"So then I says to the guy, 'leave the gun, take the Canolli."
Yes, we've all seen that movie. When it comes to going over your business plans and tax structure with your lawyer, you need to understand what is privileged and what is not. Knowing the difference will help your lawyer just as much as it will help you.
We've all "left the gun and took the Canolli" at least once in our lives, right? Or more likely, something less extreme but nonetheless unflattering. The point is, you don't want to that client who tells crucial information to his or her lawyer and then ends up wondering whether that information is “attorney client privileged” or not.
Attorney client privilege is a fundamental legal protection offered to individuals, companies, and organizations who provide confidential information and who seek counsel from their lawyer or law firm.
Under law, an attorney cannot be required to provide attorney client privileged information to a plaintiff in a law suit, such as a creditor, or to a government agency (our friends at the IRS) except in certain scenarios.
Below are a couple of common situations where you may lose attorney client privileges and a few tips on how to make sure your confidential information which you provided to your lawyers doesn’t run into the exceptions.
Was a third party present with your lawyer when the information you wanted to be privileged was discussed? For example, was your accountant or financial adviser present when discussing information you wanted to remain confidential and to remain privileged?
Keep in mind that if a third party is present in a meeting or on a conference call, then that third party may be required to provide information or documents from the meeting. That person can’t raise the attorney-client privileged defense for you unless they are actually your attorney.
If a third party professional does need to be hired, such as an accountant, that third party can be hired or brought into the matter by the attorney and the privilege may remain intact.
Fun fact: This is known as a “Kovel” hiring of the accountant and comes from a landmark case where a lawyer got an accountant for a client and the accountants work was covered under the lawyer’s attorney client privilege.
TIP: For sensitive matters where you want information to remain confidential and privileged, do not involve outside parties as those outside parties or non attorney advisers cannot raise the attorney client privileged defense.
This is especially tricky for companies who have their own “in house” legal counsel who also offers business advice.
Only the information exchanged that pertains to legal advice would be privileged. For example, was an organization chart of the companies holdings “privileged” when provided to the company lawyer also manages those assets for the business?
Also, what if that lawyer shared that organization chart to accountants, property managers, or other non lawyers? If they did, then that information is no longer attorney-client privileged.
TIP: If you have sensitive documents or information you want to keep in communication only with your lawyer, ask your attorney to identify the document as “Attorney Client Privileged” and do not provide it to non lawyers.
Not all information with your lawyer needs to be attorney client privileged. But keep these tips in mind when communicating sensitive information to your attorney.
You should always let your attorney know before you provide the confidential information that you intend it to be privileged. This way your lawyer can make sure that your information is properly "handled."
If you still have questions about attorney-client privilege, contact us directly. Or as always, you can leave them in the comments section below.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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