Business advice by in-house lawyer not privileged

Non-legal business advice offered by a corporation’s in-house counsel was not protected by the attorney-client privilege, a Rhode Island Superior Court judge recently ruled in a case of first impression.
The corporate defendants argued documents sought by the plaintiffs in a class action were privileged material.
But Judge Judith C. Savage disagreed, writing in Waltz v. Exxon Mobil Corp. (Docket No. PC 02-2436) that “only those communications [with corporate counsel] made for the purpose of obtaining or acting upon legal advice should be protected.”
The attorney-client privilege, the judge continued, did not apply if “the predominant purpose of the communication was to provide business advice, analysis, or strategy.”
The defendants could withhold any communication where a corporate employee sought or acted upon legal advice concerning the duties of his or her employment, regardless of whether the employee had “special ‘authority’ to seek or act upon legal advice,” she wrote.
A communication made between two non-attorney corporate employees carbon-copied to the corporation’s counsel would be protected only if the communication was made for the purpose of securing primarily either an opinion on law, legal services or assistance in some legal proceeding, she added.
East Providence, R.I. attorney Brian R. Cunha, who represented the plaintiffs, said the ruling will aid lawyers seeking documents during the discovery process.
“Many in-house counsel are routinely making business decisions, and then companies claim that they are protected by attorney-client privilege when they aren’t, because the attorneys are making business decisions, not legal decisions,” said Cunha.
Lead counsel for the defendants, Robin L. Main of Providence, R.I., could not be reached for comment.
In April 2003, the plaintiffs served the defendants with requests for production of documents.
In response, the defendants produced hundreds of boxes of documents. They also produced a privilege log, showing a number of documents withheld on the basis of the attorney-client privilege, the joint defense privilege and the work product doctrine.
The plaintiffs then moved to compel production of the disputed documents.
Savage noted that the Rhode Island Supreme Court has not addressed whether business advice offered by corporate counsel is privileged, but said the high court has held that “only communications made for the purpose of securing primarily: (1) an opinion on law; (2) legal services; or (3) assistance in some legal proceeding qualify under the attorney-client privilege.”
If legal and business advice are inextricably intertwined, “the legal advice must predominate over the business advice, and not be merely incidental, for the communications to be protected by the attorney client privilege,” the judge wrote.