By: Jeff Elkin
In 1981, the Supreme Court held in Upjohn Co. v. U.S. that a communication between a corporation’s lawyer and its employees would be protected by the corporation’s attorney-client privilege only if the employees were made “sufficiently aware that” any information they disclosed would be used to represent their employer’s legal interests (the “informed communication element”). This summer,the D.C. Circuit strayed from the precedent of Upjohn in in re Kellogg Brown & Root, Inc.(“KBR”). The D.C. Circuit held that KBR’s attorney-client privilege protected from a whistleblower’s discovery request information disclosed by KBR employees during interviews by KBR’s lawyers. The D.C. Circuit found the pivotal informed communication element satisfied by two facts: (1) “employees knew that the company’s legal department was conducting a sensitive investigation,” and (2) “employees were also told [via a blanket gag order letter] not to discuss their interviews without [permission] of KBR General Counsel.” This is a significant departure from Upjohn, where employees were sufficiently informed that their statements would be used to represent their employer’s legal interests by Upjohn General Counsel’s explicit statement (1) identifying himself as a lawyer representing their employer in a specified legal matter and (2) disclosing the “legal implications” and purposes of the questioning.
While corporate lawyers can now secure privilege in the D.C. Circuit for communications with corporate client employees simply by issuing gag orders, there is a difference between can and should. Despite KBR’s denigration of the informed communication element, lawyers remain bound by affirmative duties of legal ethics requiring them to ensure employees’ understanding of the legal purposes and potentially negative consequences of disclosing information to their employer’s attorney. Lawyers also continue to be prohibited from communicating with employees in circumstances of impermissible risk to their legal rights. These duties – codified almost identically by almost all state bar association – are prescribed by the American Bar Association as Model Rules of Professional Conduct 4.3, 1.13(f), 4.2, and 4.4. Additionally, the D.C. and New York State Bar Associations have interpreted their own versions of these duties to prohibit conduct which would secure attorney-client privilege in the D.C. Circuit.
Communication under the Model Rules of Professional Conduct
Rule 4.3, as applied to the corporate context, explicitly requires corporate counsel to inform a client’s employees of certain realities before or during communications with them. First, Rule 4.3 prohibits an attorney “dealing on behalf of a client” with an unrepresented employee from stating or implying that the attorney is “disinterested.” Second, Rule 4.3 requires corporate counsel to “make reasonable efforts to correct” an unrepresented employee who the attorney “knows or reasonably should know . . . misunderstands the lawyer’s role in the matter.”
If a misunderstanding becomes evident during lawyer-client communication, Rule 4.3 requires corporate counsel to “correct” the unrepresented employee. To “correct” a misunderstanding is to make a person’s apprehension of a situation “true, accurate, or right; to remove the errors or faults.” The understanding that must be made accurate is broader than the identity of the client and the diversity of interests between the employee and his/her employer. It also encompasses the communication’s context and the lawyer’s purpose in prompting it. Therefore, Rule 4.3 requires corporate counsel to elucidate that he/she is collecting information to represent the corporation’s legal interests and is not disinterested. See Rule 4.3, Comment .
Rule 1.13(f) explicitly requires corporate counsel to “explain the identity of the client when [corporate counsel] knows or reasonably should know that the [client corporation’s] interests are adverse to those of the employees with whom the lawyer is dealing.” To “explain” is not simply to state the name of the client, but rather to “make plain or clear; render understandable; [to] explicate.” Thus, when a lawyer at least reasonably should perceive an adversity of interests between his/her corporate client and a employee with whom he/she is dealing, the lawyer shall not simply state, but rather “explain” that the lawyer represents the corporation as an entity rather than its employees.
Further, Rule 1.13, Comment  instructs that when corporate counsel recognizes circumstances where the client’s interests “may become adverse to one or more of its employees’, [corporate counsel] should advise any [such employee] of (1)the conflict or potential conflict of interest, (2) that the lawyer cannot represent such employee, and (3) that such person may wish to obtain independent representation.” Comment  also provides that “[c]are must be taken to assure that the individual understands” that the lawyer’s duty is to pursue the best interests of the client corporation – as differentiated from its employees – and that “discussions between [corporate counsel] and the individual may not be privileged [from disclosure, including to a court of law].”
The legal rights of employees represented by counsel enjoy greater, prophylactic protection from corporate counsel. Under Rule 4.2, corporate counsel “shall not communicate about the subject of the representation with a [client corporation’s employee that] the lawyer knows to be represented by [independent counsel] in the matter [without the employee’s lawyer’s consent or a court order].”
According to Rule 4.2, Comment , Rule 4.2 “applies even though the represented person initiates or consents to the communication.” A lawyer must “immediately terminate the communication” upon learning that a person is represented in the subject matter of the communication.. Thus, even if corporate counsel learns of the representation during an interview, permission from an employee’s lawyer is required before the interview may continue and prior to every subsequent communication.
Rule 4.2, Comment  states that where an employee “with whom the lawyer communicates is not known to be represented by counsel in the matter” – i.e., where the fact of representation cannot be inferred according to Rule 1.0(f)’s definition of “knows” and “knowledge” – “the lawyer’s communications are subject to Rule 4.3.” It is unclear what circumstances are relevant to finding such “knowledge.” However, they could include those which support a finding that the employee is at fault in the matter due to his status as a relevant supervisor or possessor of relevant authority to obligate or impute liability to the corporation. See Rule 4.2, Comment . Other circumstances from which representation could be inferred might include any where adversity – or even diversity – of interests can be expected.
Rule 4.4(a) provides another standard of conduct binding on attorneys dealing with employees of corporate clients. Rule 4.4(a) relevantly prohibits corporate counsel from using “means that have no substantial purpose other than to embarrass, delay, or burden a [client’s employee,] or otherwise use methods of obtaining evidence that violate the legal rights of such a person.” Comment  to Rule 4.4 explains that while it “is impractical to catalogue all [legal rights of a client’s employee],” they include “legal restrictions” on corporate counsel’s use of interviews and other means of “obtaining evidence from” the client’s employees. These safeguards include Rule 4.2’s proscription of communication with represented employees and the protections to unrepresented persons provided by Rules 4.3 and 1.13(f).
At least two bar associations to date have opined regarding these Rules’ application to the corporate context. First, the D.C. Bar Association’s Ethics Opinion 269 (1997) (“Opinion 269”) clarifies that a lawyer’s ethical duty of due diligence is limited by his duties to client employees. Opinion 269 recognizes that, “[W]hile a lawyer’s obligation to represent a client . . . might suggest that the client’s need for information from the employee is the lawyer’s only concern” the Rules of Professional Conduct “specifically require that they lawyer be mindful of the interests of the employee.”
The D.C. Bar’s discussion of Rules which “specifically require that the lawyer be mindful of the interests of the employee” begins with D.C. Rule 1.13(c), apparently modeled on ABA Rule 1.13(f). D.C. Rule 1.13(c) requires a lawyer dealing with a corporate client’s employee to explain the identity of the client where adversity of interests between corporate client and employee exist.
The Opinion notes that this clarification is necessary because the interviewed employee “may consider the lawyer as also representing the employee’s personal interests, absent a warning to the contrary.” This language is strikingly similar to that of ABA Rule 4.3. Also, Comment  to D.C. Rule 1.13 substantially repeats the language of ABA Rule 1.13’s Comment .
Second, the New York State Bar Association Committee on Professional Ethics Opinion Number 650 (1993) (“Opinion 650”) considered whether “a corporate attorney [may] participate in a ‘compliance with law’ program under which employees are required to report illegal or unethical behavior.” Under this program, any information collected on the Legal Department’s “help line” would be “passed on to the corporation’s compliance officer for further investigation and such other responses as may be appropriate.”
The N.Y. Bar condoned corporate counsel’s participation in the client’s “compliance with law” program, but only where the lawyer or any of his/her agents answering the help line utilizes an “adverse interest script.” Where “it appears that a caller’s interests may differ from or [reasonably could] be ‘in conflict’ with the Company’s interests,” the approved adverse interest script instructs lawyers to first “[d]etermine whether the caller is represented by counsel.” If so, corporate counsel must refuse to speak to the caller except through the caller’s lawyer.
Opinion 650 was an interpretation of New York’s Model Code of Professional Responsibility. After the ABA Model Code was replaced by the Model Rules, so was New York’s Code. It is no surprise that a correlation table reveals that the Rules which replace the Code provisions mirror ABA Rules 1.13 and 4.3. Opinion 650 marks the first imposition of a binding duty requiring corporate lawyers to issue explicit statement of the kind the Upjohn Court found sufficient to satisfy the informed communication element of attorney-client privilege (an “Upjohn warning”).
Though a blanket gag order will satisfy the informed communication element of attorney-client privilege in the D.C. Circuit post-KBR, a lawyer’s legal ethical obligations require a higher standard of conduct. The ABA Model Rules permit a lawyer to communicate with a corporate client’s employee in representation of the client only if three conditions are met: (1) the employee is not represented in the matter; (2) the employee understands the identity of the client, the lawyer’s role in the matter, and the purpose of the conversation; and (3) the communication is elicited in compliance with all rules of law and legal ethics. However, even if these conditions are met by pre-communication statements – including Upjohn warnings –the lawyer ethically must clarify an employee’s misconceptions as they arise. The D.C. Bar recognized these requirements in its Opinion 269. As the Supreme Court held in Upjohn and the New York State Bar reiterated in Opinion 650, an attorney should impart these clarifications as explicit statements. Mere gag orders will not suffice.