Besides receiving what is hoped to be sound and constructive advice, the use of legal counsel by human resources (HR) departments and in-house counsel on HR matters may have the additional benefit of protecting sensitive, and potentially damaging, information from disclosure under the rules of attorney-client privilege and the attorney work product doctrine. While these rules are well known, they are often misunderstood and can often be complex, given the facts or legal context. This article discusses these rules and how employers can use legal counsel to their advantage for employment disputes and issues and to protect themselves from unnecessary litigation.
Attorney-Client Privilege Generally and Its Importance to HR Departments
The attorney-client privilege doctrine is well established but not universally well understood. The purpose of this privilege is to protect the communications between an attorney and client regarding information related to legal representation. The basic elements needed to establish privilege are (i) a communication (ii) made in confidence (iii) between an attorney (iv) and a client (v) for the purpose of seeking or obtaining legal advice. This privilege belongs to the client, not the lawyer. This means only the client can expressly or impliedly waive the privilege of a particular communication, by disclosing any part of the communication to a third party (including instances where the third party is in the room or on the email chain), disclosing their conversations during a deposition, or seeking legal advice that is combined with or otherwise provided for a specific business purpose. Courts will look at the underlying factual scenario in determining privilege and the waiver of privilege.
An important inquiry courts use to determine whether there is attorney-client privilege is whether the “primary purpose” of a communication is to provide legal advice. Outside counsel is often going to be acting in a legal function. When employers and their HR departments bring in outside counsel, they are typically seeking legal advice, not business advice. For example, if an employer wants outside counsel to conduct a racial equity analysis of their entire company prior to a complaint being filed to assess any potential liability, generally most communications with outside counsel will be protected under attorney-client privilege. However, if the employer asks an independent consulting firm to conduct this same analysis, these communications will not be privileged and can be discoverable if a complaint is filed.
Attorney Work Product Doctrine Generally and Its Importance to HR Departments
The attorney work product doctrine can provide protection of documents that would not otherwise be protected by attorney-client privilege. Attorney work product doctrine attaches to documents and tangible things that an attorney or their representative prepares in connection with or “in anticipation of” litigation. The attorney work product doctrine is broader than attorney-client privilege because its protections are not limited to communications or confidential matters. An attorney’s mental impressions, conclusions, opinions, or legal theories will always be protected. Accordingly, any attorney advice, as opposed to that of a non-lawyer, will be privileged and will not be subject to disclosure. Unlike attorney-client privilege, the holder of privilege for attorney work product is the attorney, not the client. This means that attorney work product privilege is waived only if the attorney discloses the work product to a third party in a way that creates a significant likelihood that an adversary or potential adversary in the anticipated litigation will obtain it.
Another important distinction between attorney-client privilege and attorney work product doctrine is that attorney work product must be made in anticipation of litigation, not just by rendering legal advice. This means documents rendered for a business purpose such as an employee dispute report prepared by HR or a consultant will not be protected. However, if that employee dispute report was prepared by a lawyer both for a business purpose and in anticipation of litigation because a complaint was filed with the client company, the employee dispute report will be protected. Even if a court were to find that certain fact-based portions of the report fit within a business purpose, the attorney’s analysis, impressions, and advice would still not be discoverable. Using the racial equity analysis example from above, if an HR department hires an outside consulting firm to conduct this analysis because a complaint might be filed, all materials and renderings by the outside consulting firm will be subject to discovery. Whereas when an HR department brings in outside legal counsel to perform the analysis, these documents and legal conclusions, even the documents prepared by non-attorney individuals at the direction of outside counsel, will generally be protected by attorney work product privilege.
Besides the racial equity analysis and employee dispute examples explained above, companies and their HR departments can benefit from outside counsel and their coinciding privileges in a myriad of ways. When HR is contemplating using outside counsel, the following should be considered:
- Has an HR complaint been filed or is it likely to be filed? Either way, outside counsel can be beneficial in preventing public disclosure of employee misconduct and complaints.
- An internal investigation may need to be conducted. Communications with outside counsel and employees are more likely to be protected than if the investigation is conducted by HR employees.
- Highly confidential and prejudicial documents and materials are likely to be created or maintained. If potentially harmful reports are being created or analyses are being conducted, the materials need to be protected from public disclosure.
- Legal advice will be necessary. By waiting for non-legal consultants to render their reports before asking for legal advice, companies have opened the door for the discovery of these documents. Instead, have the outside counsel involved from the beginning to better protect the reports and subsequent legal advice.
- Unsure of what the privilege limitations are? Just ask! If you are unsure what information and documentation may go public or what the effect is of sharing information to others besides your attorney, be sure to ask legal counsel.