Legal Ethics and Crisis Management

Selected Ethical Issues in
Crisis Management
Presented by
Dennis P. Duffy
Who is the Organizational "Client“?
ABA Model Rule 1.13
– A lawyer employed by or retained by an
organization represents the organization
acting through its duly authorized
Who is the Organizational "Client"?
Handling misconduct/wrongdoing by staff and other
governmental constituents
– ABA Model Rule 1.13
Move "up the ladder"
In extreme cases, break confidentiality
– Public Company--SOX reporting obligations
Who is the Organizational "Client"?
Interviews with Individual Corporate Employees/Officers
Explain that the client is the agency (unless a joint
representation situation)
Give warnings regarding confidentiality and privilege
Dispel any misunderstanding about separate
attorney-client relationship
Who is the Organizational "Client"?
Talking to Individual Employees/Officers: ABA
Model Rule 1.13(f):
– In dealing with an organization's directors,
officers, employees or other constituents, a
lawyer shall explain the identity of the client
when the lawyer knows or reasonably should
know that the organization's interests are
adverse to those of the constituents with whom
the lawyer is dealing.
Conflicts Involving "Virtual"
Former HR Managers/Employer Representatives as
Unless law firm individually represented corporate constituent,
there is no express attorney-client relationship/disqualification
(See Cole v. Ruidoso Municipal Schools, 43 F.3d 1373 (10th
CIr. 1994)
However, attorney-client relationship can be implied by
conduct, especially where lawyer is not sufficiently clear with
constituent as to whom firm represents (See Home Care
Industries v. Murray, 154 F. Supp. 2d 869 (D. N.J. 2001)
Note: Former corporate constituents may carry with them
"property" of the employer (attorney-client privilege information,
trade secrets, etc.)
Basic Privilege Issues
Choice of Law
Always be sure to check the rules that apply to your
specific jurisdiction!
• Don't assume that the local law of the
jurisdiction provides the substantive privilege
rule in litigation.
• Majority of U.S. states will look to the law of the
state with the most significant relationship to the
communication. Ford Motor Co. v. Leggat, 904
S.W.2d 643 (Tex. 1995).
• Federal courts sitting in diversity look to the
choice-of-law analysis of the forum state.
Attorney Client Privilege:
General Rules
A client has a privilege to refuse to disclose
and to prevent any other person from
disclosing confidential communications
made for the purpose of facilitating the
rendition of professional legal services to the
client . . .
Lawyer-Client Privilege: General
• Holder of the privilege is, or sought to
become, a client, and
• Communicated with a member of the bar
of a court, or his/her representative,
• Who, in connection with the
communication, was acting as an
attorney, and
• The communication was for the purpose
of securing legal advice.
"Representatives" of client and
• Client representative:
– person with client's authority to get or act on legal
advice, or
– employee of client, acting in scope of employment,
who is effectuating legal representation (paralegals)
– Note: some jurisdictions apply a different, "control
group" standard for determining who qualifies as the
"client" in the corporate context
• Lawyer representative:
– employee of lawyer assisting rendition of legal
services, or
– accountant reasonably necessary to provide legal
Attorney-Client Privilege
• Applies to communications made by the client
– Attorneys’ communications may also be protected if
an attorney’s communication reveal the substance of
a client communication
– Some courts impose “necessary and inevitable”
standard instead of “based on” standard for
determining whether a lawyer’s communications to a
client are privileged
• Client cannot protect a document unless such
document prepared for purpose of communication
with lawyers
• Redaction may be an option if document has both
privileged and non-privileged material
Communications between non-lawyer employees may be
privileged if made for purpose of facilitating attorney's advice to
the corporate client.
In re JDN Real Estate-McKinney, L.P. (Tex. App.--Dallas 2006)
Single email from CEO & president of corporation protected by privilege, as
part of string of privileged emails; although email itself did not reveal
confidential information, it was part of the context and subject of the privileged
string of communications.
Clover Staffing Inc. v. Johnson Controls World Services, Inc. (S.D. Tex. 2006)
Emails from corporate official to other corporate officials were protected by the
attorney-client privilege; although none of the officials were attorneys, emails
were sent at the suggestion of the corporate legal department to gather
information that could be used by attorneys in negotiating with subcontractor
to resolve contract issues.
Involving a lawyer in the communication doesn't
necessarily make it privileged
Baran v. Walsh Construction Co. (N.D. Ill. 2007)
Emails between officials of defendant construction company and its vice
president in charge of insurance department were not protected by the
attorney-client privilege; although vice president also worked in the legal
department of the company, he was acting in his capacity as the head of
the insurance department, not in his capacity as company’s legal counsel.
SmithKline Beecham Corp. v. Teva Pharmaceuticals USA, Inc. (E.D. Pa.
“What would otherwise be routine, non-privileged communications
between corporate officers or employees transacting general business of
the company do not attain privileged status solely because in-house or
outside counsel is ‘copied in’ on correspondence or memoranda.”
Some Exceptions to LawyerClient Privilege
1. Furtherance of crime or fraud.
2. Breach of duty by a lawyer or client. [Inhouse counsel claims may qualify]
3. Document attested by a lawyer.
4. Joint clients.
Joint Defense Agreements/Common Interest Privilege
• May preserve privilege for communications
between multiple parties with common
interests. But:
• Communications prior to entry of joint
defense agreement might NOT be privileged
(Strong v. State (Tex. Crim. App. 1989))
• Some jurisdictions (TX, AK, KY, OK, S.D.) do
not recognize common interest privilege
without pending litigation
Joint Defense Agreements
• Such agreements may create potential for
disqualification in later action against the codefendant
– National Med. Enterprises v. Godbey (Tex. 1998)
Firm represented employee of corporation in
connection with criminal investigation; did not
represent corporation but had JDA with it
Firm later sought to represent plaintiffs in suit against
Court: JDA did not create attorney-client relationship
between firm and corporation, BUT law firm
disqualified because the JDA created a duty to
maintain co-defendant corporation's confidences to
the same extent as the firm's own client.
• Generally, disclosure to third parties constitutes
waiver as to the subject matter.
• Offensive use of some privileged communications
can waive the privilege generally (sword/shield
• Limited waiver may be possible in the context of
cooperation with a government investigation.
• Disclosures to auditors are often held to be
• Inadvertent production
– "Snap Back" rules (Texas)
– Fed. R. Evid. 502
Waiver — Disclosure to Third
• Voluntary Disclosure –
– To any party not necessary to facilitate
confidential communication between attorney
and client
– Public Relations Specialists--Split Decisions
Waiver — Disclosure to Third
• Compelled Disclosure/”Selective” Waiver–
“Voluntary” Disclosure to the Government
Few courts recognize exception
McKesson HBOC, Inc. v. Superior Court (Cal.
App. 2004); In re Columbia/HCA Healthcare
Corp. (6th Cir. 2002)
Waiver — Implied Waiver
• Putting confidential communication "at
– Cox v. Administrator U.S. Steel & Carnegie
(11th Cir. 1994) “Having gone beyond mere
denial, affirmatively to assert its good faith [in
an FLSA case], [the defendant] injected the
issue of its knowledge of the law into the
case and thereby waived the attorney-client
Waiver — Attorney Investigative
• Investigative report generally not privileged where
defendant raises adequacy of investigation as
affirmative defense (Harding v. Dana Transp. Co.
(D.N.J. 1999))
• Only limited waiver if privileged materials can be
reasonably segregated from the "investigation"
• No privilege if attorney acting solely as
investigator rather than as an attorney
– In re Texas Farmers Ins. Exchange (Tex. App. 1999)
– Compare Harlandale Indep. School Dist. v. Cornyn
(Tex. App. 2000)
Boundaries of the Privilege in the
Corporate Context
• Attorney-Client Privilege and Interviews of
Non-Client Corporate Constituents
• Attorney-Client Privilege and Deposition
Preparation of Non-Client Corporate
• Attorney-Client Privilege and
Communications with Former Corporate
No Privilege if the Lawyer is Not
Wearing the “Lawyer” Hat
• Baran v. Walsh Construction Co. (N.D. Ill. 2007) – Emails between various officials of construction
company and its vice president in charge of
insurance department were not protected by the
attorney-client privilege, even though the vice
president also worked in the legal department of the
company, where the vice president was acting in his
capacity as the head of the insurance department,
not in his capacity as the company’s legal counsel.
• In re Sealed Case (D.C. Cir. 1984) - Must be clear
showing that attorney gave advice acting in
professional legal capacity
No Privilege if the Lawyer is Not
Wearing the “Lawyer” Hat
• Neuder v. Battelle Pacific (D.D.C. 2000) 194
F.R.D. 289
The decision to fire an employee is primarily
a business decision, not legal advice;
presence of attorney at a meeting where
decision is made does not render documents
or discussions privileged:
“Where business and legal advice are
intertwined, the legal advice must
predominate for the communication to be
Attorney-Client Privilege — InHouse
Privilege usually exists for full time in-house counsel/in-house
business person. Upjohn Co. v. U.S., 449 U.S. 383 (1981).
• Applies even if in-house lawyer is not full time in legal department,
so long as communication made by the lawyer acting in capacity as
lawyer for company
• Privilege applies to any corporate employee, regardless of position,
when the communications relate to matters within the scope of the
employee’s duties and the employee is aware that the purpose of
the information is to enable the attorney to provide legal advice
• But...some courts erect a higher standard given the concerns about
the lawyer wearing both the "business" and "law" hat.
Practice Pointer: Establish fixed “counsel” role on team at inception of
Attorney-Client Privilege — Cell
Phones and Emails
• Privilege applies to communications by
email, cell phones if requirements of
privilege otherwise met.
• Beware of inadvertent disclosure:
– Client discussions on cell phone or pay phone at
the airport
– Leaving voicemails and (i) leaving message on
the wrong number (ii) forgetting to hang up
• Note: Emails, like diamonds, are forever:
email is rarely deleted
– "Emails that can be used by the Government,or
an Opponent: It's Not A Good Thing."
Attorney-Client Privilege — Practical
Tips — General
• The attorney-client privilege can become an
attorney-conflict problem
• Be discreet
• Our clients also need to be careful
• Label appropriate emails and memoranda as
• Existence of a conversation/communication and
contents of a conversation/communication are
two different things
• In communicating with employees, document all
Upjohn factors and give the Upjohn "Miranda"
Practical Tips — In-House
• Clearly separate legal from business advice, if
• Treat privileged documents carefully. Counsel
can waive privilege with a bad distribution list.
• Consider starting with "I am addressing the
following legal issue(s)" in communications
• Direct any meeting that has a "legal" purpose
• Keep legal and business documents separate
• Three Words:
Remember Admiral Stockdale
(and not so Inadvertent)
Disclosure Issues
Inadvertent Disclosure
Ethical duty if attorney receives confidential information from
opposing party that he/she knows was sent inadvertently
ABA Formal Op. No. 05-437 - Duty to notify sender
Some Jurisdictions (including Texas): Duty to notify sender
and adhere to his/her request
Some Jurisdictions (Md., Mass.): No duty to notify.
In re Meador (Tex. 1998) (trial court did not abuse discretion in
refusing to disqualify attorney in sexual harassment action
based on receipt of privileged materials from defendant through
no fault of his own, instead ordering return of the purloined
documents and agreement not to use them in the litigation).
By the way: You are obligated to tell your client that you
inadvertently disclosed a privileged document.
Inadvertent Disclosure: Waiver
Three approaches to Inadvertent Disclosure:
– Rarely/never waives: Texas
– Always waives: D.C.
– Balancing Test: Majority of jurisdictions
FR Evidence 502
Fed. R. Evid. Rule 502
(a) Disclosure Made in a Federal Proceeding or to a
Federal Office or Agency; Scope of a WaiverWhen the disclosure is made in a Federal
proceeding or to a Federal office or agency and
waives the attorney-client privilege or workproduct protection, the waiver extends to an
undisclosed communication or information in a
Federal or State proceeding only if
(1) the waiver is intentional;
(2) the disclosed and undisclosed communications
or information concern the same subject matter;
(3) they ought in fairness to be considered together.
Fed. R. Evid. Rule 502
(b) Inadvertent Disclosure - When made in a
Federal proceeding or to a Federal office or
agency, the disclosure does not operate as a
waiver in a Federal or State proceeding if:
(1) the disclosure is inadvertent;
(2) the holder of the privilege or protection took
reasonable steps to prevent disclosure; and
(3) the holder promptly took reasonable steps to
rectify the error, including (if applicable)
following Federal Rule of Civil Procedure
Self Help: Former Employees Removing
Documents Upon Termination
• Pillsbury Madison & Sutro v. Schectman
(Cal. App. 1997) - preliminary injunction
ordering employees' attorney to return
internal documents removed from employer
law firm
• In re Marketing Investors Corp. (Tex. App.
1998) - trial court abused discretion in not
ordering former president of defendant
corporation to return documents taken from
corporation following his firing and in not
disqualifying his counsel who refused to
return the documents
Self Help: Former Employees Removing
Documents Upon Termination
• But See: Quinlan v. Curtis-Wright Corp.
(N.J. 2010) - copying and dissemination
of employer's confidential documents
might be "protected activity" under N.J.
Law Against Discrimination; multi-factor
test including
how the employee obtained the document
what he did with it
nature and content of documents
the circumstances of disclosure and disruption to employer
the employee's reasons for copying document rather than
requesting through discovery
Ex Parte Communication Rules in
To what extent may a lawyer monitor/access a represented party's
website, Twitter accounts and social media postings?
Or. Ethics Op. No. 2005-164 (2005) - lawyer may access Website of
represented opposing party as long as the access is passive or the
communication from the lawyer is equivalent to ordering products from a
NY City Ethics Op. No. 2010-2 (2010) - lawyer may not "friend"
represented party under false pretenses)
NY State Ethics Op. No. 843 (2010) (lawyer may access public pages on
social media but may not "friend" party directly or indirectly
S.D. Ethics Op. No. 2011-2 (2011)--lawyer may not "friend" upper level
employees of a client's former employer where the employer is
represented by counsel.
Ex Parte Communication Rules in
To what extent may a lawyer monitor a represented party's website,
Twitter accounts and social media postings?
Pa. Ethics Op. No. 2009-2 (2009)--lawyer may not "friend" represented
party to seek information on social media sites.
NY County Ethics Op. No. 743 (2011) --lawyer can monitor juror's publicly
available webpages so long as the lawyer does not "friend" the juror,
attempt to connect to the juror's linkedin account, subscribe to her Twitter
Employee's Privileged Information on
Employer-Owned Computers/Laptops
Curto v. Medical World Communications, Inc.,
N.Y. 2006) – Former employee did not waive privilege
concerning documents allegedly retrieved from
employer-owned laptops used by the employee
during her employment as a home office
Employee took reasonable precaution to prevent
inadvertent disclosure by sending the emails through
her personal AOL account which did not go through
the company’s servers; and
She attempted to delete the material before turning in
the laptop, the volume of material was relatively
limited, and the employee promptly requested return
of the emails upon notification.
Employee's Privileged Information on
Employer-Owned omputers/Laptops
Scott v. Beth Israel Medical Ctr., (N.Y. Sup.
2007) – Physician email communications with his
attorney using hospital's email servers not
made in confidence for privilege purposes:
Hospital's email use policy prohibited personal
use of hospital's email system; and
Policy reserved hospital's right to monitor,
access, disclose and use email communications
at any time without notice.
Employee's Privileged Information on
Employer-Owned Computers/Laptops
Employer Policy:
Should provide employees notice that it monitors (or
reserves the right to monitor) its electronic equipment,
including emails created or stored using company
equipment and that employees have no reasonable
expectation of privacy in such communications; and
Should emphasize that emails sent through third-party
email services are also subject to the policy if the
employee uses employer equipment.
* But this may not work in New Jersey: See Stengart v. Loving Care
Agency, Inc. et al., No. A-3506-08T1 (March 30, 2010).
Destruction/Spoliation Issues
Leon v. IDX Systems Corp., (9th Cir. 2006)
Ninth Circuit affirmed dismissal and $65,000 sanctions
against employee who intentionally deleted over 2200
employment-related files (some of which were likely at the
heart of employer's defense) and then wrote a program to
write over deleted documents, after he filed his
discrimination lawsuit
Employee's misconduct may bar parallel DOL
investigation and adjudication of employee's SOX
whistleblowing complaint under res judicata; DOL
investigation was based on common nucleus of facts and
DOL was suing for employee-specific rights of precisely
the type that employee had already pursued
Examination of "Meta Data"
• N.Y. State Ethics Op. No. 749 (2001) and
Fla. Ethics Op. No. 06-2 (2006) - Treat
confidential information in meta data like
"inadvertently" disclosed information-unethical to examine without consent of
opposing counsel
• ABA Formal Op. No. 06-442 (2006) - Meta
data can ethically be viewed by opposing
counsel; scrub your data if you don't want it
read by opponent
See also N.Y. State Ethics Op. No. 782 (2004) - duty to
scrub meta data especially where lawyer knows
document is being sent to a tech-savvy opponent.
Mitigating Inadvertent Disclosure
Email: disable auto complete functions/confirm
correct name (i.e., Think before hitting "Send")
Disclaimer on telecopy and email transmissions
instructing recipients in case of erroneous receipt
Mark privileged documents as such, including
separate pages (not just the first one)
Use metadata scrubber for electronic docs; consider
PDF or hard copy
Document review
Dealing with the Media/Public
• ABA Model Rule 3.6: Lawyer who has
participated in investigation/litigation
cannot make extrajudicial statements that
lawyer knows/should know will be
disseminated to public and have
“substantial likelihood of materially
prejudicing and adjudicative proceeding in
the matter.”
Dealing with the Media/Public
• Gentile v. Nev. State Bar (US 1991):
– Lawyers in pending matters have “special
access to information” relating to client’s
matter and thus public statements could be
perceived as “highly authoritative”
– However, Rule 3.6 only applies to statements
likely to have a materially prejudicial effect
on a pending or future adjudication
Response Lawyer As Witness
• Is the lawyer a witness? Could they
become one due to involvement
• If so, what are the consequences?
– Disqualification of the response lawyer/firm?
– Waiver of privilege?

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