By John H. Williamson
In its recent decision in Zurich Am. Ins. Co. v. Superior Court, Case No. B194793 (decided October 11, 2007), the California Court of Appeals provides a lengthy and thoughtful analysis of the scope of the attorney-client privilege in the corporate context. The case involved a coverage dispute where the insured moved to compel the production of Zurich documents that reflected reserve and reinsurance information as well as “Zurich’s evaluation of, or its litigation or settlement strategies concerning, the action . . . .” Slip Op. at 8. Zurich argued that the documents were protected from disclosure by both the attorney-client privilege and the work product doctrine. The trial court, however, rejected that position. First, the trial court held that “the attorney-client privilege is limited to communications by counsel to a client, and by a client to counsel.” Id. at 6. Second, the trial court held that “[t]he fact that many of the disputed items contain discussions of legal matters, strategy, and status of the bad faith litigation cannot be used to cloak them with either the attorney-client privilege or the work product privilege for that reason alone.” Id. The trial court ordered Zurich to produce any documents other than direct communications between Zurich and its lawyers, including internal communications summarizing or discussing the legal advice Zurich had received from its outside counsel. Id. at 8. Zurich appealed the order.
The California Court of Appeals framed the issue before it as follows: “Here, we are asked to decide whether the corporate attorney-client privilege extends to confidential communications between agents of the client regarding legal advice and strategy, in which the corporation’s attorneys are not directly involved or which do not include excerpts of direct communications from the attorneys.” Id. at 9. Drawing upon a large body of case law and other authorities, the appellate court concluded that the trial court’s definition of the attorney-client privilege had been too narrow. Consistent with judicial and commentator consensus, the appellate court held that the attorney-client privilege applies, not only to communications directly between client and counsel, but to communications between “third persons to whom disclosure is reasonably necessary to further the purpose of the legal consultation . . . .” Id. at 11. Thus, while the trial court found that the internal communications summarizing or discussing legal advice were not privileged in the first instance, the appellate court recognized that those communications were at least presumptively privileged, and the issue to be decided was whether Zurich had waived the privilege by disclosing the legal advice to persons not reasonably necessary to furthering the purposes of that advice. Id. at 18. The appellate court remanded the issue for further consideration by the trial court.
While the appellate court may have reached the correct practical result, it took the long way to do it. The court did not focus sufficiently on distinctions between the attorney-client privilege and the work product doctrine. These two protections often overlap in litigation, but they are different and must be analyzed separately. While the scope of the work-product doctrine is more narrow than the attorney-client privilege, work product protection is not waived as readily. Because the appellate court did not separately analyze the work product issue, it apparently overlooked a more direct basis for its decision.
The court may have assumed, as courts sometimes do, that waiver of the attorney-client privilege necessarily waives work product protection as well, but that is incorrect. See generally EDNA S. EPSTEIN, THE ATTORNEY-CLIENT PRIVILEGE AND THE WORK-PRODUCT DOCTRINE 607-10 (ABA Litigation Section 4th ed.). “While the attorney-client privilege is often treated as waived by any voluntary disclosure, only disclosures that are ‘inconsistent with the adversary system’ are deemed to waive work product protection.” Id. at 610 (collecting cases). Thus, waiver of work product protection only occurs if the disclosure “is inconsistent with the maintenance of secrecy from the disclosing party’s adversary.” See United States v. American Tel. & Tel. Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980). Two other points about work product bear emphasis, because they are often misunderstood. While often referred to as “attorney work product,” work product materials do not necessarily have to be prepared by an attorney; work product may be prepared by a party or a representative of the party. See Fed.R.Civ.P. 26(b)(3). The term “attorney work product” is misleading in another significant respect. “Work product” does not encompass all materials prepared by an attorney, but only those materials prepared in anticipation of litigation. Id.
Applying these principles to the documents at issue in Zurich, while the appellate court correctly observed that communications “reflecting a discussion of litigation strategy . . . would come within the privilege[,]” the court should have added that those communications also constitute work product. Because those communications were only disclosed to Zurich employees and agents (who presumably could be trusted not to disclose them to Zurich’s litigation adversary), there was no waiver of work product protection.
John Williamson is a partner in the firm’s commercial litigation group. He focuses his practice on the litigation and resolution of complex commercial disputes, and has experience in a wide range of matters, including E&O and D&O insurance coverage, technology, shareholder and partnership disputes, business torts, breach of contract and healthcare. He primarily represents public and private companies, and corporate officers and directors. John received his bachelor’s degree from Princeton University and his law degree from the University of Virginia. John can be reached at 404.495.3618 or jwilliamson@mmmlaw.com.
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