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2016 Mitigating Risk: Key Litigation Developments

Commercial Litigation: Procedural Issues >> Protecting the Attorney-Client Privilege While Using Third-Party Consultants

April 5, 2016

There can be no question that business and legal transactions have become increasingly multi-disciplinary and complex. Business executives and their legal counsel frequently seek guidance from a variety of external consultants, including outside accountants, financial advisors, executive benefits consultants, human resources specialists, insurance brokers, executive recruiters, and public relations advisors (especially in crisis communication situations). Can a company rely on the attorney-client privilege to protect the confidential nature of communications with these external consultants, or will the use of an external consultant constitute a waiver of privilege?

The attorney-client privilege protects communications between a client and counsel that were intended to be confidential and were kept confidential, where the communications were made to obtain or provide legal advice. In some circumstances, the attorney-client privilege may extend to non-lawyers consulted by internal corporate counsel and external counsel at law firms if the communications were made in confidence for the purpose of facilitating the attorney providing legal advice.

There are several steps a company can take to maximize the possible extension of the attorney-client privilege to consultants who assist counsel in providing legal advice. First, companies should have their attorneys, rather than a businessperson, seek the assistance of the consultants. Second, the attorney should indicate that the assistance of the consultants is being sought to help provide legal advice and be the one hiring the consultants if the consultants are being retained for a particular project.

Third, a consultant’s engagement agreement should indicate that the consultant is working at the direction of legal counsel and also should describe the manner in which the engagement relates to a legal issue. Fourth, a consultant should render a separate invoice for the work being provided to the client at the direction of legal counsel, separate and apart from its invoicing for other services the consultant may be providing to the client.

It is also advisable for attorneys to be copied on written communications with the consultants, and all written communications with the consultant should be marked “confidential and privileged.” The same degree of care should be followed in verbal communications. Preferably, the client’s attorney would be present during discussions between the client and the consultant. In at least one instance, however, a federal district court in New York ruled that communications between a client and consultant were privileged without the presence of an attorney because the communications were directed at giving or obtaining legal advice.

Finally, attorney-client privileged communications should not be shared with anyone, including spouses, family members, and friends; doing so risks waiving or destroying the privileged nature of the communications.

Takeaways

  • The complexity of modern legal issues often requires in-house and outside counsel to discuss legal issues with third-party consultants for the lawyers to be able to provide complete, accurate, and useful advice.
  • To help to ensure that communications with third-party consultants are not discoverable, attorneys, clients, and consultants must take steps to show that the communications are necessary for the provision of legal advice.

Author(s)

MICHAEL C. LASKY
Partner/Co-Chair
212.468.4849
mlasky@dglaw.com
Litigation

JOSHUA B. PODOLNICK
Associate
212.468.4983
jpodolnick@dglaw.com
Litigation