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I loved Michael Clayton.  Great performances by Clooney, Pollack and Swinton.  As a lawyer who served a few years in a big obnoxious firm like Clayton's, I found the milieu very convincing.  But I've been puzzled by one question since I saw it two weeks ago.  I can't justify billing a client or paying for Lexis for this, so I'm opening this up to our expert legal analysts.

SECOND SPOILER ALERT WARNING

The key to the movie is a report confirming that the defendant's product was indeed harmful.  If disclosed, the report would have been the "smoking gun" that led to billions in liability against the plaintiff.  The report was signed by certain higher-ups in the company, as well as its general counsel (at the time the Ken Howard character).  

The report was never disclosed to the plaintiffs, but renegade defendant's litigator (Tom Wilkinson's character) has gone nuts and is about to give it to them.  He's whacked before he can, and the plaintiffs settle for about $500-600 million.  But then Clayton tricks the new General Counsel (Swinton) into admitting the scheme.  She and Ken Howard will do serious time.

But it is not clear whether Clayton's firm will get into any trouble.  (I was left with the impression that they would not.)

However, as soon as the lawyers knew about the document, they had a duty to disclose it to the plaintiff, unless it was privileged.

Hence, the following questions

  1.  Was the document privileged because it was signed by the general counsel?
  1.  If it was privileged, would disclosure be compelled by any exception (e.g., fraud) to the privilege?
  1.  If it was not privileged, why weren't Sydney Pollack et al. also on their way to jail (or at least disbarment) at the end of the film, because they procured a settlement through fraudulent non-disclosure of a (very) material document.

Originally posted to Upper West on Wed Nov 21, 2007 at 07:02 PM PST.

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Comment Preferences

  •  Please submit your comments (3+ / 0-)
    Recommended by:
    murphy, yoduuuh do or do not, LCA

    on 14-point type on double-spaced pages, not to exceed 14,000 words.  (But be concise.)

    The Democratic Message: Security, Privacy, Justice

    by Upper West on Wed Nov 21, 2007 at 07:03:37 PM PST

  •  I've never practiced, (3+ / 0-)

    so all I've got is the black letter, but IIRC the privilege is pretty narrow: only communications as part of legal representation.  The report, unless a legal opinion prepared for communication to the client, would seem to fall outside that ambit.  

    That said, we've probably all heard of companies filtering their dicier materials through the legal department to arguably create a semblance of privilege.  Don't know if that holds up in court, though.

  •  I haven't seen the movie (4+ / 0-)
    Recommended by:
    Trix, Upper West, True North, burrow owl

    but I teach this stuff (in fact I have to teach tonight until 9:25 p.m.), so I cannot specifically address the facts, but I would say that in general, yes, it could be privileged.

    Since I do not know the specific jurisdiction, I will speak from the Restatement of the Law Governing Lawyers (3rd 2000).

    Restatement § 68 says the privilege applies to the following:

    1. a communication
    1. made between privileged persons
    1. in confidence
    1. for the purpose of obtaining or providing legal assistance for the client.

    Element 4 is satisfied under the following conditions:

    A communication is made for the purpose of obtaining or providing legal assistance within the meaning of § 68 if it is made to or to assist a person:
    (1) who is a lawyer or who the client or prospective client reasonably believes to be a lawyer; and
    (2) whom the client or prospective client consults for the purpose of obtaining legal assistance.
    (Rest. § 72.)

    In a corporation, the privilege works this way:

    When a client is a corporation, unincorporated association, partnership, trust, estate, sole proprietorship, or other for-profit or not-for-profit organization, the attorney-client privilege extends to a communication that:
    (1) otherwise qualifies as privileged under §§ 68-72;

    (2) is between an agent of the organization and a privileged person as defined in § 70;
    (3) concerns a legal matter of interest to the organization; and
    (4) is disclosed only to:
    (a) privileged persons as defined in § 70; and
    (b) other agents of the organization who reasonably need to know of the communication in order to act for the organization.  (Rest. § 73.)

    Finally, the crime-fraud exception to the privilege applies thusly:

    The attorney-client privilege does not apply to a communication occurring when a client:
    (a) consults a lawyer for the purpose, later accomplished, of obtaining assistance to engage in a crime or fraud or aiding a third person to do so, or
    (b) regardless of the client's purpose at the time of consultation, uses the lawyer's advice or other services to engage in or assist a crime or fraud. (Rest. § 82.)

    The crime-fraud exception would not apply to past conduct of the organization to which the lawyer was simply commenting in the memo.  However, if the lawyer was actively participating in a conspiracy to commit an illegal or fraudulent act that was fully disclosed to the lawyer at the outset, then the a/c privilege would not apply.

    The comment to Restatement § 82 mentions this problem explicitly:

    A client could intend criminal or fraudulent conduct but not carry through the intended act. The exception should not apply in such circumstances, for it would penalize a client for doing what the privilege is designed to encourage-- consulting a lawyer for the purpose of achieving law compliance. By the same token, lawyers might be discouraged from giving full and candid advice to clients about legally questionable courses of action. On the other hand, a client may consult a lawyer about a matter that constitutes a criminal conspiracy but that is later frustrated--and, in that sense, not later accomplished (cf. Subsection (a))--or, similarly, about a criminal attempt. Such a crime is within the exception stated in the Section if its elements are established.

    You might want to consult U.S. v. Bauer 142 F.3d 504 (1997).

    I would point out that the "smoking gun" documents that the tobacco companies created and ran through their legal departments remained privileged until a courageous former employee took the risk of financial ruin for disclosing them, and Henry Waxman (who was immune from prosecution or suit) read every word of them into the Congressional Record (thus making them public records).

    Time for class; gotta go.  I hope that helps.

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