Supreme Court reinforces law on attorney-client privilege; could affect ethical obligations of in-house counsel.

February 5, 2019

Author: Cecil E. Morris, Jr. and John M. Tanner

In Fox v. Alfani, 2018 CO 94, the plaintiff was in her early 30s when she became seriously ill after receiving a chiropractic treatment.  She consulted with a lawyer, and her parents were present with the lawyer during the consultation.  The consultation was recorded.  When this came to light in later litigation against the chiropractor, the chiropractor sought the recording.  The plaintiff claimed it was protected from discovery by the attorney-client privilege.  The trial court ruled that the parents’ presence was not necessary for the plaintiff to obtain legal advice; thus, the attorney-client privilege did not attach to the communications.  The recording was ordered produced.

The plaintiff sought and obtained review by the Colorado Supreme Court under C.A.R. 21.  The Supreme Court affirmed, applying the well-established law that the presence of a third-party who is not necessary to obtain legal advice breaks confidentiality and prevents the attorney-client privilege from applying. 

While evidentiary rulings would normally not be terribly relevant to ethical issues for in-house counsel, the close relation between the attorney-client privilege and the obligation to keep client information confidential under Colorado Rule of Professional Conduct 1.6 makes this opinion worthy of further scrutiny.  Corporate attorney-client privilege is more complicated than the attorney-client privilege with an individual and is the subject of extensive authorities; however, Fox v. Alfani underscores the essential element of confidentiality.

In-house counsel routinely communicate with certain constituents at a company.  This group was formerly called the “control group,” and that concept is still in place and can generally be thought of as the client.[i]  It is usually “C-Level” officers.  In any event, the group that constitutes the client is generally something less than everyone at the company (unless the company is very, very small).  As a general rule, confidential communications regarding legal advice between the lawyer and this group are protected by the attorney-client privilege.

It should be obvious that outside consultants, vendors, customers, etc., are all generally outside a company’s attorney-client privilege.  Thus the presence of any of these folks during communications between an in-house attorney and the client will prevent the privilege from attaching (because the communications will not be confidential).

Further, however, the presence of company employees not in this group may also destroy the privilege.  So imagine in-house counsel is having a communication (whether in person, by phone, or via email) with someone in that group and an employee not in the group.  Fox reaffirms the well-established law that ordinarily the communication is not protected by the attorney-client privilege.

One view under these circumstances might be:  “It is the client’s privilege, and if the client wants to include someone outside the privilege that is up to it.”  But this view ignores the lawyer’s ethical obligations.  Most laymen (and indeed many lawyers) fundamentally misunderstand the attorney-client privilege and would not understand that the presence of a third party (even another employee at the company) would destroy the privilege. 

The lawyer should inform the client (outside the presence of the third party) that the presence of the third party will destroy the privilege and will make the communication discoverable.  If the client still wants to proceed, then it would be prudent for the lawyer to confirm the client’s informed consent in writing (email is fine).

There could be exceptions to this general rule.  If, for example, the non-client is the person at the company tasked with heading up a group specifically examining the particular question on which legal advice is sought, then it may be that the communication can be kept confidential.  But it is a debatable point, and one which the client may not learn the answer to until it is too late.

In conclusion, the involvement of anyone outside the attorney-client relationship in a communication will ordinarily prevent the attorney-client privilege from attaching to it.  As a matter of ethics, in-house counsel need not only be aware of this, but may need to remind the client of it when it appears the client is not taking it into account.


[i] In Upjohn v. U.S., 449 U.S. 383 (1981), the U.S. Supreme Court held that the “control group test” for determining the scope of constituents with whom the attorney-client privilege attached was incorrect, but it did not provide the correct test.  Rule of Professional Conduct 4.2 prohibits opposing counsel from contacting (without permission) a “constituent of the organization who supervises, directs or regularly consults with the organization's lawyer concerning the matter or has authority to obligate the organization with respect to the matter or whose act or omission in connection with the matter may be imputed to the organization for purposes of civil or criminal liability.”  It is not clear that this is the determinative test for the attorney-client privilege analysis.