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Corporate Directors and Attorney Client Privilege

Philadelphia Business Lawyers weigh in on corporate lawsuits and attorney client privilege. Communications between an attorney and client meant for the purpose of procuring legal advice is privileged. This privileged communication provides the client a right to refuse disclosure of the content of the communication. The communication is privileged in order to aid full disclosure of client’s issues so that appropriate and adequate legal advice is dispensed. When the client is an individual, it is fairly straightforward to determine the privileged content and prevent its disclosure. However, when the client is a corporation or other business entity, it can be more complicated to determine what is a privileged communication.

For example, in a corporate setting, decisions are made by a board of directors. The bylaws of the corporation govern the operation, management and the roles and duties of the directors. The board of directors of a corporation often vote on business matters.

However, in this scenario the attorney’s client is the corporation. The corporation is a legal entity through which the board of directors acts. The attorney does not have attorney-client relationship with the individual directors that make up the board. Complications arise when there is a dispute between the board of directors or former directors and the corporation. The issue often presented is whether the individual directors can claim an “attorney-client” privilege with regard to the communications that were made for the corporation. Depending on the jurisdiction and the specific facts of the case, the communication may not be privileged.

Was the communication made for the purpose of obtaining legal advice?

A good starting point to evaluate the issue of the application of the attorney-client privilege depends on whether the communication sought to be protected was for the purpose of obtaining legal advice on behalf of the corporation or entity. There are instances where corporate attorneys are present during meetings where board decisions are being made. If the meeting was not for the purpose of resolving legal issues, the mere presence of an attorney in the room may not be sufficient to invoke the attorney client privilege.

Corporate Communications

The directors of a board tend to serve on boards of other corporations or are employed by others. When a director is employed and serves on a board of numerous corporations, there is a risk that communications of the director on board matters may result in a waiver of the attorney-client privilege. The attorney-client privilege can only be asserted when the communication is confidential. If the communication is exposed, the privilege holder is deemed to have waived the privilege. The risk of this occurring in a corporation are high. Especially, when the directors of the board sit on different boards or are employed by others.

Corporate Practices to Protect Confidentiality

In order to protect corporate communication that are subject to the privilege it important to implement certain practices.

  • Mark communications as privileged. Whenever there is a communication via email, written correspondence of meeting minutes that is of a nature that is subject to the privilege, it should be clearly marked as a confidential and privileged.
  • Separate email. Require directors to use personal emails for communications regarding the corporation. Discourage use of employer email because when a lawsuit is underway, the employer may review the communication to protect its interest and thus risk waiver of the privilege.
  • Discovery. In case of litigation, it may be advisable to employ contract attorneys that are not beholden to the corporation or employer to search for terms that allow them to identify the communications made by the director in the course of their dealings with the corporation as opposed to the employer. This may allow them to recover documents related to the director’s role with the corporation and thus avoid having the employer review the communication beforehand.

When directors have adverse interests to the corporation, the corporation may be able to withhold the information as the corporation is the rightful owner of the privilege.

Philadelphia Business Lawyers at Harty Law Group are Experienced in the Legal Nuances of Corporate Settings

Corporate lawsuits are complex and require dealing with multiple interests and parties. The attorneys at Harty Law Group use their legal acumen to navigate the complex issues surrounding attorney-client privilege in corporate litigation. To discuss your legal issue with an experienced Philadelphia business lawyer, call 267-262-5650 or submit an online inquiry. Our offices are located in Philadelphia and Haddonfield, New Jersey. We serve clients throughout New Jersey and Pennsylvania.

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