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How Does Attorney-Client Privilege Work In California Business Litigation?

At the Law Office of Parag L. Amin, P.C. (“LawPLA”), we take pride in being a multi-faceted firm. When it comes to business law, we routinely help clients with all sorts of issues ranging from startups to business litigation.

When it comes to the latter, our clients have plenty of questions. Among other things, they often ask how attorney-client privilege works in California business litigation. Keep reading to find out.

What is attorney-client privilege?

Generally, attorney-client privilege is best described as a legal benefit that safeguards confidential communications between said parties. However, this benefit only applies in certain circumstances. Specifically, this privilege preventing the disclosure of confidential communications during discovery or at trial applies when:

  1. There is an existing attorney-client relationship
  2. The communications occur strictly between the attorney and client

The following legal definitions as used in California also provide valuable insight.  

    • A lawyer – is someone “authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation.”
    • A client – is someone who has directly or indirectly consulted a lawyer (or attorney) “for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity (emphasis added).”
    • A confidential communication between client and lawyer – is “information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship (emphasis added).”

When does attorney-client privilege exist in California?

It is also worth noting that in California, an attorney-client relationship exists between:

  1. A law corporation as defined in relevant sections of the Business and Professions Code and the persons to whom it renders professional services, and;
  2. Between such persons and members of the State Bar the law corporation employs to render services to them.

In this context, the term “persons” refers to  “partnerships, corporations, limited liability companies, associations and other groups and entities.

You should be aware, however, that there are several circumstances in which attorney-client privilege does not exist. Specifically, it does not exist if an individual or business entity sought or obtained the attorney’s services to facilitate the commission of a crime or fraud; or for the purposes of planning the commission of a crime or a fraud.

The privilege is also invalidated if the lawyer has a legitimate belief that disclosing confidential communication with his or her client would prevent a violent criminal act. Lastly, the privilege is invalidated if the subject of confidential communications is disclosed to third persons with no valid interest in it, or if the communication does not include a legal opinion or advice.

The corporate conundrum

Here are a few more things to keep in mind.  As we all know, a business can’t really speak for itself. This means it is up to the people tasked with acting for the business to communicate with lawyers when necessary. It is also up to these individuals to waive attorney-client privilege when it is beneficial to do so.

Depending on your business structure, these responsibilities could fall on you as an owner, director, manager, officer, or other duly authorized employee.  In most corporations, for example, it is up to the board of directors to make such decisions. In absence of unanimity, the matter is put to a vote with majority rule. The only exception to this is if the shareholder’s agreement or corporate bylaws stipulate otherwise.

Given a scenario where a corporate board of directors votes on any such matter, the attorney-client privilege applies to:

  1. Any communications between the directors voting on the matter; and
  2. The corporation’s attorney.

However, it only applies as long as the parties are communicating in order to provide or receive legal advice to help the corporation.

You should also keep in mind that the attorney-client privilege may not apply if there is a conflict of interest between a director and the corporation. Additionally, the attorney-client privilege only extends to current directors. Former directors cannot claim this privilege to try to protect communications that occurred when they were on the board. Lastly, you should be aware that legal opinions differ on whether attorney-client privilege applies when a current or former director suing the corporation is seeking relevant communications.

Contact knowledgeable Los Angeles business lawyers today

Whether you have been in business for years or you are new to the game, the experienced business lawyers here at LawPLA are here for you. Let us know if you want to learn more about how attorney-client privilege works in business litigation, or if you need legal advice for any other reason.

You can contact us through the form here on our website, or phone one of our conveniently located Los Angeles offices to schedule a consultation. Either way, we look forward to hearing from you soon.

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