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Attorney-Client Privilege in the Context of an Organizational Client

Published:  April 23, 2018

On April 19, 2018, the Federal Bureau of Investigation raided the office of President Trump’s personal attorney Michael Cohen. The resulting media coverage demonstrated a widespread misunderstanding of attorney-client privilege. While the specific application of attorney-client privilege in that case probably isn’t relevant to your business, it is important that you are aware of the specific protections afforded to your business by attorney-client privilege.

Attorney-client privilege is one of the oldest recognized protections of confidential communications. At the most basic level, attorney-client privilege serves the public interest and administration of justice by protecting the full and frank communication between clients and attorneys. This allows attorneys to provide candid advice and effective representation. To do that, attorney-client privilege protects communication between privileged persons made in confidence for the purpose of obtaining or providing legal assistance for the client.

Attorney-client privilege is easy to understand in the context of the individual client. The client is the privileged person. The privilege does not apply to communications between the attorney and the client’s spouse, parents, children and/or business partners. In order for attorney-client privilege to attach, the communication must be made in confidence. Therefore, communication between the privileged person and attorney loses the protection of attorney-client privileged if a non-privileged person is present. These concepts are relatively easy to understand. They become more complicated when the client is not a person, but a business. This is particularly true when communicating about a case filed against the business by a current or former employee.

When an attorney’s client is an organization, the attorney represents the organization itself. But obviously, the organization only exists as an idea. It cannot speak or make decisions. The organization is just a group of individuals. Therefore, communications and decisions must come from individuals authorized to act on behalf of the organization, i.e., officers, managers, etc. But these individuals authorized to act on behalf of the organization still aren’t the clients. So, who/what is entitled to attorney-client privilege?

The answer to this question has changed over time. Less than 40 years ago, most jurisdictions only recognized attorney-client privilege for communications between attorney and the organization’s “control group.” The “Control Group” Test was a doctrine that privilege would only apply to communications between attorney and employees in a position to control the actions taken or take a substantial part in a decision about any actions to be taken based on the attorney’s advice. The “Control Group Test” fell out of favor in the early 1980’s.

In Upjohn Co. v. United States, the Supreme Court recognized that the “Control Group” Test had limitations that frustrated the purpose of attorney-client privilege. The privilege is meant to ensure candid advice and effective representation; however, this cannot be accomplished unless the attorney is fully apprised of the facts. This often requires discussions with rank-and-file employees outside the “control group,” because rank-and-file employees often possess knowledge of the relevant facts. This information is necessary for the attorney to provide adequate legal counsel.

In Upjohn, the Court rejected the “Control Group” Test and fashioned a new test. The Upjohn Test focuses on the purpose of the communication. Under this test, privilege applies to communication between the attorney and an employee if four circumstances are satisfied. First, the communication is made at the direction of corporate officials for the purpose of obtaining information necessary for the attorney to provide legal counsel to the company. Second, the information held by the employee must be information related to matters within the employee’s scope of employment and are not available to higher level employees or officers. Third, the employee must be aware he is providing information with an attorney so that the attorney can provide the company with legal advice. Lastly, the communication must be kept confidential and only shared with employees that need to know the information. If these factors are met, attorney-client privilege applies regardless of the comparative rank of the employee. Massachusetts has adopted the Upjohn Test.

If you have any questions about any labor and employment law matters, please contact the attorneys at Royal, P.C.

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