In the classic sword/shield scenario, a party cannot both invoke an advice-of-counsel defense and also use the attorney-client privilege to shield from an opponent the very advice that the client placed at issue. That said, courts have also consistently held that in order for a waiver to occur, a party must affirmatively put its own lawyer’s advice at issue. A party’s claim of a lack of bad faith generally is insufficient to generate a privilege waiver, and a clever litigant cannot, through discovery or otherwise, impose a waiver on its opponent by injecting the opponent’s consultations with counsel into a dispute.
For example, in the context of an insurance bad faith claim, if a defendant-insurer claims a lack of bad faith in a denial of coverage and affirmatively relies on its receipt of advice from counsel as evidence of that lack of bad faith, the insurer inarguably has waived the privilege. If, however, in response to a bad faith claim, the insurer denies that it acted in bad faith but does not point to advice it received from counsel as evidence of its lack of bad faith, there is no waiver of the privilege. This is so even when, in such circumstances, opponents argue that the insurer has put its state of mind at issue; after all, the argument goes, counsel’s advice would be relevant because, if a lawyer advised the insurer that it owed coverage to the plaintiff, that would undermine the insurer’s contention that did not deny the claim in bad faith.
Despite that argument, there is no waiver in that circumstance. A lawyer’s advice on a matter in litigation is almost always relevant, and such advice might well have very specific relevance in an insurance bad faith case. However, relevance is never an exception to the attorney-client privilege. As one court observed:
The mere fact that attorney-client communications may relate to the lawsuit does not expose them to discovery. Quite the contrary: it is in exactly these situations where attorney-client privilege is most properly invoked. To allow the paintiff to prevail on this argument would essentially obliterate the privilege, as it would open all attorney-client communications pertaining to the underlying litigation—which can be expected to include the vast majority of such communications—to discovery.
If a client does not affirmatively put its own lawyer’s advice at issue, there is no waiver.
In a recent decision, Doe v. Schuylkill County Courthouse, the court required the defendants, after two years of litigation, to put a stake in the ground regarding the defendants’ potential invocation of an advice-of-counsel defense. At issue in Doe was whether the defendants retaliated against the employee-plaintiffs for whistleblowing about alleged improper conduct in the workplace. The court observed that the defendants had been cagey about whether they would point to advice of counsel as part of a good faith defense: “the defendants … have alluded to the … advice received from outside counsel … Implicit in this assertion of good faith is the suggestion that the defendants were guided by counsel throughout their actions … .”
The Doe court acknowledged that the attorney-client privilege survives even “when the client’s state of mind is in question.” The court, however, suggested that, even absent an explicit and affirmative invocation of an advice-of-counsel defense, an assertion of a “good-faith belief” defense puts attorney-client communications at issue and waives the privilege. That suggestion goes a step farther than those courts that have required that the proponent affirmatively invoke an advice-of-counsel defense before holding that the client waived the privilege.
Regardless of any conflict over whether and when there can be a waiver from an implicit invocation of an advice of counsel defense, courts definitely do not permit a party to manipulate the privilege in order to ambush an opponent at trial. A party cannot lie in the weeds by withholding privileged communications during discovery, only to decide on the cusp of trial to affirmatively invoke an advice-of-counsel defense without having afforded the other side the opportunity to conduct discovery on the issue.
Those principles of fairness appear to have motivated the Doe court. The court did not hold conclusively that the Doe defendants waived the privilege. Instead, the Doe court told the defendants to make a call: were the defendants going to rely on advice of counsel or not? If not, the defendants, after two years of litigation, needed to say so clearly and conclusively, and if they made that express disclaimer, the privilege could survive. However, in the absence of a clear and conclusive choice, or if the defendants invoked an advice-of-counsel defense, the defendants’ communications with counsel would be discoverable.
A party can’t have it both ways. It is impermissible to point to advice received from counsel as a defense to a claim but then shield such advice from discovery. Generally, however, a waiver will not occur unless a client affirmatively puts its lawyer’s advice at issue. In Doe, the court held that, at a relatively advanced stage of litigation, it was reasonable to require the defendants to make their intentions clear: invoke advice of counsel as a defense and waive the privilege, or clearly forego that defense and keep its communications with counsel confidential.
Reprinted with permission from The Legal Intelligencer, © ALM Media Properties LLC. All rights reserved.