Dual Representation Risks Waiver of AC Privilege

Professionals must communicate clearly with clients regarding the existence and scope of the professional-client relationship.  This is especially true for general counsel, who represent a company but also interact with its employees. We discussed these issues here in the context of the Penn State/Sandusky scandal two years ago but lingering issues remain which highlight the risks of dual representation.

As you undoubtedly know, the Pennsylvania Office of Attorney General began investigating allegations of sexual abuse at Penn State in 2009. The AG convened a statewide Grand Jury as part of the investigation that uncovered misconduct in 1998 and 2001. As part of the criminal investigation, the AG subpoenaed several Penn State employees to appear and testify before the grand jury. Penn State’s general counsel agreed that she would represent each of the employees before the grand jury.

The attorney met independently with the employees to explain the Grand Jury process.  The university president was also interviewed by the AG before his testimony, and Penn State’s counsel was present for the interview.  After the interview, the AG informed the judge that the testimony of the employees was inconsistent with the other employees.  The judge later asked the attorney directly who her client was, and she responded that she represented the university only.  Nevertheless, when the president came back to testify, he stated that he believed he was being represented by the university’s counsel.  During the course of the testimony the attorney consulted with the president and allowed him to clarify matters.

The attorney was later required to testify about the responses of the Penn State employees.  The attorney then discussed various issues that arose during the president’s prior testimony.  Following the attorney’s testimony, the grand jury recommended charges against the president for failure to report child abuse, perjury, and obstruction, and a criminal complaint was filed.

The president later filed pre-trial motions to preclude the attorney’s testimony on the grounds that it constituted a breach of the attorney-client privilege.  The trial court, however, determined that the attorney did not represent the president in an individual capacity and that she therefore did not violate the attorney-client privilege.  In a decision available here, the appellate court determined that because the president met with the attorney to discuss the subpoenas and he consulted the attorney for purposes of securing legal advice, an attorney-client relationship existed during the grand jury testimony.

Professionals who represent businesses must explain to individual employees the nature of their relationship and who the client is.  In order to avoid confusion, employees are often best served by retaining their own counsel.  Failure to do so could call into question whether there is an attorney-client relationship and could lead to waiver of privileges.

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  1. Mel Moseley

    You raise important considerations. This is an area that often can lead to problems for careless interactions between attorneys, corporate clients and their employees.

    This frequently arises when asked to represent both financial service firms and employees/independent contractors of the firms who are the subject of customer or industry claims. Assuming the firm is an existing client, before discussing anything with employees the attorneys must first determine if he can even offer to represent the employee and whether he should (would representation of either be limited by representation of both, are conflicts likely, etc.). If the lawyer thinks he can fairly and ethically represent both and should offer the representation, then clear disclosures about the dual representation should be made in writing in a signed engagement letter (the possibility of future conflicts, possible need to withdraw, sharing of confidential info disclosed by either client can be shared with the other etc.) and have both clients approve the dual representation in writing.

    If the employee retains individual counsel, the company lawyer should approach all meeting with the employee through the employee’s counsel and generally assume discussions won’t be protected. Joint defense agreements can be useful when separate counsel for the employee is used.

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