtain professional legal services, or to act on advice thereby rendered, on behalf of the client; or (B) any other person who, for the purpose of effectuating legal representation for the client, makes or receives a confidential communication while acting in the scope of employment for the client.

15 Not all Corporate Employees are “Clients” * Corporate clients can share their knowledge of legal advice under some circumstances with other employees. * Dissemination of legal advice beyond those who “need to know” may waive the privilege.

16 Corporate Employees –“Control Group” rejected by Supreme Court – –Texas Rule 503 –“Subject-matter Test” The Control Group test was arbitrary. “Need to Know” is appropriate guideline –Restrict distribution of sensitive material

17 Consultants and Independent Contractors Is disclosure of attorney client communication “reasonably necessary” in order to inform the attorney of all pertinent facts. Insurance Agent Accountant Appraiser

18 Inter-Corporate Communications Legal advice disseminated to wholly owned subsidiaries held not to be a waiver Parent corporation and subsidiaries share a unity of interest such that the parent (as well as the subsidiary) is the ‘client’ for purposes of the attorney-client privilege Documents from subsidiary’s in-house counsel to parent’s in-house counsel, prepared for the purpose of obtaining legal advice or opinions, are privileged communications between client and attorney or as communications among counsel

19 Common Interests “Joint Defense” privilege Rule 503 of the Texas Rules of Evidence: Confidential communications between a client or lawyer and another lawyer representing a party in a pending action and concerning a matter of common interest.

20 Common Interests (Joint clients who later become adverse) Rule 503 of the Texas Rules of Evidence provides that “there is no privilege as to communications relevant to a matter of common interest between or among two or more clients if the communication was made by any of them to a lawyer retained or consulted in common, when offered in an action between or among any of the clients.”

21 What is a Confidential Communication? Rule 503 of the Texas Rules of Evidence: A communication is “confidential” if not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.

22 Confidential Communication? Communications often privileged if joint defense, but not if business enterprise Former employees - - may reveal information to others (e.g., new employer); treated as failed waiver Communications with auditors generally not privileged Presence of other people

23 What Communications are Privileged? Non-Confidential Information Provided to Attorney –Information that is not privileged when communicated to the attorney does not become privileged merely because it is communicated to an attorney Privilege Attaches to the Communication Itself –The privilege does not attach to the facts communicated, it attaches to the communication itself

24 What Communications are Privileged? Transacting the General Business of the Company – –Routine, non-privileged communications between employees transacting the general business of the company do not attain privileged status merely because an attorney is “copied” on the correspondence or memoranda

25 What Communications are Privileged? Client’s Recording of Facts Business Advice vs. Legal Advice Legal Advice Discussed by Clients Patent Work

26 Drafts prepared by counsel or circulated to counsel for legal advice are privileged if for the purpose of giving or obtaining legal advice. If draft is provided to a third party, no privilege. If draft is not in connection with litigation it is not Work Product. Can only claim Attorney Client Privilege. What Communications are Privileged?

27 The Work Product Exemption Rule of the Texas Rules of Civil Procedure defines Work Product: (1) Material prepared or mental impressions developed in anticipation of litigation or for trial by a party or a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, employees, or agents; Or

28 The Work Product Exemption Rule Or (2) a communication made in anticipation of litigation or for trial between a party and the party’s representatives or among a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees or agents.

29 Examples of Documents that are Not Work Product Topic outline prepared by in-house counsel for an oral presentation. Consultant documents submitted to regulatory authorities Materials prepared in the ordinary course of business or pursuant to public requirements unrelated to litigation.

30 Examples of Documents that are Not Work Product Draft contract prepared by transactional attorney Internal memorandum from one attorney to another reviewing transaction for client Attorney notes made before litigation was contemplated

31 Examples of Documents that are Not Work Product Litigation Disclosures concerning experts, trial witnesses, witness statements, contentions Trial exhibits Identification of potential parties and potential witnesses Photographs to be offered into evidence Rule of the Texas Rules of Civil Proc.

32 Examples of Work Product Attorney notes from interview of witness in anticipation of litigation or in connection with litigation Documents prepared in connection with litigation that has concluded.

33 Ethical Issues – Texas Disciplinary Rule 1.05 “Confidential Information” includes “privileged information” Rule refers to FRE 501, TRE 503 Lawyer obligated not to reveal confidential information, except: –when authorized by client –when client consents –to client representatives –to comply with Court orders –to prevent crime or fraud (by client)

34 Electronic Data and Communications Same rules apply as to paper documents Identify attorneys Identify all recipients Be careful to designate as confidential Encryption Limit distribution Segregate factual information

35 Protecting s Use an appropriate subject line referencing the litigation or subject matter Write your s like you would a letter instead of like a phone call If your client’s could be read out of context, clarify your client’s in your response

36 Protecting s, continued Use language that clearly shows you are providing advice or responding to a request for advice Limit the dissemination of your and advise your client not to forward s from attorneys to non-attorneys or to non- employees. Be careful to reply to the correct , not the that was attached

37 Waiver of the Privilege Intent - –If communication was intended to be communicated to a third party, it will not be protected by the attorney-client privilege Voluntary/Consensual Disclosure - –if the holder of the privilege, i.e. a client representative, voluntarily discloses or consents to disclosure of any significant part of a communication, the privilege is waived Subject Matter v. Communication - –Disclosing a subject discussed with an attorney does not waive the privilege; waiver occurs if the person discloses part of the communication itself Selective Disclosure –Disclosure of part of a privileged communication may waive the attorney-client privilege as to the whole communication

38 Electronic Discovery New Federal Rules (12/06) will address some issues on privilege (Rules 26, 16) Costs of E-Discovery can be huge Parties should agree about privilege claims (e.g., that inadvertent disclosure can be reviewed)

39 Making it Easier to Claim Privilege Inform your clients of the rules Mark your privileged communications as privileged. Don’t mark your non-privileged communications as privileged Make sure you include a signature block with information that shows you are an attorney

40 Internal Investigations Highly sensitive information – need to establish privilege and work product protections Voluntary waiver by corporations is more frequent (DOJ guidelines regarding corporation) Waivers can lead to private litigation and “torched” employees Selective waiver not favored by courts

41 International Issues Privileges not as robust in most other countries Europe accords protections primarily to outside counsel, not inside, but this could be changing Difficult for in-house counsel to count on confidentiality in Europe