Communications between an attorney and client are privileged, right?  As iron-clad as we think the attorney-client privilege may be, there are limits.

Ian Meklinsky at Fox Rothschild LLP shared an interesting case with me this morning where a federal judge in New Hampshire ordered the production of the reports prepared by outside counsel following an investigation of  conducted by outside counsel.  The case involved Phillips Exeter Academy and allegations of sexual assault.  Phillips Exeter’s retained outside counsel hired another lawyer to investigate the allegations.  As part of the investigation, the attorney interviewed witnesses, reviewed documents and prepared two reports for Phillips Exeter and its retained outside counsel.  In discovery Phillips Exeter asserted that the results of the investigation were attorney client privileged.

The court ordered production of the reports because the outside counsel’s reports consisted of factual findings acquired from three witnesses interviewed by outside counsel.  According to the court, facts and statements by third parties are not attorney client privileged.

The attorney client privilege only covers communications for the purpose or rendering legal advice.  The court also questioned whether the reports from outside counsel constituted legal advice or whether the reports contained information to assist Phillips Exeter  make a business decision.  The court focused on the character and content of the reports, and concluded that the information in the reports consisted of information to assist Phillips Exeter on whether to discipline a student accused of sexual assault.  According to the court, the information was akin to providing information to help the client make a business decision, and communications to facilitate a business decision are not the same as legal advice.

Finally, it appears that the court was going to require Phillips Exeter to produce the reports no matter what.  The court concluded by stating that even if Phillips Exeter or its retained counsel hired outside counsel to render legal advice, and the information in the reports constituted legal advice, Phillips Exeter waived any claim of attorney client privilege regarding the reports by putting the contents of the reports at issue in the litigation and by sharing portions of the reports with third parties.

Clients regularly hire outside counsel to conduct investigations, assuming that the results of the investigations will be attorney-client privileged.  The implications of the New Hampshire court’s ruling could be huge in any situation where a party attempts to shield the results of an investigation by hiring outside counsel because the court’s distinction between advice to assist the client in making a business decision and rendering legal advice seems hazy and arbitrary.  Additionally, the court’s decision that Phillips Exeter put the contents of the report at issue in the case is problematic in every case where there is an investigation into allegations that end up in litigation.