Be Mindful of Who’s In the Room:
Attorney-Client Privilege and Waiver
By John J. Lovejoy, Esq.
It seems like a harmless request: your client asks if he can bring his trusted friend to your next meeting. At your previous meetings, the client failed to remember facts about his case. He spent most of his time raging against the opposing party (a former business partner now suing him for fraud). Wishing to please the client, you tell him his friend would be welcome at your meeting.
This meeting goes well. The friend helps your client recall key facts. And with his friend present, the client maintains his composure. He patiently listens while you explain your theory of the case and your strategies for prevailing. He’s happy, you’re happy.
At least until the following week, when a deposition notice for the friend arrives at your office. During the deposition, opposing counsel asks the dreaded question: “Did you discuss this case with your friend or his lawyer?” You object, he insists he will move to compel, and your client clutches his pen so hard it cracks and leaks ink all over the table.
Most lawyers are cautious enough to avoid this scenario. In talking to their clients, they will exclude all third parties from their client communications to avoid waiving a privilege. This is unfortunate, since a client’s friend or advisor can help facilitate the attorney-client relationship. For example, where a client regularly relies on a friend for advice or support, they can find it disconcerting to have that friend unavailable in the midst of stressful litigation. Or a client may wish to use an intermediary for her attorney-client communications.
Courts have recognized these benefits and extended the attorney-client privilege to protect communications involving third parties. But this protection is vague and uncertain. One well-respected treatise states:
“The client may use an agent for communicating with the attorney. As long as the client reasonably expects the agent to keep the communication confidential from third parties … the privilege should apply.”
“On occasion, parties choose to communicate through third parties for the sake of convenience. In most instances, such communication will negate the requisite confidentiality for the communication to be privileged.”
Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product Doctrine (5th ed. 2007).
Greater certainty in this area would benefit lawyers and their clients. What follows is a modest attempt to survey some of the leading cases on this topic.
The Kovel Doctrine: Attorney-Client Privilege Can Extend to the Attorney’s Agents
In determining whether the presence of a third party destroys the attorney-client privilege, many courts look to the landmark decision of United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). In Kovel, an accountant who worked for a law firm (but was not a lawyer) spoke to a client of the firm. The accountant was then subpoenaed by a grand jury investigating the client. Refusing to disclose his communications with the client, the accountant maintained that the attorney-client privilege extended to these communications. The employee was held in contempt, and appealed.
Vacating the contempt finding, the Second Circuit explained that “the complexities of modern existence prevent attorneys from effectively handling clients’ affairs without the help of others” such as secretaries, file clerks, and (with certain clients) translators. Thus, the attorney-client privilege may extend to these agents. But it can also extend to an accountant when, for example, a client relates a complicated tax story and the accountant’s help “is necessary, or at least highly useful, for the effective consultation between the client and the lawyer which the privilege is designed to permit.” On the other hand, if the client is seeking tax or accounting and not legal advice, no privilege exists.
Federal courts, including the U.S. District Court of Maryland, have applied the Kovel rule. In Neighborhood Development Collaborative v. Murphy, 233 F.R.D. 436 (2005), a defendant used a financial consultant/advisor as a conduit of information between himself and his lawyers. The plaintiff moved to compel production of documents from the defendant’s lawyers, arguing that the defendant waived his attorney-client privilege by sharing the documents with his advisor. The district court denied the motion to compel, ruling that the “intermediary doctrine” protected the communications because they were made in confidence for the purpose of obtaining legal advice from an attorney. The court rejected the movant’s argument that the defendant had to show “a fundamental inability to communicate [with his lawyer] without the intermediary’s assistance[.]”
The NDC court distinguished a previous Maryland federal case where accountants communicated with lawyers, Black and Decker Corp. v. United States, 219 F.R.D. 87 (D. Md. 2003) on the basis that, in the prior case, the accountants’ primary role was to provide tax and business advice rather than assist plaintiff's attorneys in providing legal advice. The Black and Decker Court reached this conclusion based on the following factors: “1) to whom was the advice provided – counsel or the client; 2) where client’s in-house counsel is involved, whether counsel also acts as a corporate officer; 3) whether the accountant is regularly employed as the client’s auditor or adviser; and 4) which parties initiated or received the communications.”
The Kovel Doctrine in Maryland State Courts
An attorney should hesitate before bringing a third party into his or her client communications based on the cases discussed above. First, it is difficult to show that a client spoke to a non-lawyer to obtain “legal advice” rather than business advice. Second, it is not clear that Maryland state courts even apply the Kovel doctrine in civil cases.
In a criminal case, State v. Pratt, 284 Md. 516 (1979), the Court of Appeals held that the attorney-client privilege applied to communications between a client and a psychiatrist retained by defense counsel to help prepare and insanity defense. Citing Kovel, the Court explained that “in criminal causes communications made by a defendant to an expert in order to equip that expert with the necessary information to provide the defendant’s attorney with the tools to aid him in giving his client proper legal advice are within the scope of the attorney-client privilege.”
Conversely, the Court of Appeals rejected a privilege claim in E.I. du Pont de Nemours & Co. v. Forma-Pack, Inc., 351 Md. 396 (1998). DuPont’s legal department hired a collection agency to undertake collection efforts against Forma-Pack. The collection agency then retained an attorney to sue Forma-Pack, on DuPont’s behalf, seeking the alleged debt. Forma-Pack sought discovery from the collection agency, including documents reflecting the agency’s communications with retained attorneys. DuPont moved for a protective order, which the trial court denied. The Court of Appeals affirmed in a 4-3 decision, reasoning that DuPont hired the collection agency for a business purpose (to collect a debt) rather than a legal purpose.
The dissenting judges criticized the majority’s ruling. Citing Kovel, they noted that courts “have recognized circumstances in which the attorney-client privilege extends to communications between an attorney and an agent hired on behalf of a client.”
Newman v. State: A “Cool Head in the Room” May Not Destroy the Privilege
In Newman v. State, 384 Md. 285 (2004), the Maryland Court of Appeals considered facts similar to those stated above in the introduction. Elsa Newman met with her attorney to discuss a heated custody dispute with her soon-to-be ex-husband. A long-time friend and confidant accompanied Ms. Newman to the lawyer’s office. When the lawyer saw how distraught Ms. Newman was about her situation, he invited her friend to sit in on the meeting.
The Court noted that generally the presence of a third party will destroy the attorney-client privilege, citing Forma-Pack. But this general rule did not apply here, the Newman Court held, because Ms. Newman “reasonably understood the communications in question to be confidential” despite the friend’s presence. The Court added that “only the client has the power to waive the attorney-client privilege[.]” Since it was Newman’s lawyer who suggested that her friend participate in their meeting, Newman’s consent to the friend’s participation did not waive privilege.
In other words, had Newman suggested that her friend participate in her attorney meeting, she might have waived any privilege in the communications. This seems like an unusual distinction: while courts agree that the client “owns” the privilege, they have held that as the client’s agent, the attorney can waive the privilege. For example, when an attorney inadvertently discloses privileged documents to opposing counsel, such disclosure can waive the privilege even though the client did not authorize it.
But if Newman is read narrowly, the client in the hypothetical above has waived the attorney-client privilege because he, not his lawyer, chose to include a friend in his communications.
In two (non-precedential) opinions, Maryland Circuit Courts have rejected privilege claims based on the reasoning of Forma-Pack. In RCC, Inc. v. Cecchi, No. 323447 (Cir. Ct. Mont. Cty 2010), the court held that the company failed to show that its communications with its accountant “were necessary for the translation of information involving legal advice.” While the company cited Newman v. State in support of its privilege claim, the court found that Newman “should be limited” to a situation where the presence of a third party was reasonably necessary. The RCC court also noted that in Newman it was the lawyer, not the client, who decided to include the third party.
Similarly, the court in Devetter v. Alex Brown Mgmt. Svcs., Inc., No. 24-C-03-007514 (Cir. Ct. Balt. City 2006) rejected plaintiffs’ claim that their communications with counsel involving their financial advisors were protected by the attorney-client privilege. The plaintiffs cited the Neighborhood Development case as persuasive authority in favor of their claim. But the court rejected the decision, opining that Maryland’s appellate courts were unlikely to follow it. The court added that Newman v. State “was expressly limited to the situation where the client merely acquiesced to the presence of a third party in attorney communications. It has never been extended by a Maryland court to a situation where the client specifically retains a third party to communicate with counsel.”
Several lessons can be extracted from the divergent opinions discussed above. First, since one can never be sure where a case will end up, it is wiser to follow the more restrictive approach to privilege adopted by Maryland’s state courts. Second, if one must use a non-attorney third party to communicate with a client, be sure these communications do not stray into business or tax advice, but remain focused on legal advice.
Mr. Lovejoy is an associate with Shapiro Sher Guinot & Sandler in Baltimore, Maryland. He can be reached at (410) 385-4204 or at firstname.lastname@example.org.