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September 18, 2012

ABA Podcast: High-Profile Case Provides Lesson on Waiver of Privilege, Work-Product Protection

Avoiding waiver of attorney-client privilege or work-product protection is crucial to defending your client’s rights. Michael Downey, a partner at Armstrong Teasdale LLP in St. Louis and an ethics professor at Washington University School of Law and St. Louis University School of Law, used a high-profile case to illustrate waiver of privilege in a Section of Litigation Sound Advice podcast.

In the United States of America v. Martha Stewart and Peter Bacanovic (2004), the lifestyle guru Stewart was prosecuted by the federal government for allegedly engaging in insider trading and lying to federal investigators related to the sale of stock in ImClone. At issue in the case was an email that Stewart had prepared and sent to her lawyers to set forth what had happened and what she remembered about the circumstances of her sale of the stock, Downey says.

The next day, Stewart also sent the email to her daughter, Alexis. “Alexis was not an attorney and did not have some special confidential relationship, at least under legal principles, with Ms. Stewart,” Downey says.

When the U.S. government made the discovery about the email, it argued that privilege had been waived because a privileged communication had been shared with a third party, Downey says.

But the inquiry didn’t end there because the court next raised the question of whether the communication was protected by the work-product provision, Downey says.

There are a number of rules that define work-product protection, but the most famous example comes from the Supreme Court case Hickman v. Taylor (1947) and is codified in civil rule procedure 26. “Basically what it says is that documents that are prepared in anticipation of litigation or for trial generally cannot be discovered unless there’s a particular extraordinary need to receive those documents or if there is some other exception that applies,” he says.

The work-product privilege is waived when a party to a lawsuit uses the work product in an unfair way that is inconsistent with the principles underlying the doctrine of the privilege, Downey adds. “What the court said is that by forwarding the email to a family member, Martha Stewart did not substantially increase the risk that the government would gain access to the materials, and [the court] said that it did not affect either side’s interest in the litigation,” Downey says. “This disclosure did not advance an intent on Stewart’s part to relinquish the work-product protection, and it … did not prejudice the government by offering Stewart some litigation-based advantage.”

The court found that the work-product protection had not been waived and that the U.S. government could not obtain access to the communication, Downey says.

“The real lesson here is that sometimes when a communication is shared with a third party, that sharing may constitute a wavier of the attorney-client privilege,” he says, “but [the court] is going to look at other questions, like questions of fairness and whether or not the disclosure substantially increased the risk that an adversary would get the communication. And if the answer to both of those questions is no, there’s not going to be a waiver.”

It’s important to determine when a communication may be protected by both the attorney-client privilege and the work-product doctrine “so that you can assert both of those protections because, frankly, you may find that there’s been some disclosure that would count as a waiver of one protection but not necessarily of the other,” Downey says.

Learn More About:  EthicsLitigation