Representing Media Clients and Their Employees in Newsgathering Cases: Traps for the Unwary

By Thomas S. Leatherbury, Richard M. Goehler and Bruce E.H. Johnson

As large libel verdicts continue to be overturned,1 plaintiffs' lawyers are suing individual reporters and their employers on novel and more expansive tort theories for newsgathering conduct.2 The role of prepublication and prebroadcast counsel, whether inside or outside, appears to be expanding as well. Counsel must now know not only the nuances of libel and privacy law but also the compendium of federal and state laws concerning wire-tapping, eavesdropping, trespass, hidden cameras, intrusion, ride-alongs, and searches.3 Potential newsgathering liability may create more complicated relationships between media lawyers and their clients. As civil and criminal liability for newsgathering conduct becomes less theoretical and more commonplace, prepublication counsel must be more aware of and sensitive to the possibility of conflicts of interest between reporters and their employers.4 These potential conflicts are still being handled on an ad hoc or, even more frequently, on a post hoc basisif they are spotted at all.

In rendering advice, can counsel presume to represent the company only? How does counsel acknowledge, establish, and perhaps limit who is the client? What guidelines should counsel use to detect potential adversity between the reporter and the company? Does the reporter's individual exposure to potential criminal liability change counsel's calculus in determining potential adversity? When and how should counsel disclose the possibility of adversity? When and under what circumstances should counsel obtain a prospective waiver of conflicts of interest? These questions present complex problems in the abstract, and even more complex problems in the sometimes sensitive, tripartite relationship among lawyers, reporters, and media companies - problems made even more complicated by real world deadlines and financial constraints. We hope to provide some guidance for anticipating and addressing at least some of these issues.

Traditionally, when defamation was the major legal concern facing newspapers, broadcasters, and other media, these clients would consult their lawyers only at the time of prepublication review, generally when the news story had been researched, written, and was ready for publication. This discrete consultation would focus on a single liability risk, the danger of false and defamatory statements in the story, and would be based on a review of factual information that was the result of the reporter's investigation. The reporter and the editor, with rare exceptions, already had agreed on the final written product of their labors, and they simply needed attorney review to assess and limit the risk of defamation.

Traditional prepublication review is designed to avoid civil liability. Where respondeat superior is the usual rule, the reporter, the editor, and the publisher generally share a common set of interests and goals. If the reporter is found liable, the company will usually be liable, and vice versa. Indeed, after Garrison v. Louisiana5 largely eliminated the relic of criminal libel, newsroom lawyers have not concerned themselves with criminal law. With few and very noteworthy exceptions, such as the rare confidential source battle that was litigated to the jailhouse and beyond, a reporter was extremely unlikely to face criminal sanctions as a result of any particular article.6

The advent of newsgathering liability presents a very different set of risks for media lawyers. First, legal consultations are no longer simply the discrete discussion between lawyer and client after the story has been researched and written. Instead, they may precede the reporter's investigation and continue while the investigation is ongoing.

Second, because of the so-called crime-fraud exception to the attorney-client privilege,7 the lawyer's advice may later become evidence used against the client.8

Third, and perhaps most significant, assisting media clients in avoiding these liabilities creates additional issues for media lawyers, aggravated by the potential application of criminal law principles to newsgathering advice and counsel.

What Are These Issues?

Identifying the Client

A lawyer must always consider who is the client in these circumstances. For example, does the individual employee become in effect another client of the company's lawyer? Certainly, editors or reporters may well argue that they acted and relied on the attorney's advice on newsgathering risks - and that fact may be significant. According to the Restatement (Third) of the Law Governing Lawyers, "[w]hether the lawyer is to represent the organization, a person or entity associated with it, or more than one such persons or entities is a question of fact to be determined based on reasonable expectations in the circumstances" and thus "a lawyer's failure to clarify whom the lawyer represents in circumstances calling for such a result might lead a lawyer to have entered into client-lawyer representations not intended by the lawyer."9 A corporate officer may invoke the attorney-client privilege individually if the evidence shows the officer is consulting the lawyer in an individual capacity.10 One court has held that an employee can claim the privilege individually only if the substance of the consultation did not concern the employee's official duties or the company's general affairs.11

Some federal courts have adopted a five-part test for determining when individual corporate employees can claim that the corporation's lawyer also represented them:

First, they must show they approached [counsel] for the purpose of seeking legal advice. Second, they must demonstrate that when they approached [counsel] they made it clear that they were seeking legal advice in their individual rather than in their representative capacities. Third, they must demonstrate that the [counsel] saw fit to communicate with them in their individual capacities, knowing that a possible conflict could arise. Fourth, they must prove that their conversations with [counsel] were confidential. And fifth, they must show that the substance of their conversations with [counsel] did not concern matters within the company or the general affairs of the company.12

Obtaining Informed Consent

If there is to be a joint representation, the lawyer must obtain informed consent from both clients. In Felix v. Balkin,13 the court disqualified attorneys for both the defendant-employer and the plaintiff-employee for failure to discover conflicts of interest arising from joint representation in a sexual harassment suit. A number of employees sued Saks Fifth Avenue and various supervisors for the alleged sexual harassment committed by one particular supervisor. One of the supervisors who was being jointly represented with Saks then filed her own sexual harassment suit against Saks and the particular supervisor. Thus, an employee-plaintiff in one suit was suing her employer with whom she was a co-defendant in another suit brought by another employee on similar facts.

The Felix court analyzed the ethics of dual representation of employer and employee, holding that, in these circumstances, joint representation compromised the attorney's duty of loyalty to both clients. The court noted that, when undertaking joint representation, attorneys incur a two-part duty of disclosure to the clients: from investigation of the "essential facts," attorneys must (1) determine in their "professional opinion that interests are, in fact, common and not adverse, and [(2)] explain fully to each client the implications of the common representation."14 The goal is the client's informed decision to proceed with the joint representation. Where such explanation does not make it "obvious that the lawyer can adequately represent the interests of each client," or where a client refuses to consent to joint representation after such an explanation, the attorney must withdraw.15

These duties are heightened, the court noted, when the joint representation is of employer and employee, "for without full understanding of all facts and circumstances, the lawyer cannot know, and cannot form a reliable opinion, that the inherent inequality of status, or particular individual interests, may not override a common interest."16 The attorney representing the defendant-employer and employee failed to discharge these duties faithfully because he had had only a cursory conversation with the employee about conflicts, did not question her about any potential conflicts, and did not explain the consequences of dual representation and conflicts of interest. Even though the court admitted the employee had breached her duty of candor to her defense attorney, the court nonetheless disqualified the attorney's entire firm from all of the pending lawsuits.

Recognizing Potential Consequences

If there is a joint representation, the attorney owes duties to both clients and may be prevented from representing either if a conflict arises. As Felix illustrates, the company lawyer who advises both the company and its employees faces an increased risk of disqualification, even if the company and the individual employee do not bring claims against one another. Although most courts have refused to disqualify the employer's attorney because an attorney-client relationship existed between the attorney and the employee as an agent of the employer (rather than as an individual), the decisions have not been uniform.17 For example, in Montgomery Academy v. Kohn,18 an attorney was disqualified from representing a school in its suit to recover from its former director for an investment made in a Ponzi scheme, after the director had provided the attorney with confidential information regarding her investment of the academy's funds in the scheme. The court determined that, at the time of the disclosure, there was an implied attorney-client relationship between the attorney and the...