The black letter rule is that, once waived in any context, the attorney client privilege is gone. Some courts have suggested that there may be limited disclosure to certain governmental agencies without thereby constituting a waiver in other contexts. In United States v. Massachusetts Institute of Technology, ___ F. Supp. ___ (D. Mass. 1/10/97), unofficially reported at 97 TNT 17-24, the Court held that disclosure to the Defense Contract Audit Agency, the auditing arm of the Department of Defense, constituted a waiver of the privilege. This reminds us that any disclosure of the privilege places the confidential communication at risk, regardless of how salutary the disclosure. Taxpayers should consider carefully whether there are ways to satisfy those needs which do not require such disclosure before embarking on a course of disclosure that will open the door, not just to the IRS but to other third parties that may find themselves with compulsory process and a sufficient need to request access to the documents. (Posted 1/27/97.)
But What About Inadvertent Disclosures?
MIT (above) involved an intentional disclosure that let the cat out of the bag. What about unintentional disclosures? The Court of Federal Claims decision in IBM v. United States (3/10/97), unofficially reported at 97 TNT 54-12 (3/20/97), is an object lesson. In that case, pursuant to court ordered expedited discovery, the taxpayer turned over large quantities of documents. As part of its response, the taxpayer's attorney included the following caveat:
In reviewing and producing the accompanying documents on an expedited basis it is possible that plaintiff inadvertently has produced one or more documents falling into a privileged category, in which event plaintiff reserves its right to seek to withdraw such documents from production upon its becoming aware of such inadvertent production.
Among the documents disclosed were four documents subject to either the attorney-client privilege or the work product privilege.The issue was whether that inadvertent disclosure blew the privilege for the documents disclosed. The Court's answer was that, in that case, it did.
The Court reached this conclusion after reviewing the various approaches courts take to such inadvertent disclosures. Those approaches are:
- a disclosure by an attorney during discovery is a waiver of the privilege, even if the disclosure is inadvertent and even if the client did not even know about the disclosure (thus hardly having made a knowing waiver);
- a disclosure by counsel during discovery is not a waiver unless the client waived the privilege; and
- an intermediate position, based upon the imperatives of discovery in the litigation system, looking to the facts and circumstances to determine whether the privilege should be deemed waived.
Although the Government argued vigorously for the first approach, the Court viewed its precedent as requiring the latter approach. Under that precedent, the the Court framed the issue as (emphasis supplied):
whether the disclosing party intended to invoke the protection afforded by the work product and attorney-client privileges and whether the disclosing party took adequate measures, given the circumstances, to prevent disclosure: "For that type of problem, the fundamental questions always are: did the client wish to keep back the privileged materials and did he take adequate steps in the circumstances to prevent disclosure of such documents?"
Having thus framed the facts and circumstances issue, the Court looked to the quality of facts proffered by the taxpayer (IBM) to address these issues. It seems clear that IBM's caveat (quoted above) suggests that it did not intend to waive the privilege. So, since the test thus formulated is in the conjunctive, the Court focused on the question of whether the disclosing party took adequate measures to prevent disclosure.
The Court found IBM's proffer inadequate, both on procedural grounds (i.e., IBM did not put the alleged facts in affidavit form) and, more importantly, because the facts as thus proffered were too conclusory and thus insufficient to meet the test. Contrasting the proffer to a case where the test was met, the Court noted that IBM did not offer detail as to what instructions were given the attorneys reviewing the documents prior to disclosure, whether the documents were or were not identified as privileged, and other detail.
Herein lies simple object lessons.
- Do the work necessary so that this problem does not arise. This becomes a litigation budget issue, for most of us do not work for IBM's who can afford to pay to get it done right. But we must recognize the risks and have the client's permission to undertake the risks that are involved.
- When a problem inadvertently arises, solve the problem right. Of course, in those courts holding that even inadvertent disclosure is a per se waiver, there is nothing that can be done. But, learning the lesson of IBM, we should assure that the quality of our explanation is sufficient (facts permitted) to permit a court to find no waiver.
(Posted 3/20/97)