Corporate LawyersSee Weakening Of Attorney-Client Privilege

Wednesday, June 1, 2005 - 01:00

A survey released recently by the Association of Corporate Counsel (ACC) shows that attorney-client privilege in the corporate sector faces increasing challenges. Nearly 40 percent of the 719 in-house and outside corporate attorneys surveyed say that their corporate clients have experienced erosions in the protections offered by the privilege and work-product doctrine in the last four years (post-Enron).The shift comes as government regulators, prosecutors and concerned stakeholders increase their demand for accountability from corporate boards and management.

ACC conducted the survey in response to reports from members and their outside counsel that their clients' attorney-client privilege rights are under attack. The survey shows that 94 percent of those responding believe the attorney-client privilege to be integral to their ability to monitor, enforce and improve their client's compliance initiatives. Approximately one third of those surveyed conveyed a personal story about how the client's privilege rights have been called into question in the last four years.

"This data suggests that when trying to 'catch the bad guys,' prosecutors and others may sacrifice fundamental protections that our system affords clients," explained Fred Krebs, president of ACC.

Increasingly, corporate clients are being asked to waive their privilege rights during SEC investigations, federal and state prosecutions of criminal allegations, and sensitive civil suits. These demands for waiver are often presented as a form of requirement for companies to show that they are cooperating with the government, or as a necessary response to calls for corporate "accountability" and "transparency." This practice is supported by the newly amended Federal Sentencing Guidelines and the Department of Justice's internal policies (The Thompson Memorandum), both of which give prosecutors leverage to push for a waiver of privilege.

ACC has been working with a diverse group of organizations to monitor and respond to these attacks on the rights of corporate defendants and the employees whose presumed confidential conversations may now be used against them once the company waives its privilege rights. The groups include the National Association of Criminal Defense Lawyers, the U.S. Chamber of Commerce, the Business Roundtable, the National Association of Manufacturers, the American Chemical Council and the American Civil Liberties Union (which is concerned that waivers will disproportionately affect smaller businesses, nonprofits and individual employees).