by Robert M. Buchanan, Jr.
The Supreme Judicial Court of Massachusetts has taken intellectual leadership on an issue of nationwide importance for the legal profession. RFF v. Burns & Levinson, 465 Mass. 702, 703 (July 2013) addressed “whether confidential communications between law firm attorneys and a law firm’s in-house counsel … are protected from disclosure to the client by the attorney-client privilege.” The SJC ruled firmly that the privilege does apply — the first time this issue has been resolved by the highest court in any jurisdiction.
Examples Of The Issue In Practice
The Boston Bar Association filed an amicus brief in the RFF case. We provided several practical examples of how in-house counsel function in law firms.
Example 1: Law Firm represents Client A and also represents Client B. Client B calls Lawyer asking for urgent advice about an affiliate of Client A. Does Lawyer have a conflict of interest?
Example 2: Lawyer is preparing for a strategy discussion with Client, which is scheduled to begin in a few hours. Suddenly Lawyer realized that he may have made a technical or strategic mistake. What should he do? Does he need to disclose something to Client?
Example 3: A real estate developer Client sends a letter accusing Law Firm of malpractice, and at the same time insists that Law Firm continue performing work for the developer. Should Law Firm continue performing work for this Client?
In each of these three scenarios, the lawyer needs guidance; the law firm’s in-house counsel is in the best position to provide guidance; and the client will benefit if the lawyer obtains proper guidance promptly.
The Facts Of The RFF Case
The RFF case was similar to Example 3. Real estate lawyers received a demand letter from their client, a real estate developer. The lawyers faced a difficult set of questions. Should they argue with the client? Should they continue to represent the client? How could they do both at the same time? The lawyers sought advice from their partner who was “designated to respond to ethical questions and risk management issues.” RFF, 465 Mass. at 704.
The real estate developer later filed a malpractice action and sought to take depositions. The Business Litigation Session — in a well-reasoned opinion by Judge Billings, dated November 20, 2012 — ruled that the attorney-client privilege protected the lawyers from interrogation about their discussion with in-house counsel.
The SJC’s Analysis
The SJC affirmed, stating a logical series of principles, as the BBA had advocated.
1. Lawyers in law firms often need advice.
Law firms, like corporations, face a vast and complicated array of regulatory legislation, where the line between permissible and prohibited conduct is not always an instinctive matter.
RFF, 465 Mass. at 708-09, quoting Chambliss, The Scope of In-Firm Privilege, 80 Notre Dame L.Rev. 1721, 1756 (2005).
2. The attorney-client privilege enables in-house counsel to give advice.
Where a law firm designates one or more attorneys to serve as its in-house counsel on ethical, regulatory, and risk management issues that are crucial to the firm’s reputation and financial success, the attorney-client privilege serves the same purpose as it does for corporations or governmental entities: it guarantees the confidentiality necessary to ensure that the firm’s partners, associates, and staff employees provide the information needed to obtain sound legal advice.
RFF, 465 Mass. at 704-10.
3. There is no principled reason to reject the privilege.
Lower courts in some other jurisdictions had ruled that the attorney-client privilege does not apply. These courts have held that the law firm is impaired by a conflict of interest when the firm represents itself adverse to a current client. The SJC ruled, to the contrary, that the law firm can’t avoid analyzing what to do, and its analysis should be protected by the attorney-client privilege. Justice Gants stated the critical distinction as follows:
. . .[A] client is entitled to full and fair disclosure of facts that are relevant to the representation, including any bad news, and to sound legal advice from its law firm. But a client is not entitled to revelation of the law firm’s privileged communications with in-house or outside counsel where those facts were presented and the sound legal advice was formulated.
RFF, 465 Mass. at 716 (emphasis added).
The Privilege Applies If Four Requirements Are Met
The BBA’s amicus brief proposed a three-part test for applying the attorney-client privilege to in-house counsel. These three requirements were adopted by the SJC in the passage below. The SJC also added a fourth requirement, confidentiality, which is consistent with them. The SJC held:
For the privilege to apply, four conditions must be met. First, the law firm must designate, either formally or informally, an attorney or attorneys within the firm to represent the firm as in-house or ethics counsel, so that there is an attorney-client relationship between the in-house counsel and the firm when the consultation occurs. Second, where a current outside client has threatened litigation against the law firm, the in-house counsel must not have performed any work on the particular client matter at issue or a substantially related matter…. Third, the time spent by the attorneys in these communications with in-house counsel may not be billed or charged to any outside client…. Fourth, as with all attorney-client communications, they must be made in confidence and kept confidential.
RFF, 465 Mass. at 723 (emphasis added).
All Massachusetts law firms should review these four requirements. Although the SJC’s holding is not binding outside Massachusetts, its powerful reasoning should be persuasive in other states as well. In the long run, this analytical clarity should benefit all U.S. law firms and the clients that they serve.
Robert M. Buchanan, Jr. wrote the Boston Bar Association’s amicus brief, pro bono, in the RFF case. Mr. Buchanan is Chair of the Ethics Committee at Choate Hall & Stewart, where he is a partner in the Litigation Department and leads the Antitrust practice.