Waiver of Attorney/Client Privilege By Inadvertent Disclosure

by | Mar 28, 2008 | Litigation

Oops! Can be a problem!

The source of the attorney-client privilege is found in the Indiana statutes at IC § 34-46-3-1:

[T]he following persons shall not be required to testify regarding the following communications:

  1. Attorneys, as to confidential communications made to them in the course of their professional business, and as to advice given in such cases.

What is “Privileged?”

The person asserting the privilege has the burden to show:

  1. the existence of an attorney-client relationship;
  2. that a confidential communication was involved.

    Note: The privilege belongs to the client and can only be waived by conduct attributable to the client.

The person asserting the privilege has the burden to show:

  1. the existence of an attorney-client relationship;
  2. that a confidential communication was involved.

Voluntary Disclosure or Consent.

Indiana’s Rules of Evidence [Ind. R. Evid. 501] provide that:

(b) Waiver of Privilege by Voluntary Disclosure

A person with a privilege against disclosure waives the privilege if the person or person’s predecessor while holder of the privilege voluntarily discloses or consents to disclosure of any significant part of the privileged matter. This rule does not apply if the disclosure itself is privileged.

So, what does this mean?

Illustrations by example best explain what client conduct or actions may constitute a waiver by the client of the privilege.

Example No. 1: You didn’t look in the box, did you?

An owner of a power plant (the Plaintiff) sued a contractor (the Defendant) who started a fire during the course of construction, resulting in property damage.

During the discovery phase of litigation, the Defendant produced 2 ½ boxes of documents for Plaintiff’s inspection at Defendant’s offices. Shortly after Plaintiff’s counsel began inspecting the documents, Defendant’s counsel attempted to pull back some documents which had already been reviewed by Plaintiff’s counsel because they had been “inadvertently” included in the pile of documents produced by the Defendant, and claimed those particular documents were attorney-client privileged. A disagreement ensued between Plaintiff’s and Defendant’s counsel and the question was put before the Court.

The Court adopted the “balancing test” as the preferred approach among the three (3) alternatives in use in various jurisdictions, and concluded that the privilege had not been waived.

Example No. 2: We gave you what?

In a medical malpractice case against a Defendant physician, the Defendant asked the physician who shared office space with him to serve as the Defendant’s expert witness. The Defendant physician gave his expert witness files to review. Included in the documents given by the Defendant to his expert witness for review were communications to the Defendant from his attorney. After the expert witness completed his review of the files, Plaintiff’s counsel deposed the Defendant’s expert witness, and at the outset of the deposition, Plaintiff’s counsel had already examined the same files produced by the Defendant that were examined by Defendant’s expert witness and relied upon by the expert witness for his opinion and testimony.

At the deposition, the Defendant’s attorney attempted to then “remove” from the files already reviewed by the expert witness those documents that were communications between the Defendant’s attorney and the Defendant physician. Plaintiff’s counsel objected to the defense attorney’s attempt to withdraw the questioned documents. The Court, applying “balancing test,” held that the Defendant physician’s attorney-client privilege had been waived.

Example No. 3: Thought you took that stuff out of the file? Think again!

In a “bad faith” action against an insurer for failure to pay medical benefits under a medical insurance policy after the insurer denied coverage, the Claims Committee sought an opinion of its attorney on the coverage issue. The insurer’s attorney provided an opinion, in communicated the opinion to the Claims Committee without declaring that such opinion was an “advice of counsel” statement. The Claims Committee completed its review and also denied coverage to the insured. Litigation on coverage ensued and discovery was conducted between the insurer and the insured.

The insurer’s attorney’s opinion letter was redacted from the file produced by the insurer in response to discovery, but the Claims Committee’s determination, which, included its findings that it “concurs with the attorney’s opinion of no coverage,” was left in the insurer’s file.

A dispute arose between the parties in the case as to whether the insurer’s attorney’s opinion letter must be produced. The Court held in this instance that the attorney-client privilege had been waived by “opening the door” when the insurer provided the basis for the Claims Committee’s decision, i.e., that the Claims Committee “concurred with the attorney’s opinion of no coverage,” and, thereafter, reached a similar conclusion of “no coverage.”

How does the Court decide when the attorney-client privilege is waived?

Some states use the “objective” test: Inadvertent disclosure forfeits the protection of the privilege without regard to the circumstances. Others use the “subjective” test: Continues the protection of the privilege if the disclosure was not intentional.

Most states use the “balancing” test: The Court examines several factors in determining whether to continue the protection of the privilege depending upon the circumstances of the case.

Factors Emphasized in Court Cases.

The factors to be taken into account by the Court are:

  1. Was the privileged information a small part of a large disclosure?
  2. What precautions were taken to protect against disclosure?
  3. Was there prompt discovery and attempted correction of the disclosure?
  4. How widespread was the inadvertent disclosure?
  5. Is it possible to effectively grant relief to the disclosing party (to “unring” the bell)?
  6. Is there the prospect of serious harm to the interests of the opponent or justice if waiver is not found?
  7. How excusable or inexcusable is the neglect that resulted in the disclosure?

What Clients Need to Know!

If something (a document, a note, a paper, etc.) is privileged, make sure it says that. And if it’s not privileged, don’t say it is. Mark documents “attorney-client privileged” that are privileged.

Documents should be shared, distributed, only on a “Need to Know” basis. Never share privileged documents outside of the “control group.” Not sure how is in the control group? Ask your attorney. Segregate privileged materials from non-privileged. Not sure what materials are privileged? Ask your attorney.

How do you know what is privileged and what is not? Before disseminating any documents, first seek the advice of your attorney. Get your attorney involved at the earliest stage, on the front-end. Requests from insurers, from patients, from your clients and contractors, all raise the potential risk of you producing attorney-client privileged information. Even some compulsory disclosures (e.g., to state, federal, or professional regulators) can be deemed to constitute a waiver.

When in doubt, consult your attorney first. Mistakes will be costly. Instruct those working for you on the policies of your firm, company or practice of releasing documents. Your attorney can draft and provide you with a “policy” to be used by your staff and employees concerning dissemination of information and production of documents.

More about Robert F. Parker

More about Robert F. Parker

Bob is an Of Counsel attorney at BCC and is resident in the firm’s Merrillville office. His practice is concentrated in commercial, professional liability, and personal injury litigation.