Question

I am in-house counsel for a large corporation. Company officials often ask me to give legal advice, which includes discussion about the best strategies to address business decisions to be made by the company. Should I be concerned about how I present this advice?

Answer

An in-house counsel plays a very important role for a company, especially when counsel can provide legal advice to company officials and address business considerations based on his or her background and experience. While this provides an excellent service for the company, it also can create dangerous situations in which the advice might not be protected from discovery and disclosure in a litigation matter.

The analysis is more of an evidentiary question than a lawyer confidential-information question, but often the considerations are the same. If the lawyer is providing solely legal advice to company officials, that information should be kept confidential and should be exempt from disclosure under the rules of evidence. If the information provided by the lawyer is considered business advice, the attorney-client privilege might not apply and the information might not be considered protected.

A recent decision by the New Mexico Court of Appeals presents a good example of this distinction. The court held that attorney-client privilege did not apply to a memorandum that included “talking points” authored by a hospital’s in-house counsel. The memo contained legal and business advice concerning the employment separation of two physicians. Because some of the information was provided to hospital officials for the purpose of assisting them in seeking the resignation of one of the physicians, the court concluded that the memorandum was not subject to the attorney-client privilege because it contained this business information as part of the content of the document. The memorandum was then entered into the court proceedings and became part of the proof to support an award of compensatory and punitive damages against the hospital.

The hospital’s in-house counsel began the memo by indicating that the document was “confidential subject to attorney-client privilege,” but that language did not cause the court to stop its review of the document’s content. The court held that it should strike a balancing test to determine whether the information was privileged or not and held the following:

“A court faced with a situation where the primary purpose of a communication is not clearly legal or business advice should conclude the communication is for a business purpose, unless evidence clearly shows that the legal purpose outweighs the business purpose.” Bhandari v. Artesia General Hosp., 317 P.3d 856 (N.M. Ct. App. 2013).

The court went on to hold that the memo was prepared for the purpose of providing a script to the chief executive officer on how to engage one of the physicians in discussion about resignation from employment. The court held that the document should not be protected as a privileged document and allowed its introduction into the trial court proceedings.

Wisconsin SCR 20:1.6 provides a very broad definition of confidential information and states that everything related to the representation is considered confidential. That might not be sufficient to make the information privileged under the evidentiary rules, so in-house lawyers should be very careful how they communicate information to company officials and perhaps should generate two separate documents in order to preserve the confidentiality of true legal advice to the company. WL