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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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<img style="max-width: 100%;height: auto;max-width: 100%;height: auto" loading="lazy" class="alignright size-medium wp-image-1510" src="https://www.thelawforlawyerstoday.com/wp-content/uploads/sites/754/2015/02/Advice-225x300.jpg" alt="Advice" width="225" height="300">Two trial courts &mdash; in New York and New Hampshire &mdash; recently weighed in on the in-house firm counsel privilege. &nbsp;The New Hampshire Superior Court, in <a href="http://www.courts.state.nh.us/superior/orders/bcdd/Moore-v-Grau.pdf">Moore v. Grau</a>, recognized the parameters of the privilege. &nbsp;In contrast, the New York County Commercial Division judge in <a href="http://filehost.thompsonhine.com/uploads/2014_33171_9ed3.pdf">Stock v. Shnader Harrison Segal &amp; Lewis LLP</a>&nbsp;ruled that a malpractice plaintiff has a right to discover all relevant communications of his fiduciaries. &nbsp;The New York case is already on appeal, and <a href="http://www.newyorklegalethics.com/law-firm-in-house-privilege-revisited/">is being closely watched</a>.
Basis for firm counsel privilege
When issues develop with a firm&rsquo;s representation of a client, &ldquo;Who ya gonna call&rdquo;? &nbsp;Not necessarily Ghostbusters. &nbsp;Rather, lawyers usually want to get advice from an in-house firm ethics guru. &nbsp;But are communications and documents related to that advice privileged from discovery later on?
Courts in the early- and mid-2000&rsquo;s said &ldquo;No,&rdquo; because in-house firm counsel&rsquo;s advice to the law firm and its lawyers raised a conflict of interest between the firm and its client, which these courts held negated any privilege. &nbsp;See, e.g., <a href="https://casetext.com/case/koen-book-distributors-v-powell-trachtman-logan">Koen Book Distrib. v. Powell,</a><a href="https://casetext.com/case/koen-book-distributors-v-powell-trachtman-logan"> Trachtman</a>&nbsp;(E.D. Pa. 2002). &nbsp;(Other cases are collected here, h/t to the <a href="http://www.freivogelonconflicts.com/thisthatparti.html">Freivogel on Conflicts</a> blog.)&nbsp;
But the tide later began to turn, with courts recognizing that public policy should &ldquo;encourage lawyers to consult with in-house counsel to understand and comply with their professional responsibilities,&rdquo; and that these consultations should be privileged &mdash; at least up to the time that the firm determined that an ethical breach had occurred that needed to be disclosed to the client. &nbsp;See, e.g., <a href="http://filehost.thompsonhine.com/uploads/TattleTale_Magistrate's_order_c145.pdf">TattleTale Alarm Syst. v. &nbsp;Calfee, Halter &amp; Griswold, LLP </a>(S.D. Ohio, &nbsp;2011) (<a href="http://filehost.thompsonhine.com/uploads/TattleTale_Court's_Order_Adopting_2353.pdf">mag. dec. adopted</a>); <a href="http://filehost.thompsonhine.com/uploads/In_re_SonicBlue,_Inc._b485.pdf">&nbsp;In re SonicBlue</a>, Inc. (N.D. Cal. Bankr. 2008).
Then, in fairly quick succession, in 2013 and 2014, the high courts of three states recognized the in-house firm counsel privilege: &nbsp;<a href="http://masscases.com/cases/sjc/465/465mass702.html">Massachusetts</a>, <a href="http://www.publications.ojd.state.or.us/docs/S061086.pdf">Oregon </a>and <a href="http://caselaw.findlaw.com/ga-supreme-court/1638454.html">Georgia</a>. &nbsp;Each court used its own approach to reach the same result. &nbsp;In <a href="http://www.courts.ca.gov/opinions/documents/B255182.PDF">California, the first intermediate appellate decision</a> to recognize the in-house privilege was issued in November 2014.
The ABA House of Delegates has also <a href="http://www.americanbar.org/content/dam/aba/directories/policy/2013_hod_annual_meeting_103.docx.">urged all jurisdictions</a> to apply the attorney-client privilege to shield &ldquo;confidential communications between law firm personnel and their firms&rsquo; designated in-house counsel made for the purpose of the rendition of professional legal services to the law firm.&rdquo;
Will the trend continue?
In the recent Moore case, the New Hampshire trial court held that the defendant law firm had made a prima facie showing that e-mails it sought to shield from discovery were privileged &mdash; even though the firm&rsquo;s ethics guru was not officially designated as &ldquo;firm counsel.&rdquo; &nbsp;The court said that it was persuaded that sound policy favored the developing trend toward recognizing an in-house firm counsel privilege, notwithstanding that few of the state&rsquo;s firms were large enough to have a full-time designated in-house counsel.
The New Hampshire trial court adopted a four-factor flexible approach that the Georgia supreme court had used in recognizing the privilege, and said it would examine the documents in camera to assess these factors:
<ul>
<li>a genuine attorney-client relationship existed between the lawyer seeking advice and the lawyer giving it;</li>
<li>communications were intended to advance the firm&rsquo;s interest in limiting its liability, rather than the client&rsquo;s interest;</li>
<li>the communications were kept confidential; and</li>
<li>no exceptions to the privilege applied.</li>
</ul>
In contrast, the New York County commercial division court ordered a law firm to turn over 24 documents. &nbsp;Without extensive analysis, the court agreed with the malpractice plaintiff that the firm lawyers did not expect their communications with the firm&rsquo;s general counsel to be kept confidential from the client. &nbsp;The court also said that the plaintiff had &ldquo;a right to disclosure from his fiduciaries of communications that directly correlate to his claims of self-dealing and conflict of interest.&rdquo; &nbsp;The appeal is likely to center on this expression of the &ldquo;fiduciary exception&rdquo; to the attorney-client privilege, and whether it applies in the firm-counsel context.
Uncertain times
Although the trend is toward recognizing the sound policy basis for the in-house firm counsel privilege, there is still plenty of uncertainty about whether a single conceptual framework will crystallize and emerge as predominant, and whether large commercial states, like New York, will solidly recognize and apply the privilege. &nbsp;Stay tuned, but in the meantime, you might do well to consider the New Hampshire and Georgia courts&rsquo; four factors to guide your communications when &ldquo;Who ya gonna call&rdquo; sends you to your in-house ethics counsel.

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Ethics

Legal Ethics, Professional Responsibility and the Business of Law

In-house firm counsel privilege — will the favorable trend continue?