in-house counsel depositions: navigating complex legal and...
TRANSCRIPT
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Presenting a live 90-minute webinar with interactive Q&A
In-House Counsel Depositions:
Navigating Complex Legal and Ethical Issues Reducing the Likelihood of Being Deposed, Responding to
Deposition Notices and Subpoenas, Protecting Privileged Information
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, JANUARY 14, 2016
David M. Greenwald, Partner, Jenner & Block, Chicago
Todd Presnell, Partner, Bradley Arant Boult Cummings, Nashville, Tenn.
Christina H. Bost Seaton, Partner, FisherBroyles, New York
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In-House Counsel Depositions:
Navigating Complex Legal and Ethical Issues,
Responding to Deposition Notices and
Subpoenas, and Protecting Privileged
Information
Presented by:
Christina H. Bost Seaton, Esq. [email protected]
January 14, 2016
6
Attorney Client Privilege—The Basics
• There are four basic elements required for something to be
protected by the attorney client privilege:
› A communication;
› Made in confidence;
› Between and attorney and a client;
› For the purpose of seeking or obtaining legal advice.
7
Attorney Client Privilege—The Basics
• What does it mean for a communication to be made in
confidence?
› Court will conduct a waiver analysis.
› See In re Grand Jury Subpoenas, 561 F. Supp. 1247, 1258-1259
(E.D.N.Y. 1982); Coastal States Gas Corp. v. Dep’t of Energy, 617
F.2d 854 (D.D.C. 1980)
8
Attorney Client Privilege—The Basics
• Emails.
› How many recipients?
› Is it labeled as privileged?
› What about outside directors?
• When does the attorney-client privilege protect
communications upon which third parties are included?
9
Attorney Client Privilege—The Basics
• Organization as Client.
› Upjohn.
› Model Rule 1.13.
• For whom was the legal advice sought?
• Was the employee seeking the legal advice doing so as part
of his position as an employee?
10
Business v. Legal
• In-house counsel frequently have both business and legal
roles in their organization.
› Business advice is not protected by the attorney client privilege.
See U.S. Postal Serv. v. Phelps Dodge Refining Corp., 852 F.
Supp. 156, 160 (E.D.N.Y. 1994).
• Predominantly legal advice that contains some business
advice does not lose its protection. See Rossi v. Blue Cross
& Blue Shield, 542 N.Y.S.2d 508 (1989).
• Pervasive Regulatory Environment. See In re Vioxx Products
Liab. Litig., 501 F. Supp. 2d 789, 800-801 (E.D. La. 2007).
11
Practice Tips
• Educate non-legal employees about the limitations of the
attorney client privilege.
• Avoid funneling documents through in-house counsel.
• Consider specifically stating in written communications that
the communication is a “Request for Legal Advice.”
• Try to separate business and legal advice into separate
documents.
• Distribute emails only to those who “need to know.”
• Consider disabling Reply to All or Forwarding on email
system.
• Consider password protecting privileged documents.
12
Attorney’s Ethical Duty of Confidentiality
• In-house counsel must abide by the duty of confidentiality
embodied in Model Rule 1.6.
› Confidential information is broader than privileged information
– All information that came into attorney’s possession arising
from the representation of the client
• Ensure that the in-house counsel being deposed is authorized
to reveal the information about which he is being asked.
13
Unauthorized Practice of Law
• Model Rule 5.5.
• Has the temporary practice exception contained in
Model Rule 5.5 been adopted by the jurisdiction in which the
in-house counsel has been practicing?
• If not, is the in-house counsel registered in the state in in
which he or she is practicing?
• If not, did the company have a reasonable belief that he was
properly licensed? See Gucci America, Inc. v. Guess?, Inc.,
09-Civ-4373, 2011 U.S. Dist. LEXIS 15 (S.D.N.Y. Jan 3,
2011).
14
Multijurisdictional Practice
• Countries where in-house counsel are not required to be
licensed as members of the bar. See Anwar v. Fairfield
Greenwich, 1:09-cv-0018, 2013 U.S. Dist. LEXIS 162638
(S.D.N.Y. Nov. 8, 2013).
• Countries that don’t recognize the attorney client privilege.
See Wultz v. Bank of China, 979 F. Supp. 2d 479, 485
(S.D.N.Y. 2013).
• The European Union does not believe in-house counsel are
sufficiently independent for the attorney client privilege to
apply. Akzo Nobel Chems. Ltd. v. Comm’n of the European
Communities, C-550/07 P (Sept. 14, 2010).
15
Practice Tips
• Consider having in-house counsel certify their bar
registrations on an annual basis.
• If your practice is multijurisdictional, consider including
alternative dispute resolution provisions in your agreements,
as well as choice of law provisions.
• If outside counsel defending a foreign lawyer’s deposition,
make sure to consider the law of the foreign jurisdiction
regarding in-house counsel registration and the attorney client
privilege.
About FisherBroyles, LLP
Founded in 2002, FisherBroyles LLP was the first national, full-service, cloud-based law firm in the country. Our Next
Generation Law Firm® has grown to over 115 attorneys in 17 offices nationwide. The FisherBroyles model leverages
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Stevens v. CoreLogic, Inc. 2015 WL 8492501 (S.D.
Cal. Dec. 10, 2015)
Case Study
18
Why?
• Business role
• Inserting herself as fact witness
• Sole person with knowledge
• Support claim or defense
• Internal investigation
• Litigation tactic
19
Concerns
• Ethical Obligations—Confidentiality
• Ethics—lawyer as a witness
• Attorney-Client Privilege
• Work Product
20
Rules
• FRCP 26(c)
– Good cause
– Forbidding inquiry or limiting scope
• FRCP 45(d)(3)(A)(iii)
– Court shall quash subpoena “requires disclosure of privileged or other protected matter.”
21
The Shelton Rule
22
1.No other means exist to obtain the information;
2.The information sought is relevant and non-privileged; and
3.The information is crucial to the party’s case preparation.
23
The Friedman Case
24
• Need to depose the lawyer;
• Lawyer’s role in connection with the matter on which discovery is sought and in relation to the pending litigation;
• Risk of encountering privilege and work-product issues; and
• Extent of discovery already conducted.
25
Practical Tips
• Avoid appearing like a fact witness
• Know your jurisdiction’s approach
• Seek preemptive protective order
• Information from other sources
• Retain separate counsel for the lawyer-deponent
26
502(d) Orders
27
A federal court may order that the
privilege or protection is not waived
by disclosure connected with the
litigation pending before the court—
in which even the disclosure is also
not a waiver in any other federal or
state proceeding.
28
502(d) Purposes
• Circumvents need for inadvertent-disclosure analysis
• Avoids subject matter waiver
• Reduces costs of privilege review
• Courts may enter even when parties do not agree
29
Practical Effect
• Binds parties and courts in all other federal or state proceedings
• Quick-peek agreements
• Clawback agreements
30
But consider…
• Model Rule 1.6—confidentiality obligations
• Cannot un-ring the bell
• Effective in state court?
• Consider 502(d) Order a safe-harbor provision
31
Good v. American Water Works Company, Inc., 2014 WL 5486827 (S.D. W. Va. Oct. 2, 2014)
32
New FRCP
• Scheduling Orders
– Rule 16(b)(3)(iv)
– Include 502(d) Orders in CMO
• Discovery Plans
– Rule 26(f)(3)(D)
– Include 502(d) Orders in discovery plan
33
Drafting Tips
• Avoid the term “inadvertent”
• Avoid any reference to 502(b) reasonableness standard
• Should also cover purposeful disclosures
• Avoid strict processes for clawing back materials
34
35
MITIGATING RISK WHEN IN-HOUSE
COUNSEL BECOMES A TESTIFYING WITNESS
David M. Greenwald
JENNER & BLOCK LLP www.linkedin.com/in/davidmgreenwald
The views expressed herein are not made on behalf of Jenner & Block LLP or any of its clients.
Jenner & Block LLP ©2016
MITIGATING RISK THAT IN-HOUSE COUNSEL
WILL BECOME A WITNESS
• Avoid making in-house counsel an occurrence witness after an event.
– Verifying interrogatories
– Submitting factual statement in support of an insurance claim
– Signing employment termination letter
• Avoid designating in-house counsel as a 30(b)(6) or Most Knowledgeable
Person witness.
• When an in-house lawyer will be acting in a legal capacity for the
company, make that clear in their title and in the corporate organization
chart.
37
MITIGATING RISK WHERE IN-HOUSE COUNSEL
IS AN OCCURRENCE WITNESS
• During deposition preparation, make determination what subject matter is
not protected by ACP or WP.
– Counsel and deponent should anticipate where the lines will be drawn.
– Communication with opposing counsel prior to the deposition may
enable the company to articulate the lines clearly; counsel may then
refer to that articulation during the deposition.
• What knowledge/recollection is legal vs. non-legal?
• If in-house counsel has been involved in litigation preparation, it may
present additional challenges.
38
REFRESHING RECOLLECTION OF IN-HOUSE LAWYER
• The challenge: Even where in-house counsel may have non-legal
occurrence knowledge, the documents relating to that information may be
reflected in ACP or WP documents.
• For example:
– Notes of meetings that included both legal and business components
– Chronology of events drafted by in-house counsel contemporaneously
in anticipation of litigation.
39
REFRESHING RECOLLECTION OF A WITNESS: FRE 612
FRE 612 Provides:
Rule 612. Writing Used to Refresh a Witness’s Memory
(a) Scope. This rule gives an adverse party certain options when a
witness uses a writing to refresh memory:
(1) while testifying; or
(2) before testifying, if the court decides that justice requires the
party to have those options.
40
REFRESHING RECOLLECTION OF A WITNESS: FRE 612 (cont’d)
Advisory Committee Notes: 1972
. . . The purpose of the phrase “for the purpose of testifying” is to
safeguard against using the rule as a pretext for wholesale exploration
of an opposing party’s files and to insure that access is limited only to
those writings which may fairly be said in fact to have an impact
upon the testimony of the witness. . . .
Advisory Committee Notes: 1974
. . . The Committee amended the Rule so as still to require the
production of writings used by a witness while testifying, but to
render the production of writings used by a witness to refresh his
memory before testifying discretionary with the court in the interests
of justice, as is the case under existing federal law. See Goldman v.
United States, 316 U.S. 129 (1942).
41
REFRESHING RECOLLECTION OF A WITNESS: FRE 612 (cont’d)
Advisory Committee Notes: 1974
The Committee considered that permitting an adverse party to
require the production of writings used before testifying could
result in fishing expeditions among a multitude of papers which a
witness may have used in preparing for trial.
The Committee intends that nothing in the Rule be construed as
barring the assertion of a privilege with respect to writings used by
a witness to refresh his memory. House Report No. 93-650.
42
REFRESHING RECOLLECTION OF A WITNESS: FRE 612 (cont’d)
• Where witness reviews ACP communication or WP prior to testifying, the
court has discretion to order disclosure in the interests of justice.
• Varying approaches to applying this discretion, e.g.:
– Waiver should be found only in the uncommon circumstance when the
document serves as a script for the witness’s testimony in place of his
own memory. (RESTATEMENT (THIRD) OF THE LAW GOVERNING
LAWYERS § 90 cmt. d (2000).
– Waiver only if review materially influenced deponent’s testimony.
– Merely looking at a document during preparation does not waive
privilege.
43
REFRESHING RECOLLECTION OF A WITNESS: FRE 612 (cont’d)
In re Rivastigimine Patent Litig., 486 F. Supp. 2d 241, 243-244 (S.D. NY 2007)
Two part functional test:
(1) a threshold showing that the documents had sufficient impact on the witness's testimony to trigger the application of Rule 612; and
(2) balancing whether “production is necessary for fair cross examination,” or “the examining party is simply engaged in a fishing expedition.”
In re Kellog, Brown & Root, Inc. 796 F.3d 137 (D.C. Cir. 2015)
• Court granted petition for mandamus.
• No waiver of privilege where in-house counsel, who had been designated as 30(b)(6) witness, reviewed the investigation report and related materials.
44
PREPARING IN-HOUSE LAWYER FOR DEPOSITION
• Where possible, use non-ACP and non-WP materials during preparation.
• Avoid providing compilations of documents when the intention is to use
only a subset in preparation.
• Note where witness reviews ACP communications and WP for the purpose
of asserting privilege rather than to refresh recollection.
45
IN-HOUSE COUNSEL AS RULE 30(b)(6) WITNESS
• Avoid designating in-house counsel.
• Designate as narrowly as possible.
• What information will be based on the witness’s general knowledge?
• What information will witness “learn” from purposes of testimony?
46
FEDERAL RULE OF EVIDENCE 30(b)(6)
Rule 30(b)(6) Provides:
In its notice or subpoena, a party may name as the deponent a public
or private corporation, a partnership, an association, a governmental
agency, or other entity and must describe with reasonable
particularity the matters for examination. The named organization
must then designate one or more officers, directors, or managing
agents, or designate other persons who consent to testify on its
behalf; and it may set out the matters on which each person
designated will testify. . . . The persons designated must testify
about information known or reasonably available to the
organization.
47
PREPARATION OF RULE 30(b)(6) WITNESS (cont’d)
• Rule 30(b)(6) witnesses are expected to be adequately prepared regarding
what the entity should reasonably know, to the extent information is
reasonably available.
• Some courts have held that Rule 30(b)(6) witnesses must testify regarding
facts they learned from conversations with counsel and from review of
work product.
– Questioning that would elicit the mental impressions or opinions of
counsel are generally prohibited.
• Using ACP and WP materials to prepare a 30(b)(6) witness risks waiver,
e.g., through testimony that goes beyond facts and puts protected material
at issue.
• Practice Tip: Use non-ACP or WP materials where possible.
48
COUNSEL AS RULE 30(b)(6) WITNESS
• Designating an in-house attorney as a Rule 30(b)(6) witness creates
particular risks.
• If the designation is because counsel is most knowledgeable about facts:
– Was the knowledge obtained over time through ACP communications?
• May be difficult to make distinction between “facts” and communications.
– Was the knowledge obtained when the in-house lawyer was acting in a
business capacity?
• If the in-house lawyer also acted in legal capacity regarding the
same subject matter, it may be difficult to draw lines.
• Has the in-house lawyer been involved in litigation preparation generally?
49
STRUCTURING INTERNAL INVESTIGATIONS
Scenario:
• Anonymous Call Received By Company Helpline
• Helpline Sends Report of Call to Chief Compliance Officer
• CCO Notifies General Counsel
• General Allegations:
• European-Based Employee of U.S. Publicly Traded Company Has Been Paying Off Government Officials in Middle East to Obtain Contracts.
• Employee’s Manager in U.S. Is Aware of Payments.
• Company Has Been Booking Costs of Payoffs as “Commissions.”
• Assistant General Counsel has worked with the Manager; unclear if those matters may be related to the vague allegations.
– Alternative: As the investigation proceeds, it becomes apparent that AGC may have occurrence knowledge.
50
ISSUES TO CONSIDER WHEN COMPANY RECEIVES COMPLAINT
• Should there be an investigation? Who decides?
• If so, should the company handle it internally or with outside counsel?
• Who should be notified within the company?
• Who should authorize the investigation?
• Outside counsel: Engagement Letter
– Who engages counsel?
– What is the stated purpose of engagement?
• Data Lock Down
– Where is the data likely to reside?
– Are there custodians whose data should be captured immediately (e.g., through forensic
imaging of laptops, pdas, voicemail, email, etc.)?
– If data resides outside of U.S.: What limits apply regarding: (a) processing data; (b)
transferring data; (c) limiting use for which data will be used?
– Litigation Hold Notice?
– Has document preservation duty been triggered?
51
GOALS
Establish Team and Process to:
• Preserve and review relevant data.
• Determine if there has been any wrongdoing.
• Conduct the investigation in manner that maximizes Attorney-Client Privilege
and Work Product Protection.
• Attorney-Client Privilege and Work Product Doctrine should be considered
separately.
• Preserve Company’s ability to cooperate with government authorities.
• Determine corrective action, including whether or not to voluntarily disclose.
• Corrective action may include optimizing internal standards and procedures.
– Compliance Program
– Training
• Action may include employee discipline up to and including termination.
52
EFFECT OF PRESENCE OF THIRD PARTIES DURING INTERVIEWS
• Investigation will often involve third parties.
• Forensic Accountants
– Auditors
– Investigators
• Risk of privilege will be waived if third party is present unless they are
deemed an agent of counsel or an agent of the corporation.
• Limit presence of anyone who is not essential to the conduct of the
interview, including other employees of the company.
• Should in-house counsel participate in interviews conducted by outside
counsel?
53
UPJOHN WARNINGS IN EMPLOYEE INTERVIEWS
• Corporation holds the privilege: It may choose to assert or waive in the future.
• At the beginning of an employee interview it is important to provide Upjohn warnings.
– Counsel represents the corporation, not the individual employee.
– The interview is protected by the attorney-client privilege.
– The corporation, not the employee, holds the privilege.
– The corporation may decide to waive the privilege and disclose what it learns during the interview.
– The employee should keep the substance of the interview confidential.
Sandra T.E. v. South Berwyn School Dist. 100, 600 F.3d 612, 620 (7th Cir. 2010) (citing Upjohn warnings given during employee interview as evidence supporting that investigators were acting as attorneys and reversing order to disclose privileged communications).
• Important to provide Upjohn warnings to in-house counsel who are interviewed in the course of the investigation.
54
UPJOHN WARNINGS IN EMPLOYEE INTERVIEWS (cont’d)
• Without clear Upjohn warnings, an employee may believe that counsel is
also representing the employee.
• If that belief is reasonable, courts may hold privilege applies to both the
employee and the corporation.
• Corporation may be prevented from disclosing information.
• Counsel may be at risk.
U.S. v. Nicholas, 606 F. Supp. 2d 1109 (C.D. Cal. 2009), order rev’d,
583 F.3d 600 (9th Cir. 2009) (investigative counsel failed to give Upjohn
warnings to company employee, despite representing employee personally
in a related case, and referring matter to disciplinary committee).
55