They Said What?!: Protect Your Internal Discussions from Disclosure in Litigation

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When discussing complex employment issues, an employer would be wise to take steps to ensure that communication is protected from disclosure and remains confidential, preventing it from becoming discoverable in future litigation. The attorney-client privilege protects a (1) communication, (2) made between privileged persons (attorney and client), (3) in confidence, (4) for the purpose of obtaining or providing legal advice or services for the client. This means that sensitive communications between HR personnel, senior executives, or other non-legal personnel are typically not privileged. Even when in-house counsel are included, maintaining privilege can be difficult when the in-house attorney wears multiple “hats.” The work product doctrine shields "documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative. . . ." Fed. R. Civ. P. 26(b)(3)(A).

Why Should I Care About Privilege?

Internal communications that are not privileged can become public documents in the course of litigation or disclosed to a governmental agency during an audit or investigation, even if the company intended to keep them confidential. Keeping your communications privileged allows the company to address sensitive issues and engage in frank and open dialogue on how to best handle sensitive situations without the fear that the communications will later be discoverable or seen outside the company. Control of information is vital in litigation. If you can choose the what, when, and how of disclosures, you can gain a significant advantage in litigation.

When Do I Need to Be Mindful of Privilege?

Employers should exercise caution whenever they are discussing a particularly sensitive issue—for example, when terminating employees, conducting a reduction-in-force, addressing an internal complaint, or conducting an internal investigation. For example, consider involving counsel if there is a group layoff. Generally, the larger the layoff, the greater the need for privilege. The employer is likely to discuss a variety of sensitive topics, including potential adverse impacts, adjustments to selection criteria, and other potential cost-cutting measures. The need for privilege is especially important if state or federal WARN Acts are or could be implicated. You should also consider involving counsel when deciding to terminate an employee who has recently engaged in any protected activity, where you may be discussing the risks associated with the termination, the potential need for a waiver, and other similar topics.

For complaints and investigations, look for certain buzz words such as “discrimination,” “harassment,” “illegal,” “unethical,” and “fraud.” Ask yourself, is the conduct, if true, potentially illegal, fraudulent, or unethical? If so, you will want to ensure that your communications regarding the conduct are privileged. If the matter is more serious or HR may have a conflict of interest (such as allegations of discrimination or harassment involving HR personnel, allegations against senior management, allegations of regulatory violations, SOX allegations, or possible class action implications), an outside investigation by counsel may be best to protect information with privilege as much as possible. The bigger the potential risk or issue, the more you should lean towards an external investigation by independent outside counsel.

Privilege does not apply in a wide range of scenarios that a company might think are privileged and certainly want to keep confidential. For example, the fact of a consultation, underlying facts shared with an attorney, documents provided to an attorney, correspondence with copies to an attorney, and communication in the presence of a third party, are not protected, nor are conversations protected simply because a lawyer is present or minimally involved. Instead, to be privileged, the purpose behind these discussions must be a request for or receipt of legal services or advice.

Presumption of Privilege Not At Play in Corporate Counsel Context

It is essential to direct your communications to your counsel and request their legal advice. Merely copying counsel may not be enough to preserve the privilege. This is particularly true when counsel wears two or more “hats” and provides both legal and business advice at different times. While courts presume that a company hired outside counsel to provide legal advice, courts do not exercise the same presumption with respect to in-house counsel. Instead, courts often require in-house counsel to make a “clear showing” that communications were made for a legal, rather than a business, purpose.  If the purpose of the communication is to further ordinary business activities, it is less likely to be privileged.

In evaluating the context of a communication, employers should consider several factors, including:

• Whether the communication would have occurred whether or not the attorney was copied (less likely to be privileged).
• Whether the correspondence was addressed to a number of individuals, only one of whom is in-house counsel with limited involvement (less likely to be privileged).
• Whether the correspondence was segregated from other, non-privileged correspondence/documents (more likely to be privileged).

Practical Considerations

Keep the following points in mind to maximize the likelihood that communications and documents will remain privileged:

• Involve counsel on communications and phone calls that need to be privileged, directing emails to counsel. State specifically that legal advice is being sought.
• Limit your recipients to only those who need to know and never send these communications outside the company. Avoid using “reply all” or sending emails to large distribution lists. If you need to work with third-party experts, retain them through counsel.
• Treat AI tools as potential third parties. Turn off auto-recording, avoid AI transcription, and establish protocols for the use of AI. Courts have begun holding that information distributed or run through certain AI tools is not privileged.
• When communicating with counsel for purposes of obtaining legal advice, put “Attorney-Client Privilege” in the title or body of the email. If you are gathering information or documents for counsel, note you are gathering the information or documents at the direction of counsel. Clearly mark all privileged documents with a header such as “Privileged and Confidential Attorney-Client Communication” or “Prepared in Anticipation of Litigation.”
• Keep the lawyer engaged in the discussion, rather than dropping them from subsequent communications. Although there can be protection for communications made at the direction of counsel, it becomes much more challenging to claim privilege for communications and meetings with little to no attorney involvement.
• Using a “privilege” label does not create a privilege that otherwise does not exist. Therefore, avoid overuse of “privileged” when marking documents, especially when the document contains no communications that would be protected by privilege. This can undercut your claim of privilege for other documents.
• If an inadvertent disclosure occurs, act promptly to rectify the error, such as notifying the receiving party and asserting your claim of privilege.

Keeping sensitive communications privileged can mean the difference between winning and losing a lawsuit and can significantly impact the settlement value of a case. Employers should train their employees to be mindful of the steps to ensure privilege. Maynard Nexsen regularly advises employers on a variety of workplace issues and conducts training for employers’ employees on topics such as these. For questions about privilege or to discuss internal training or other workplace legal matters, contact any member of our Employment & Labor Law Practice Group for advice.