Ethical Issues Of Concern To In-House Counsel

Article by Steven J. Fram, Esquire1

Because in-house counsel are not just attorneys -- they are also employees and sometimes hold non-legal officer positions -- the degree to which attorney ethics rules apply to them is not always clear. Moreover, different jurisdictions have adopted varying versions of the Rules of Professional Responsibility and have taken different approaches to disputes between in-house attorneys and their employers. As a consequence, the rights and responsibilities of in-house attorneys can vary significantly from jurisdiction to jurisdiction. This article will briefly summarize four ethics issues that can adversely impact unwary in-house attorneys and their employers. Its primary focus will be on the professional responsibilities of in-house attorneys under New Jersey law. The article will also suggest some steps that can be taken to avoid problems arising from the ethical issues it notes.

What Communications are Privileged? In-house attorneys need to bear in mind that their communications with other company employees are not necessarily protected by the attorney-client privilege. This is because the courts have recognized that in-house attorneys sometimes play dual roles as both attorneys and business-people. The lawyer-client privilege, however, only applies to communications between attorneys and their clients "in the course of that relationship and in professional confidence...." N.J. Evid. R. 504.

Where in-house attorneys give advice that is predominantly business in nature, the courts have held that the communications are not covered by the attorney-client privilege. This is so even if some of the advice given is legal. As one court has noted: "The mere fact that a communication is made directly to an attorney, or an attorney is copied in or on a memorandum does not mean that the communication is necessarily privileged.... There is no privilege for corporate counsel who has given, or corporate employees who are seeking, predominantly business advice as opposed to legal advice."2

Attempts to distinguish business advice from legal advice can be particularly difficult for in-house attorneys who wear more than one "hat" by holding other, non-legal officer positions.3 The process of judicial line-drawing between legal advice and business advice will typically require the submission of the communications to a judicial officer for in camera review.4 In United Jersey Bank v. Wolosoff,5 for example, the court held that a determination of the discoverability of documents withheld under the attorney-client privilege required that the documents "be carefully reviewed" by the trial court in camera "to determine their nature and content":

The mere fact that Mulligan is an attorney and served as the bank's in-house counsel is clearly insufficient. So too, that Mulligan's employment duties may have included responsibilities pertaining to pending litigation is not enough, by itself, to compel application of the privilege. Rather, judicial scrutiny must focus upon both the nature of the relationship between Mulligan and others and the type of information or communication involved.6

To maximize the chances that communications intended to be privileged will be maintained as such, in-house attorneys are well advised to take a number of precautions. When an attorney provides legal advice, she should be explicit. Thus, an internal memorandum or email might begin: "I am writing in response to your request that I provide legal advice concerning...." In addition, communications intended to be privileged should have a conspicuous legend to that effect, such as: "ATTORNEY-CLIENT COMMUNICATION, CONTAINS PRIVILEGED LEGAL ADVICE." Such precautions will improve, although not guarantee, the likelihood that a court will find the communications were for the purposes of providing legal advice and that the intent was for them to be confidential.

Revealing Attorney-Client Communications. A related, and often particularly difficult, issue concerns the circumstances in which a lawyer may -- or must -- reveal information that would otherwise be confidential. ABA Model RPC 1.6 provides that a lawyer "may" reveal otherwise privileged information "to prevent reasonably certain death or substantial bodily harm." The ABA Rule does not require disclosure under any circumstances.

New Jersey's version of RPC 1.6, in contrast, is significantly broader in important respects. It provides that a lawyer "shall" disclose otherwise privileged information "as soon as, and to the extent the lawyer reasonably believes necessary," to prevent a client or another person (1) "from committing a criminal, illegal or fraudulent act that the lawyer reasonably believes is likely to result in death or substantial bodily harm or substantial injury to the financial interest or property of another"; and (2) "from committing a criminal, illegal or fraudulent act that the lawyer reasonably believes is likely to perpetrate a fraud upon a tribunal."

The exceptions to the attorney-client privilege contained in New Jersey RPC 1.6(b) do...