Supreme Court Declines To Apply Fiduciary Exception To Attorney-Client Privilege: What Implications For ERISA Plans?

Lower-court cases have generally ruled that ERISA fiduciaries' communications with legal counsel may be subject to disclosure to plan beneficiaries under the "fiduciary exception" to the attorney-client privilege. In United States v. Jicarilla Apache Nation, 131 S. Ct. 2313 (U.S. 2011), the U.S. Supreme Court considered the "fiduciary exception" for the first time in a non-ERISA setting and found that the United States, as trustee of tribal property, was entitled to confidential communications with its legal counsel despite its fiduciary status. The Supreme Court's rejection of the "fiduciary exception" in this context has raised hope that ERISA fiduciaries may be entitled to greater confidentiality in obtaining legal advice regarding plan administration.

The Fiduciary Exception

In Jicarilla, the Supreme Court reiterated that the attorney-client privilege is intended to encourage clients to seek, and attorneys to give, full and frank legal counsel. The Court recognized that many lower courts have applied a "fiduciary exception" to the attorney-client privilege and precluded a fiduciary from asserting the privilege against beneficiaries of the trust or ERISA plan where the fiduciary has sought legal advice with regard to administration of the trust or ERISA plan.

This fiduciary exception has been based on two principles. First, the "real...