Reconsidering the Corporate Attorney-Client Privilege: A Response to the Compelled-Voluntary Waiver Paradox

Abstract

Many within the legal profession are presently of the opinion that the protection traditionally accorded by the corporate attorney-client privilege is being seriously eroded, if not completely destroyed. This sentiment has largely been inspired by the perceived effect of government use of what I refer to as "compelled-voluntary" waiver in the context of investigations into corporate wrongdoing. Various governmental bodies employ this waiver device, but the United States Department of Justice ("DOJ") is perhaps the best known and certainly the most vilified.

The DOJ guidelines for prosecuting corporations, embodied first in the so-called "Holder Memorandum" and now in the "Thompson Memorandum," provide, among other things, that it is appropriate for federal prosecutors to consider a "corporation's timely and voluntary disclosure of wrongdoing and it's willingness to cooperate in the investigation of its agents..." The guidelines go on to indicate that "[o]ne factor...prosecutors may weigh in assessing the adequacy of a corporation's cooperation is the completeness of its disclosure including, if necessary, a waiver of the attorney-client and work product protections..."

Although the Holder and Thompson Memoranda, as well as the Organizational Sentencing Guidelines, describe waiver as not being absolutely required by the government, the corporate bar insists that waivers are routinely sought and that corporations feel compelled to acquiesce. The prospect of such a waiver is made particularly daunting by the general rule that once a party discloses privileged information to a third party, the privilege is waived as to everyone, including prospective or current plaintiffs and their attorneys. The end result, according to many, is the complete evisceration of the corporate attorney-client privilege, and in turn, effective corporate legal representation.

The Article examines this problem, as well as some of the solutions that have been proposed thus far, and concludes that the focus of the current debate amongst the American Bar Association ("ABA"), the DOJ, and others needs to be adjusted. In particular, rather than trying to address the waiver issue head-on, as is presently being done, the Article suggests that reconsidering the existing scope of the corporate attorney-client privilege itself would promote a more constructive dialogue. The Article specifically proposes narrowing the privilege through the adoption of a control group-type test modeled after Comment 7 to Rule 4.2 of the ABA Model Rules of Professional Conduct. Whether or not this is the best approach, the Article maintains that the key to solving the compelled-voluntary waiver paradox is to re-focus the discussion on the composition of the federal corporate privilege.

Keywords: attorney-client privilege, waiver

JEL Classification: K10, K11, K21, K30, K31, K40, K41, K42