Lay Groundwork to Protect Legal Advice During Bias Probes

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By Patrick Dorrian

The dual legal and business roles in-house attorneys and top-level human resources personnel serve in many companies can raise tricky—and potentially expensive—issues involving attorney-client privileged information.

These issues can be created during internal investigations of worker bias complaints and may be complicated if the Equal Employment Opportunity Commission comes calling and wants to look into past bias reports made to the company and how they were handled.

Attorney-client privilege generally shields from disclosure confidential communications between the client—the company—and its legal team. But the privilege is subject to challenge and waiver.

That’s why training in-house counsel and HR officials on the intricacies of the privilege is vital, management-side attorney Todd Presnell told Bloomberg BNA. It’s also important to train managers and other employees who regularly interact with in-house lawyers and human resources regarding legal issues.

“They need to understand the differences between legal and business advice, confidentiality and when the privilege attaches,” Presnell said. He’s a partner in the Nashville, Tenn., office of Bradley Arant Boult Cummings LLP and has written extensively about evidentiary privileges.

Presnell said that in his experience, companies’ performance in providing such training varies. Some do a complete job of educating their in-house attorneys, HR personnel and other concerned employees on the ins and outs of the privilege, he said. Some do almost nothing and others mostly just train their lawyers.

Geoff Weirich, the principal owner of Weirich Consulting and ADR in Atlanta, agreed that key personnel at a lot of companies don’t seem to understand the nuances of the privilege. The result? Information may be sent to someone who doesn’t need to know it, leading to a potential waiver of the privilege, he said. Before launching his consulting firm, Weirich was a partner in management-side law firm Paul Hastings LLP for more than 30 years.

Disagreements with the EEOC—or with an employee or a rejected job applicant in private litigation—about whether information being sought truly is protected can emerge. And a court ultimately may be called on to resolve the dispute.

That typically is something nobody wants, especially the courts, Weirich said. Since 2010, he’s been a member of the council that governs the American Bar Association’s Labor & Employment Law Section.

Fifth Circuit Case

An example of such a scenario can be seen in a case pending before a federal appeals court in New Orleans involving accounting giant BDO USA LLP.

The EEOC has asked the U.S. Court of Appeals for the Fifth Circuit to overturn a lower court’s ruling that a privilege log BDO provided to the agency during its investigation of a former employee’s discrimination charge was sufficient to satisfy an EEOC subpoena. The district court had upheld a magistrate’s determination that BDO’s privilege log wasn’t too “vaguely-worded” to show that the withheld information is in fact privileged.

The EEOC subpoena demanded that the firm produce documents and other information regarding all employees affected by the alleged discrimination and relevant firm practices. Allegations include that BDO’s top corporate management subjected employees to sex and national origin bias and retaliated when the firm’s former human resources director tried to look into the alleged discrimination.

BDO refused to turn over 278 communications that the company says contain privileged information. It also denied the bias allegations, including that the former HR director, Hang Bower, was subjected to retaliation. Bower was merely reminded that the firm’s office of general counsel, not its human resources department, is responsible for investigating bias complaints made against BDO partners, according to the company.

The burden is fully on the company to establish that each of the withheld communications contains protected attorney-client information that was intended to be and was kept confidential, the EEOC argued in its opening and reply briefs filed with the Fifth Circuit.

BDO countered that the EEOC has the proof scheme all wrong. The company bears the initial burden of producing a log containing the nature of the evidentiary privilege being asserted, the names of the authors and recipients of each of the withheld documents, and a brief description of the contents of the communication and the portion of it that includes privileged information. But then the burden shifts to the EEOC to show on a document-by-document basis why a particular communication wasn’t or no longer is protected by the privilege, BDO says.

The EEOC failed to support its argument that the documents were improperly withheld, BDO says. Therefore, the lower court properly refused the agency’s request that the court examine each of the 278 communications in private, the company argues.

Log Hard to Get Right

“In a sense, they’re both right,” Weirich said. The EEOC is right that the burden to establish privilege is on BDO, but the company “is right about the log,” he said.

The purpose of a privilege log is “to provide a short, succinct statement of what’s privileged,” he said. A log doesn’t need to contain so much detail about withheld information that it in essence reveals the privilege, Weirich said.

That approach is based on the Federal Rules of Civil Procedure and is “pretty uniform” throughout the country, he said. “I’m not aware of there being a meaningfully different standard” in use in other circuits, Weirich said.

The rule just requires that a privilege log contain a “reasonably sufficient description” of each withheld communication, Presnell said. It can be difficult to describe a privileged document with enough detail to establish that it’s privileged without inadvertently disclosing the privileged information, he said.

It’s “very hard to do,” Weirich agreed. That is “why you sometimes see” a court agree to conduct a private—or “in camera"—review of a subset of withheld documents, he said.

But “it’s very unusual” that all of the documents listed on a privilege log would be reviewed in camera, which is one of the things the EEOC requested of the lower court in its subpoena enforcement action against BDO, Weirich said.

Does Context Matter?

The difficulty of preparing and producing a privilege log in a way that will satisfy the EEOC—or an employee or job applicant in private litigation—means that an employer claiming attorney-client protection must be ready to defend the privilege for each document, if challenged, Presnell and Weirich said.

“If you’re going to do a log, you should do it in a way that anticipates it will be challenged” on a motion to compel and that “will withstand a challenge,” Presnell said. “I would also have ready an affidavit” from a lawyer explaining that the withheld communications sought legal advice and were intended to be and remain confidential, he said.

Affidavits are particularly useful in matters in which in-house lawyers were involved, because courts often take a close look at communications involving in-house counsel to see whether they concerned legal advice or business advice, Presnell said.

BDO failed to support its claim of privilege in this way, the EEOC told the Fifth Circuit Feb. 9 during oral argument. The company’s log instead was “conclusory” and many of the communications listed on the log involved business advice, the EEOC argued.

BDO’s lawyer shot back that the company tried to come to agreement with the agency over the contents of the log and why it’s asserting privilege for the 278 withheld documents. BDO expected to have more back and forth with the EEOC to resolve the dispute, but the agency short-circuited the process and accused the company of “using the attorney-client privilege as a sword” rather than the shield it’s intended to be, BDO alleged.

The privilege log wasn’t given to the EEOC in isolation but was provided in the midst of proceedings during which BDO had already furnished the agency with multiple position statements on Bower’s charge and other information, the company said. That prior information gave the EEOC plenty of detail with which to assess each of the privilege log entries, BDO asserted.

“It’s a great argument by BDO that the log needs to be viewed in the context of what’s already” transpired in the agency’s investigation, Weirich said. The approach the company says it took to resolve the dispute also would be in sync with the usual process, he said.

Courts Hesitant to Get Involved

A privilege log really is a starting point for the parties to engage in the sort of “meet-and-confer” approach federal procedural rules generally encourage to resolve all types of discovery disputes, Weirich said. A dispute usually is sharpened or narrowed during the back and forth between the parties, eliminating the need for court intervention or at least leaving a court with less that it needs to rule on, he said.

But courts don’t like to get involved in discovery disputes in general or disagreements over claims of privilege in particular, he said. And that disdain for wading into discovery and privilege disputes “is amplified at the appeals level,” Weirich said.

Indeed, the Fifth Circuit during oral argument repeatedly asked the EEOC and BDO why they couldn’t work out their dispute privately and whether they were willing to seek the help of a mediator to avoid the court having to rule on the issues presented.

The last thing any court wants to see is for legitimately privileged information to be revealed, Weirich said. But for a court to determine whether a privilege claim is justified, it almost necessarily requires that the privileged information be disclosed to the court, he said.

For the parties, the practical effect of court involvement is an increase in costs, especially where a judge will be conducting an in camera review of documents, Presnell said. “The time and expense of litigation would rise substantially,” and it also would burden the courts if more privilege disputes needed to be resolved in this way, he said.

Importance of Training

That’s a big part of the reason why proper training is so important, Presnell said. He provides audit-related and training services to in-house legal departments to assist them in establishing and maintaining the corporate attorney-client privilege.

Proper training should include all personnel who may regularly be involved in the handling of employee bias complaints or other legal issues, rather than just the lawyers and HR officials who lead those efforts, he said.

“Managers sometimes lose sight of” or don’t have a clear enough understanding of what’s needed to maintain a privilege and many send or forward a privileged communication in a way that compromises or waives the privilege, he said.

That typically happens when information is shared with someone who doesn’t need to know it, Weirich said. While there isn’t “much good case law” on who’s in the circle of employees who need to know privileged information, a good rule of thumb is to focus on whether the employee is a decision maker or someone who will just be carrying out a decision made by someone high up in the organization, he said. Someone whose role it is just to carry out an order typically can be told to do so without needing to reveal the legal discussions or reasoning underlying the decision, he said.

Training should focus in part on the distinction between legal and business advice and that the two should be communicated separately even if they are intertwined, Presnell said. For example, a lawyer responding to a request for legal advice made in an existing e-mail chain that also includes business discussions may want to reply in a wholly separate e-mail to increase the chances that the legal advice she’s providing will be seen as distinct from the business discussions and thus shielded from disclosure under the attorney-client privilege, he said.

Making that distinction can be difficult to do in practice, despite the best training, Presnell acknowledged.

Employees who regularly encounter attorney-client or other privileged information also should be trained not to overuse a privilege tag, he said. In other words, don’t tag every communication involving a lawyer as privileged, he said. Instead, use a privilege tag only when information is truly or arguably privileged, Presnell said.

By doing so, “you will help show a judge that you know what you are doing” should court intervention prove necessary, Presnell said. That approach won’t guarantee that the court will rule in your favor, but it will “make more persuasive” your argument that the claimed privilege is valid, he said.

Additional Wrinkle

Another aspect present in the BDO case that generally “has always been difficult” to deal with is the scenario where the worker who files a charge with the EEOC—or who sues for employment discrimination or retaliation—is a former human resources official, Weirich said. The firing of an in-house lawyer is similarly “a very sticky wicket,” he said.

Because of the nature of those jobs, these employees necessarily are exposed to attorney-client privileged information, he said. That raises concerns not just for the company, but also for the employee, he said.

It can be difficult for a former HR official or in-house attorney to litigate their claims without revealing to their attorney some of the privileged information they’re aware of, Weirich said. That puts a burden on plaintiffs’ counsel to guard against the unnecessary disclosure of or inquiry into privileged information. “It presents real ethical issues for them,” he said.

This is another area where quality employee training is vital, Presnell said. Such training should focus on “the concept of confidentiality” to guard against the improper disclosure of privileged information to the EEOC or a plaintiff’s attorney, he said.

Employers need to make clear to HR officials and to in-house lawyers while they are still employees of the company that the confidential information shared with them will remain confidential if they ever leave and that they’re obligated to maintain that confidence going forward, Presnell said.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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