Small and midsized law firms often handle ethical issues—like potential conflicts or the specter of a malpractice claim—by having internal discussions among partners and associates. It’s the email thread that keeps many lawyers up at night trying to evaluate whether they did something wrong. It’s the email thread that really should have been a phone call or an in-person meeting.
While discussing issues “in-house” can be efficient, there’s a significant risk that these communications may not be fully protected by the attorney-client privilege if the affected client later sues for legal malpractice.
If your firm has a general counsel, consult with them. If your firm does not have a general counsel but you have enough lawyers that you can consult with someone senior at the firm who is not involved with the matter, you should consider formally naming them general counsel of your firm and consulting with them. If neither of those options are viable, you should consider consulting with Outside Counsel.
Internal Law Firm Communications May Not Be Protected by Attorney-Client Privilege
The privileged status of intra-firm communications was addressed by the California Court of Appeal in Palmer v. Superior Court, 231 Cal.App.4th 1214 (2014). The court found that internal communications with a law firm’s designated in-house or ethics counsel can remain privileged—if all of the following factors are satisfied:
- Segregated Role: The in-house counsel or ethics counsel must have a genuine attorney-client relationship with the firm or its lawyers, separate from the client matter at issue.
- Confidentiality: The content of the communications must be for the purpose of obtaining or providing legal advice, and kept confidential within the firm.
- No Double Duty: The in-house lawyer shouldn’t also be working on the client’s case in question or billing the client for that time.
- No Disclosure to the Client: If the conversation is deemed part of the firm’s own legal representation (and not the client’s), it needs to stay confidential to maintain privilege.
Palmer reaffirms that a firm’s internal consultations can be protected, but makes it clear the fine line that firms must walk to keep those sensitive, intra-firm communications privileged from disclosure to the client. If a court later decides that the firm’s in-house consultation was not truly segregated from the client’s representation or that no genuine attorney-client relationship existed with the internal counsel, those communications could be discoverable in malpractice litigation. Worse, the client may seek sanctions against your firm for not turning those files over when they demanded the client file.
Why Outside Counsel Matters
For small or mid-sized firms, it’s often simpler and clearer to consult outside counsel when significant ethical or malpractice-related issues arise. Doing so avoids many of the privilege challenges that can arise when relying purely on internal resources. Outside counsel is by definition a separate entity, so the communications are more likely to be protected from discovery, and the risk of inadvertently waiving privilege is substantially reduced.
When legal or ethical questions arise—particularly those that could lead to malpractice claims—consulting with qualified outside counsel is often the safer approach to preserve the confidentiality of crucial communications and shield your firm from committing the unforced error of inadvertently admitting liability when trying to strategize internally. You must remember that the attorney-client privilege, as between members of your firm discussing protecting the firm or evaluating the firm’s liability, must be formalized in order to protect those communications from discovery in the malpractice case that hopefully never comes.
Why Tyler Cares
Tyler is fascinated by the rules that the legal profession has imposed on itself relating to ethics. Tyler started his career at O’Melveny & Myers LLP and represented a Vault 100 law firm and one of its partners in their defense against a claim of legal malpractice and breach of fiduciary duty. Since starting his own law firm, Tyler has advised lawyers on the board of a public company on California ethics questions and regularly discusses ethical matters with other attorneys. He offers Outside Counsel services to companies and to law firms.