In law school, budding lawyers are introduced to many legal constructs, including important protections under the attorney-client privilege and work-product doctrine. In practice, we learn how these important legal constructs have been shaped by the courts, and often encounter circumstances where strong arguments can be made that some exchanges between legal counsel and their clients should not be covered by privilege or work-product. Most frequently, these arguments arise where companies have in-house legal counsel who also serve in some business capacity.
Recently, in one of my affordable housing tax credit cases in the Northern District of Illinois, important lessons were learned that highlight this. These lessons reiterate the importance of using both the attorney-client privilege and work-product doctrine as they were intended—and not as a means to restrict access to discoverable information.
The case is Urban 8 Fox Lake Corporation v. Nationwide Affordable Housing Fund 4, LLC, No. 18 C 6109, 2020 WL 201065 (N.D. Ill. Jan. 13, 2020), and the court penned a scathing critique of opposing counsel’s attempt to conceal vast amounts of otherwise discoverable information by claiming that relevant information sought during discovery was protected by the attorney-client privilege and work-product doctrine.1 Not only was the Court justifiably offended by an in-camera submission that included hundreds of blank pages, but it also took offense to the attempt to conceal general business emails between an in-house attorney and his client—including balance sheets, spreadsheets created by my own client, and even a generic image of a toilet.
Whether unfortunate error, or bad faith, the case illustrates how these actions can inhibit the court’s ability to quickly and efficiently adjudicate cases on their merits. It also serves as a careful reminder of the potential repercussions that can follow such abuses.
To protect yourself and your clients from costly errors, consider these six simple “Dos” and “Don’ts” to maintain appropriate privileges throughout the discovery process:
- Understand the different protections and what reasonably qualifies for each. The requirements for attorney-client privilege are only met when attorney-client communications address specific, confidential legal advice. The privilege is not met when comments are made in front of a third party—including in email correspondence. Similarly, legal advice must be sought or be provided; routine or ordinary business should not be concealed. Alternatively, the work product doctrine refers to documents and work created in preparation for or in anticipation of litigation. Materials created as part of the ordinary course of business, even if they are found helpful in the case, are not protected.
- Provide a complete privilege log—including proper labeling of the contents. Use a standard privilege log and list all of the documents included. Without the proper labeling—including who, what and when—the court cannot verify privilege assertions and may reject the claims. This can damage a litigant’s credibility and even result in sanctions.
- Perform a document-by-document examination of the materials submitted to the court. A legitimate claim of privilege can only be confirmed by a judge after examining each submission during the in camera review. Whether inadvertent or intentional, long lists of document submissions may be an attempt by opposing counsel to encourage a court to broadly accept questionable assertions of privilege and will be met with understandable frustration from the court.
- Overstep the line between business advice and legal advice. Generally, in business—including in the affordable housing industry—parties will leverage in-house legal counsel to help gather financial information to assist in negotiations. However, when these actions are taken by in-house counsel, they enter a potentially gray area in privilege and work-product law, which can make it exceedingly difficult to separate pertinent legal counsel—which is privileged—from more general business advice, which is not privileged. Take care to recognize the distinctions and do not simply designate as privileged every email in-house counsel may be included on during such negotiations.
- Blindly accept privilege log materials as such. As this case shows, it is important to carefully review the privilege log and materials received from your adversaries in litigation. Otherwise, relevant and discoverable information may be concealed from you in discovery.
- Do anything to jeopardize your credibility or good faith before the court. In this case, the defendant failed to meet the basic standards for a privilege log, despite additional opportunities to do so, resulting in a determination of bad faith that led to sanctions. Unnecessary delays such as these only burden the courts, which damage crucial credibility. While we all want to be zealous advocates for our clients, credibility before the court is paramount.
- Prior, related decisions may be found at Urban 8 Fox Lake Corp. v. Nationwide Affordable Hous. Fund 4, LLC, 415 F. Supp. 3d 827, 2019 WL 6208107 (N.D. Ill. No. 21, 2019) and Urban 8 Fox Lake Corp. v. Nationwide Affordable Hous. Fund 4, LLC, No. 18 C 6109, 2019 WL 5963644 (N.D. Ill. Nov. 13, 2019).
David A. Davenport is a shareholder and lawyer at Winthrop & Weinstine, P.A, and represented the plaintiff in the above-referenced litigation. Since 2013, Davenport has been at the forefront of affordable housing litigation and helping to develop case law—representing general and managing partners in matters involving more than 100 Low Income Housing Tax Credit (LIHTC) developments in more than 15 states.