Privilege Issues That Arise When Dealing with Outside Consultants

First published in the State Bar of Texas Corporate Counsel Section Newsletter, Winter 2013

This article is the second in a series of four articles discussing various issues relating to the attorney-client privilege. The first article, entitled “An Overview of the Attorney-Client Privilege & Common Privilege Issues”, appeared in the Fall 2012 Edition of the Corporate Counsel Section Newsletter, State Bar of Texas.

It is well recognized that the attorney-client privilege only applies to confidential communications between a client and its lawyers. If a third party is present during the communication - or the communication is later disclosed to a third party, the privilege does not apply. Often, however, it is necessary for the lawyers and clients to rely on the experience of a third party to help provide the legal advice: an accountant, banker, interpreter or other expert. Can a client and lawyer include such a third party in their discussions and still maintain the confidential nature of the communication?

The issue of whether the attorney-client privilege should extend to third-party consultants is still developing. There is very little Texas case law on the topic, but this article provides an overview of the existing law and possible arguments to extend the privilege to include a third-party consultant in an otherwise privileged conversation. It is also important to remember that, like all privilege issues, whether the privilege applies to a consultant will be very fact-specific and will be made on a communication-by-communication basis.

1. Texas Rule of Evidence 503

   Under Texas Rule of Evidence 503, which governs the attorney-client privilege in Texas, a communication is privileged if it is confidential, made for the purpose of facilitating the rendition of professional legal services, and is made between a (1) lawyer; (2) client; (3) representative of the lawyer; or (4) representative of the client, or any combination of the four.1

   The analysis of whether a particular consultant is within the privileged relationship and thus does not waive privilege begins with the definitions of representative of the client and representative of the lawyer. Rule 503 defines a representative of the client as “a person having authority to obtain professional legal services, or to act on advice thereby rendered, on behalf of the client” (known as the “control group test”) or as “any other person who, for the purpose of effectuating legal representation for the client, makes or receives a confidential communication while acting in the scope of employment for the client” (known as the “subject matter test”). TEX. R. EVID. 503(a)(2)(A)-(B).

   A representative of the lawyer is defined as “one employed by the lawyer to assist the lawyer in the rendition of professional services” or “an accountant who is reasonably necessary for the lawyer's rendition of professional legal services”. TEX. R. EVID. 503(a)(4)(A)-(B).

2. No Privilege if Communication Made in Presence of Third Party or if Communication Is Later Shared with a Third Party

   A key component of the attorney-client privilege is that the communication be confidential...