Attorney-Client Privilege – Waivers and Exceptions

Mar 2, 2021 | General Estate Planning, Podcasts, T&E Administration, T&E Litigation, Uniform Law, Multi-State Issues & Laws

“The Attorney-Client Privilege:  Its Waiver and Exceptions,” that’s the subject of today’s ACTEC Trust and Estate Talk.

Transcript/Show Notes

This is Susan Snyder, ACTEC Fellow from Chicago. The attorney-client privilege is important to maintain communications confidential between an attorney and the client. The privilege may be waived, and there are exceptions to the privilege. To educate us on these waivers and exceptions, you will be hearing today from ACTEC Fellows, Adam T. Gusdorff of West Conshohocken, Pennsylvania; Steven K. Mignogna of Southern New Jersey; and Eric W. Penzer of the New York metropolitan area. Welcome Steve, Adam, and Eric.

Thank you, Susan. This is Steve Mignogna. I’ll get it started. Most of us are familiar with the attorney-client privilege in general, but the three of us want to talk about times that the privilege can be endangered. Societies decided that certain kinds of communications are so vital that disclosure is usually outweighed by privacy. Communications between spouses, or with doctors, or clerics, and one of those is the attorney-client communication, which in most instances, is privileged. But we’ll focus on times when that can no longer be the case. And I’ll start us off by talking about situations where the attorney-client privilege can be waived.

There are many instances where the waiver can occur and it’s impossible to go through those even in hours, let alone minutes. But needless to say, attorneys and their clients need to be very careful to protect the sanctity of the attorney-client communications. A lot of times that burden falls on the attorney, him or herself. It’s always a good idea, for instance, to set forth in the retention letter that the client should be mindful to keep the communications with the lawyer private, and also do things like not share the communications with others or use commercial email addresses. Keep everything within the attorney-client bubble.

Nonetheless, there can be exceptions. For instance, if a third party is necessary to facilitate the representation with the lawyer, those communications could still be privileged. The classic example is where a foreign language problem exists, and the client needs to communicate through someone with the attorney because of a language barrier. It might be a good idea in those instances, nevertheless, to use a power of attorney that the client gives to that third party the agency authority to communicate with the lawyer.

The most dangerous area, though, is probably an inadvertent disclosure by the attorney or by the client, rather. In today’s world, we can all think about ways that can occur. Emails can be forwarded. They can end up in the wrong hands. Mistakes can be made in communicating through the client’s employer system. We all know the hazards of autofill or reply to all. So, communicating with emails, is especially treacherous; and we caution everyone to be very careful about that and for the attorneys to caution their clients about that.

Social media also presents another forum where waiver can occur inadvertently by the client, as the client or people who know the client post information about the matter that the attorney is handling. So, technology and social media only make the preservation of the attorney-client privilege all the more challenging, and the waiver can operate on many levels. So, we wanted to scratch the surface of some of those. I’ll move it over to Adam to talk about that in some more detail.

Exceptions to Attorney-Client Privilege

Okay. Thank you, Steve. So, I’m actually going to talk about one of the important exceptions to the attorney-client privilege. I think most estate planners go through their day thinking that their file will be kept totally private and that their conversations with clients will remain totally confidential. But you need to understand that might not be the case. If someone comes along after the client dies with questions about the plan, such as in the context of a will contest, then your file might be totally discoverable and you’re likely to be the most important witness. And when that case arises, you need to think about the circumstances under which you can, or even must, produce your file and talk about the planning.

Now, as someone who works on a fair amount of will contests, I can say that the first thing a contestant’s lawyer will want to see is your file; and among the first people they will want to speak to is you. So, in a situation in which a client at the planning stage is making an unbalanced distribution, for example, to favor one child over another or wants to cut out a child all together, you should have the conversation with the client at that time about whether you may speak to the unhappy child after the client dies. So, in other words, you should think about talking to the client about an express waiver over the privilege, with the assumption or expectation that having that discussion after the client dies will prevent litigation. The ACTEC commentaries to Rule 1.6 of The Model Rules of Professional Conduct talks about an implied waiver of the privilege in those kinds of circumstances in the event you haven’t had that specific conversation with the client.

Now, if the client doesn’t preemptively waive the privilege during the planning stage and you don’t think you have an implied waiver, then the client’s personal representative can waive the privilege. Now, sometimes the personal representative won’t want to waive the privilege because many times in a will contest, the personal representative is the person being accused of wrongdoing. So, if you don’t have a waiver by the client or the personal representative, then the best course of action is to sit tight with your file until a court directs you to produce it. Now, that brings me to the probate or testamentary exception to the privilege that I believe exists in most American jurisdictions. And what the probate exception means is that your communications with your client are not privileged in the context of the estate plan and the client’s intent.

Many states recognize this exception by statute. Others, such as Pennsylvania, where I am, by case law. And the rationale for this exception, which is echoed in the ACTEC commentaries I mentioned, is that the client likely would have waived the privilege where the issue is fulfilling the client’s intent. On the federal stage, the probate exception has been recognized since at least the 1800s. And if you’re interested in doing a little more reading, there is a good general discussion of this exception in a 1998 U.S. Supreme Court case, called Swidler & Berlin v. U.S., which you can find at 524 U.S. 399. So, that’s the exception to the privilege in the planning context. And now Eric is going to talk a little bit about an exception that might arise in the context of trust or estate administration.

Thanks, Adam. The attorney-client privilege is so ingrained in our jurisprudence that most attorneys freely provide clients with legal advice, without even entertaining the possibility that those communications with their clients for that purpose could be discoverable. However, at common law, there’s an exception to the attorney-client privilege applicable when a fiduciary obtains legal advice related to the exercise of fiduciary duties; in which case, courts have held that the fiduciary cannot withhold those communications from the beneficiaries. That is what’s known as the fiduciary exception.

In a 2011 Supreme Court case, the court explained that this exception existed as common law in England, where the rule was that when a trustee obtained legal advice to guide the administration of the trust and not for the trustee’s own defense in litigation, the beneficiaries were entitled to the production of documents related to that advice. And the reason for that, according to the courts, was that the legal advice was sought for the beneficiary’s benefit and it was obtained at their expense. And this fiduciary exception quickly became an established feature of English common law. While initially, the exception wasn’t widely embraced by our courts, by the 1970s, American courts began to adopt the English common law rule.

Now, most jurisdictions that recognize the exception also carve out an exception to the exception for conflicts and litigation between fiduciary and beneficiaries, applying the exception to matters concerning administration, but not litigation or disputes between fiduciary and beneficiary. A few states, including New York, Florida, South Carolina and Delaware have adopted statutes abrogating the exception in whole or in part. This exception, I think, can be described as a trap for theunwary, as there exists relatively little case law on the exception, its applicability and the scope of the exception to the exception or disputes between beneficiary and fiduciary. Time restraints here don’t allow for a more detailed discussion. But I think if you take nothing away from this podcast but the knowledge that this exception and the probate exception that Adam discussed exists, well, then I submit that your time listening will be time well spent.

Thank you all for teaching us about the attorney-client privilege, its waiver and exceptions.

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