Thursday, October 1, 2009

9th Circuit Court of Appeals holds statements made during internal investigation are not privileged

Last week in class we covered the difficult issues that arise when attorneys conduct internal investigations for entity clients. Among these, we talked about the possibility that individuals interviewed by the attorney might feel the attorney represents them and that therefore the information they provide will be confidential.

Yesterday, the Court of Appeals for the 9th Circuit decided a closely watched case on that very issue. In that case, as part of an internal investigation related to alleged backdating of stock options the lawyers for a company interviewed the chief financial officer of the company. He disclosed relevant information which was eventually disclosed to the authorities. The CFO claimed that the attorneys represented both him personally and the company at the time of the investigation and that the statements were confidential and should not have ended up in the hands of the U.S. government. Assuming this was a case of "dual-representation" an interesting question arises as to whether the entity client "controls" the privilege. The opinion, which is available here, holds that the individual could not claim the attorney-client privilege to prevent the disclosure of the statements but only because the statements were not made "in confidence" -- they were made in the presence of people outside the protection of the privilege to begin with.

For more on the story go here, here, here and here.

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