Although attorneys have an ethical obligation to keep information relating to a client’s representation confidential, many contractors fail to understand how attorney-client privilege works and wrongly believe they can tell their attorneys anything without the risk of disclosure. This can lead to costly mistakes that could jeopardize valid claims and disputes on construction projects.

WHAT AND WHO IS PROTECTED?
The attorney-client privilege protects communications made to obtain legal advice; it does not protect the information communicated. The privilege protects confidential verbal and written communications, and allows attorneys and their clients to discuss legal matters and potential legal matters honestly and completely without worrying about the information being disclosed to their adversary’s attorney. This encourages full and frank discussions between attorneys and their clients, but merely speaking to an attorney about something does not necessarily mean the attorney-client privilege protects those conversations from disclosure.

Federal law, and most state law, applies the attorney-client privilege only in the following situation:
  • a contractor asserting the privilege is, or is seeking to become, the client of an attorney;
  • the contractor speaks to an attorney or the attorney’s representatives, such as a paralegal;
  • the contractor expected the communication to be confidential;
  • the contractor seeks legal advice and the communication relates to that purpose; and
  • the contractor claims the privilege applies and does nothing to waive the privilege (see United States v. Mass. Inst. Tech., 1997).
Of course, the privilege does not shield communications with an attorney or the attorney’s representative made for the purpose of committing a crime or fraud.

The client (e.g., the contractor) benefits from the privilege, but it does not automatically extend to the company’s employees, officers, board of directors or shareholders. The privilege does cover certain communications between a contractor’s employees and its attorney, but only those that involve matters within the scope of the employees’ duties for the corporation and made to the attorney to obtain legal advice for the contractor (see Upjohn Co. v. United States, 1981). Essentially, the privilege does not protect communications on any matters other than the particular claim or dispute on which the attorney represents
the contractor. 

COMMON MISCONCEPTIONS
Many contractors (and even some attorneys) incorrectly believe that placing labels such as “Attorney Client Communication” or “Attorney Work Product” on emails, letters and other documents protects them from disclosure under the attorney-client privilege. However, the label itself has no legal standing; the only value is to highlight the fact the document relates to legal advice and should be kept confidential internally. Such documents must still satisfy all of the elements necessary to establish the privilege.

Similarly, many contractors believe simply copying an attorney on emails, letters and other documents automatically protects them from disclosure. The attorney-client privilege only applies to documents on which a contractor copies its attorney to obtain legal advice. This can be a challenging area to apply the attorney-client privilege in a corporate setting, especially for contractors that have in-house counsel. As a federal court stated in 2007: “modern corporate counsel have become involved in all facets of the enterprises for which they work … in-house legal counsel participates in and renders decisions about business, technical, scientific, public relations, and advertising issues, as well as purely legal issues.”

Courts also understand contractors may try to shield internal communications regarding claims or disputes from discovery by “funneling” documents through counsel. As a result, it must be clear to a court that the attorney is acting in a legal capacity in order to apply the attorney-client privilege.

While contractors can, and should, seek advice from their attorneys, they should not assume those communications will be privileged when they relate to business issues rather than legal issues. The privilege only protects communications involving an attorney’s non-legal expertise if the primary purpose of the communication is to obtain
legal advice.

Additionally, contractors cannot protect certain facts under the attorney-client privilege simply by communicating them to their attorney. Information that can be gathered from a source other than the privileged communication is not protected (see Upjohn, 449 U.S. at 395-96). For instance, statements already in meeting minutes or other documents in the project record do not somehow become privileged if a contractor has discussed, or will discuss, them with its attorney. Contractors must remember that merely communicating something to an attorney does not prevent the underlying facts from disclosure if they can be discovered from another source.

WAIVING THE PRIVILEGE
Contractors generally waive the attorney-client privilege by disclosing the protected conversation, email, letter, or other document or its contents to a third party outside the attorney-client relationship, such as a banker, insurance agent, stockbroker, accountant or consultant not involved in the claim or dispute. This waiver occurs even if the contractor inadvertently includes or forwards communications protected by the attorney-client privilege to third parties.

However, courts recognize that contractors can share protected communications with certain third parties without waiving the privilege and “tend to mark out a small circle of “others” with whom information may be shared without loss of the privilege (e.g. secretaries, interpreters and counsel for a cooperating co-defendant).” Even so, contractors should err on the side of caution when discussing conversations or forwarding information sent to their attorney, as well as the attorney’s resulting advice on
legal matters.

Contractors most often inadvertently waive the protection afforded by the attorney-client privilege by being careless with their communications, especially emails. For this reason, contractors must always check and double-check the email addresses in the “To” and “cc” lines before sending a confidential communication to counsel or forwarding an email from an adversary in a claims or dispute situation. Contractors also should think very carefully before forwarding emails from counsel to others to avoid terminating the privilege. While it is possible in some instances to preserve the privilege after an inadvertent disclosure, it’s much easier to prevent disclosing privileged information in the first place.

Knowing the basic parameters of the attorney-client privilege will help contractors properly and effectively communicate with their counsel. This will allow them to best protect their interests when claims and disputes arise on construction projects without the risk of having their adversary obtain and exploit those communications.


John T. Bergin is senior counsel in the Washington, D.C., office of Thompson Hine. For more information, email john.bergin@thompsonhine.com. Kelley J. Halliburton is a staff attorney at Shapiro, Lifschitz & Schram, P.C. For more information, visit www.slslaw.com.