Delaware Trial Handbook § 15:2. ATTORNEY-CLIENT PRIVILEGE

The attorney-client privilege, which has long been recognized in Delaware as a common-law privilege,6 is now defined in its current scope and requisites by Delaware Rule of Evidence 502.7 The privilege is designed to foster the confidence of the client and enable the client to communicate openly with his or her attorney without fear while seeking legal advice.8 The privilege applies even though litigation is not pending or contemplated at the time.9  The privilege may apply to a communications even if no party to the communication is an attorney.9.1

Under Rule 502, the relationship of a lawyer and client begins when a person, public officer, corporation or other organization consults with a lawyer or a person reasonably believed by the person or entity to be a lawyer with a view toward obtaining from that lawyer professional legal services.10 The rule by its terms relates to information given to a lawyer in confidence, even if the client decides not to engage the lawyer, or the lawyer declines the representation. In this respect, Rule 502 parallels the obligation of confidentiality contained in the Delaware Rules of Professional Conduct.11

The privilege entitles a client to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client where the confidential communication was (1) between the client or the client’s representative and the client’s lawyer or the lawyer’s representative, (2) between the lawyer and the lawyer’s representative, (3) by the client or the client’s representative or the client’s lawyer or a representative of the lawyer to a lawyer or a representative of lawyer representing another in a matter of common interest, (4) between representatives of the client or between the client and a representative of the client, or (5) among lawyers and their representatives who are representing the same client.12 In short, the privilege extends to any (1) communication, (2) which was confidential, (3) which was for the purpose of obtaining or rendering legal services to the client, and (4) which was between the client and the attorney.13

In the absence of an express contract or formal retainer agreement, determining the existence of an attorney-client relationship is a fact intensive inquiry that depends on the circumstances of each case. In determining the existence of an attorney-client relationship, courts look at the contacts between the potential client and its potential lawyers to determine whether it would have been reasonable for the “client” to believe that the attorney was acting on its behalf as its counsel. A “client” includes one who consults a lawyer, even if that individual did not ultimately retain that lawyer.13.1

A “communication” includes statements made by the client to the attorney, as well as the attorney to the client, and may include non-verbal conduct as well as oral or written assertions.14  However, not all communications made in the presence of counsel are privileged. For example, the presence of a lawyer at a business meeting called to consider a problem that has legal implications does not itself shield the communications that occur at that meeting. Something more than the mere presence of counsel is required; counsel must infuse the communication with legal advice. Stated differently, the attorney-client privilege is properly invoked when the attorney is acting as a lawyer and giving advice with respect to the legal implications of a proposed course of conduct. A request for legal advice need not be express, and an incidental request for business advice made in conjunction with a communication primarily soliciting legal advice does not destroy the attorney-client privilege.  This is because business and legal advice may often be inextricably interwoven. A single proposed course of conduct such as patenting and licensing of an invention will have both legal and business ramifications, and the lawyer may advise as to both in a single communication. 14.1

A communication is “confidential” for the purpose of the attorney-client privilege if not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of legal services to the client or those reasonably necessary for the transmission of the communication.15 A “representative” of the lawyer is defined as one employed by the lawyer in the rendition of professional legal services.16

Under the common interest doctrine, when a third party and the privilege holder are engaged in some type of common enterprise and the legal advice relates to the goal of that enterprise the parties are permitted to share privileged information without a waiver occurring. Further, represented clients sharing a common legal interest may, at least in certain situations and under the close supervision of counsel, communicate directly with one another regarding that shared interest, and not merely require that the information be shared merely among counsel.16.1  Evidence that the parties’ legal interests are “substantially similar” is sufficient to invoke the common interest doctrine.16.2 For a matter to be of “common interest,” in the transactional context there has to be an interest so parallel and non-adverse that, at least with respect to the transaction involved, the parties may be deemed to be acting as joint venturers.16.3

The privilege may be claimed only by the client, the client’s guardian or conservator, the personal representative of a deceased client or the successor, trustee or similar representative of a corporation, association or other organization, whether or not in existence. The privilege belongs to the client, and not to the lawyer, and cannot be asserted by the lawyer on his or her own behalf. However, the person who was the lawyer or the lawyer’s representative at the time of the communication is presumed to have authority to claim the privilege but only on behalf of the client.17 Until the client waives the privilege or a court determines that the privilege does not apply, the attorney is bound to respect it and not disclose the privileged information.

Since the privilege obstructs the search for truth, it must be construed strictly in the interests of justice.18  The party asserting this privilege has the burden of establishing each of the necessary elements.19 The privilege protects only the communications themselves and does not shield disclosure of the underlying facts which are the substance of the communication. Thus, a party may not decline to disclose relevant facts even when such facts were learned as a result of a communication with an attorney.20 Further, if an attorney gives an opinion based solely on publicly available information, as opposed to information obtained from the client, the privilege does not apply.21

Where facts are conveyed without any expectation that they will be kept confidential, the privilege will not apply. Thus, where two or more clients retain or consult a lawyer jointly, and subsequently their interests diverge, and a lawsuit results, there is no privilege in the lawsuit to prevent disclosure of information conveyed by one of the two clients to the attorney.22 However, the lawyer must have been retained or consulted by the clients in common, and a lack of such commonality of action preserves the privilege even if the parties had a common interest at the time and acted together.23

The attorney-client privilege applies only to legal advice, and not to business or personal advice, even if the client’s legal advisor is a party to the communication.24 Where business advice is mixed with legal advice such as would be difficult to parse out, however, the whole is deemed privileged.25 If a communication contains both legal and business advice, and the legal and business advice can be segregated easily, then the business advice must be disclosed, although the legal advice remains privileged.  But where the two types of advice cannot be segregated or it is too difficult to determine if the legal issues predominate in a given communication, the party asserting the privilege will be given the benefit of the doubt, and the entire communication will be deemed privileged.25.1

The privilege does not protect statements made by an attorney to a third party during negotiations.26 Similarly, when a party makes a communication with the intent that the lawyer will reveal the information to a third party, there can be no expectation of confidentiality, and the privilege will not apply.27 The client may not protect his or her own documents under the umbrella of the attorney-client privilege merely by delivering such documents to his or her attorney.28

In the usual case, the name of an attorney’s client is not a matter subject to the protection of the attorney-client privilege.  There are, however, several exceptions.  For example, where revealing the identity of the client would provide the last link in the chain of evidence leading to the conclusion that that the client has committed a crime, the attorney may assert the privilege to avoid being compelled to reveal the client’s name.  This circumstance will usually arise where the client has been involved in wrongdoing that has attracted the attention of regulatory or law enforcement officials but the client’s identity is as yet unknown.  Further, the attorney may assert the privilege where the revelation of the client’s name will somehow simultaneously reveal confidential communications between the lawyer and the client, for example where the names of clients of a divorce lawyer will necessarily indicate that those clients were seeking legal advice about a divorce. Further, where the clients whose identities are sought are strangers to the litigation, the goal of confidentiality may buttress a claim of attorney-client privilege to protect against compelled disclosure.28.1

Conversely, the fact that a client consulted with an attorney, the fact of the attorney’s employment, the attorney’s identity and the general nature of the legal services rendered generally do not constitute confidential information per se and, therefore, are outside the attorney-client privilege.28.2

Communications between counsel for a party and an expert witness hired by or for that party are not protected by the attorney-client privilege.28.3

Delaware Rule of Evidence 502 provides other explicit exceptions to the privilege where: (1) the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or a fraud;29 (2) the communication is relevant to an issue between parties claiming through the same deceased client, whether the claims are by testate or intestate succession or by inter vivos transaction;30 (3) the communication is relevant to an issue of breach of duty by the lawyer to the client or the client to the lawyer;31 (4) the communication was necessary for a lawyer to defend in a legal proceeding an accusation that the lawyer assisted the client in criminal or fraudulent conduct; (5) the communication is relevant to an issue concerning an attested document to which the lawyer is an attesting witness, or (6) the communication was relevant to a matter of common interest between or among two or more clients if the communication was made by any of them to a lawyer retained or consulted in common, when offered in an action between or among any of the clients.32

Under the “crime or fraud” exception, the attorney need not be a participant in or even aware of the client’s intended crime or fraud.  However, merely asserting that the statements were communicated to an attorney in furtherance of a crime or fraud is not of itself sufficient to remove the protection of the privilege.  Instead, the party seeking disclosure of the privileged information must make a prima facie case.  This does not require proof of the commission of a crime or fraud, but only that the client consulted with the attorney to obtain advice designed to assist the client in the commission of a crime or fraud.32.1

The privilege can be waived when a party places an otherwise privileged communication “at issue” in the litigation. In determining whether this exception applies, the court must consider whether (1) a party injects the privileged communications themselves into the litigation, or (2) a party injects an issue into the litigation, the truthful resolution of which requires an examination of confidential communications.32.2  The advice of counsel is placed in issue where the client asserts a claim or defense, and attempts to prove that claim or defense by disclosing or describing or relying on an attorney-client communication.32.3

In the corporate context, where legal advice is rendered to a corporation through one or more of its officers or directors, such officers or directors are deemed to be joint clients with the corporation for the purpose of the attorney-client privilege.33 Where a corporation’s directors are sued by shareholders in a derivative action claiming breach of fiduciary duty, the protection of the shareholders’ interests as well as those of the corporation and the public requires that the attorney-client privilege be negated if the shareholders can show “good cause” why it should not be applied in the particular instance.34 In determining whether there is “good cause” sufficient to overcome the privilege, consideration is given to (1) the number of shareholders involved in the action and the percentage of stock they own; (2) the bona fides of the shareholders; (3) the nature of the claim and whether or not it is obviously colorable; (4) the apparent necessity or desirability of the shareholders having the information and its availability from other sources; (5) whether the lawsuit alleges facts indicating that the challenged action is either criminal, illegal or of doubtful legality; (6) whether the communication relates to past or prospective actions; (7) whether the communication contains advice concerning the litigation itself; (8) the extent to which the communication is identified versus the extent to which the shareholders are blindly fishing; and (9) the risk of revelation of trade secrets or other information in whose confidentiality, the corporation has an interest for independent reasons.35

As the privilege belongs to the client, only the client has the power to waive the privilege.  When the client is a corporation, the board of directors has the power to waive the privilege.35.1

6. Texaco, Inc. v. Phoenix Steel Corp., 264 A.2d 523, 524 (Del. Ch. 1970); Hollingsworth v. Essence Communications, Inc., C.A. No. 5312, slip op. at 2, Hartnett, V.C. (Del. Ch. July 15, 1977).  For a summary of the history of the privilege from Roman times to the present, see Clausen v. National Grange Mutual Insurance Co., C.A. No. 96C-11-073-WTQ, slip op. at 6-11, Quillen, J. (Del. Super. Aug. 1, 1997).

7. D.R.E. 502; Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1121 (Del. Super. 1992).

8. Zirn v. VLI Corp., 621 A.2d 773, 781 (Del. 1993); In re Kennedy, 442 A.2d 79, 91 (Del. 1982); Deutsch v. Cogan, 580 A.2d 100, 104 (Del. Ch. 1990); Riggs Nat. Bank v. Zimmer, 355 A.2d 709, 713 (Del. Ch. 1976); Hollingsworth v. Essence Communications, Inc., C.A. No. 5312, slip op. at 5, Hartnett, V.C. (Del. Ch. July 15, 1977).

9. Phillips v. Delaware Power & Light Co., 194 A.2d 690, 692 (Del. Super. 1963).

9.1. MPEG LA, L.L.C. v. Dell Global B.V., C.A. No.  7016-VCP, slip op. at 3, Parsons, V.C. (Del. Ch. Dec. 9, 2013).

10. D.R.E. 502(a)(1), (a)(3).

11. Del. R. Prof. Cond. 1.6, comment, and preamble.

12. D.R.E. 502(b). See also Deutsch v. Cogan, 580 A.2d 100, 104 (Del. Ch. 1990); Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1121-22 (Del. Super. 1992); Ramada Inns v. Dow Jones & Co., 523 A.2d 968, 969-70 (Del. Super. 1986); International Business Machines Corp. v. Comdisco, Inc., C.A. No.91-C-07-199, slip op. at 2, Goldstein, J. 67 (Del. Super. Mar. 11, 1992); Playtex, Inc. v. Columbia Casualty Co., C.A. No. 88C-MR-223, slip op. at 4, Del Pesco, J. (Del. Super. Jan. 5, 1989).

13. Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992); Ramada Inns v. Dow Jones & Co., 523 A.2d 968, 970 (Del. Super. 1986). See also In re Kennedy, 442 A.2d 79, 91 (Del. 1982); Texaco, Inc., v. Phoenix Steel Corp., 264 A.2d 523, 524 (Del. Ch. 1970); Riggs Nat. Bank v. Zimmer, 355 A.2d 709, 713 (Del. Ch. 1976).

13.1. Benchmark Capital Partners, L.P. v. Vague, C.A. No. 19719, slip op. at 8-11, Noble, V.C. (Del. Ch. Sept. 3, 2002).

14. Ramada Inns v. Dow Jones & Co., 523 A.2d 968, 972 (Del. Super. 1986) (citing D.R.E. 801(a)).

14.1. Rembrandt Technologies, L.P. v. Harris Corp., C.A. No. 07C-09-059, slip op. at 17, Slights, J. (Del. Super. Feb. 12, 2009).

15. D.R.E. 502(a)(5). See also Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992); Ramada Inns v. Dow Jones & Co., 523 A.2d 968, 972 (Del. Super. 1986); Jedwab v. MGM Grand Hotels, Inc., C.A. No. 807, slip op. at 4, Allen, C. (Del. Ch. March 20, 1986); International Business Machines Corp. v. Comdisco, Inc., C.A. No.91-C-07-199, slip op. at 2, Goldstein, J. (Del. Super. Mar. 11, 1992).  See also Capano v. State, 781 A.2d 556, 651 (Del. 2001) (noting that certain information was not confidential because it was given to counsel for the purpose of being made public).

16. D.R.E. 502(a)(4).

16.1. Rembrandt Technologies, L.P. v. Harris Corp., C.A. No. 07C-09-059, slip op. at 18-23, Slights, J. (Del. Super. Feb. 12, 2009).

16.2. Rembrandt Technologies, L.P. v. Harris Corp., C.A. No. 07C-09-059, slip op. at 18-23, Slights, J. (Del. Super. Feb. 12, 2009).

16.3. 3M Corp. v. Diamond II Holdings, Inc., C.A. No. 3933-VCN, slip op. at 24-25, Noble, V.C. (Del. Ch. May 31, 2010); Jedwab v. MGM Grand Hotels, Inc., C.A. No. 8077, Allen, C. (Del. Ch. Mar. 20, 1986).

17. D.R.E. 502(c). Thus, it is recognized that the privilege survives the death of the client. See Bush v. McComb, 7 Del. 546, 2 Houst. 546, 549 (Del. Super. 1863).

18. Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1123 (Del. Super. 1992).

19. Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1122 (Del. Super. 1992). See also Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992); International Business Machines Corp. v. Comdisco, Inc., C.A. No. 91-C-07-199, slip op. at 2, Goldstein, J. (Del. Super. Mar. 11, 1992).

20. Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1122 (Del. Super. 1992); Ramada Inns v. Dow Jones & Co., 523 A.2d 968, 973 (Del. Super. 1986); Ashcraft v. A. C. & S. Co., C.A. No. 87C-FE-170, slip op. at 11, Taylor, J. (Del. Super. Oct. 18, 1989).

21. Reese v. Klair, C.A. No. 7485, slip op. at 12, Hartnett, V.C. (Del. Ch. Feb. 20, 1985).

22. D.R.E. 502(d)(6); Kalisman v. Friedman, C.A. No. 8447-VCL, slip op. at 5, Laster, V.C. (Apr. 17, 2013).

23. Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1124 (Del. Super. 1992).

24. MPEG LA, L.L.C. v. Dell Global B.V., C.A. No.  7016-VCP, slip op. at 4, Parsons, V.C. (Del. Ch. Dec. 9, 2013).Cephalon, Inc. v. Johns Hopkins University, C.A. No. 3505-VCP, slip op. at 3, Parsons, V.C. (Del. Ch. Dec. 4, 2009); Cascella v. GDV, Inc., C.A. No. 5899, slip op. at 4, Brown, V.C. (Del. Ch. Sept. 13, 1989).

25. MPEG LA, L.L.C. v. Dell Global B.V., C.A. No.  7016-VCP, slip op. at 4, Parsons, V.C. (Del. Ch. Dec. 9, 2013); Scaly Mattress Co. of New Jersey v. Scaly, Inc., C.A. No. 8853, slip op. at 6-7, Jacobs, V.C. (Del. Ch. June 19, 1987).

25.1. MPEG LA, L.L.C. v. Dell Global B.V., C.A. No.  7016-VCP, slip op. at 4-5, Parsons, V.C. (Del. Ch. Dec. 9, 2013).

26. Moyer v. Moyer, 602 A.2d 68, 72 (Del. 1992).

27. Zirn v. VLI Corp., 621 A.2d 773, 782 (Del. 1993); Hoechst Celanese Corp. v. National Union Fire Ins. Co., 623 A.2d 1118, 1125 (Del. Super. 1992).

28. Phillips v. Delaware Power & Light Co., 194 A.2d 690, 693 (Del. Super. 1963).

28.1.  Brett v. Berkowitz, 706 A.2d 509, 514-15 (Del. 1998).

28.2. The Continental Insurance Co. v. Rutledge & Co., Inc., C.A. No. 15539, slip op. at 6, Chandler, C. (Del. Ch. Jan. 26, 1999).

28.3. Rowlands v. Lai, C.A. No. 95C-06-006, slip op. at 4, Vaughn, J. (Del. Super. Apr. 6, 1999).

29. D.R.E. 502(d)(1). See also Hollingsworth v. Essence Communications, Inc., C.A. No. 5312, slip op. at 5, Hartnett, V.C. (Del. Ch. July 15, 1977).

30. D.R.E. 502(d)(2).

31. D.R.E. 502(d)(3).

32. D.R.E. 502(d)(4).

32.1. Princeton Ins. Co. v. Vergano, 883 A.2d 44, 54 (Del. Ch. 2005); In the Matter of Sutton, C.A. No. 96M-08-024, slip op. at 19-22, Cooch, J. (Del. Super. Aug. 30, 1996).

32.2.  Alaska Electrical Pension Fund v. Brown, 988 A.2d 412, 419 (Del. 2010); Tackett v. State Farm Fire & Cas. Ins. Co., 653 A.2d 254 (Del. 1995).

32.3. Grunstein v. Silva, C.A. No. 3932-VCN, slip op. at *3, Noble, V.C. (Nov. 20, 2012).

33. Kirby v. Kirby, C.A. No. 8604, slip op. at 16, Berger, V.C. (Del. Ch. May 18, 1988).

34. Wal-Mart Stores, Inc. v. Indiana Electrical Workers Pension Trust Fund IBEW, 95 A.3d 1264, 1276-78 (Del. 2014); Zirn v. VLI Corp., 621 A.2d 773, 781 (Del. 1993); In re Fuqua Industries, Inc. Shareholder Litigation, C.A. No. 11974, slip op. at 6-7, Chandler, V.C. (Del. Ch. Oct. 8, 1992); Bray v. Oklahoma Publishing Co., C.A. No. 10,798, slip op. at 3, Berger, V.C. (Del. Ch. July 13, 1990); Kirby v. Kirby, C.A. No. 8604, slip op. at 19, Berger, V.C. (Del. Ch. May 18, 1988); Sealy Mattress Co. of New Jersey v. Sealy, Inc., C.A. No. 8853, slip op. at 7-8, Jacobs, V.C. (Del. Ch. June 19, 1987); Moran v. Household Int’l, Inc., C.A. No. 7730, slip op. at 4, Walsh, V.C. (Del. Ch, Sept. 18, 1984); Dalton v. American Investment Co., C.A. No. 6305, slip op. at 3, Brown, C. (Del. Ch. Nov. 14, 1983); Tabas v. Bowden, C.A. No. 6619, slip op. at 4-5, Hartnett, V.C. (Del. Ch. Feb. 16, 1982).

35. Cole v. Wilmington Materials, Inc., C.A. No. 12649, slip op. at 3-4, Allen, C. (Del. Ch. July 1, 1993); In re Fuqua Industries, Inc. Shareholder Litigation, C.A. No. 11974, slip op. at 7, Chandler, V.C.  (Del. Ch. Oct. 8, 1992); Bray v. Oklahoma Publishing Co., C.A. No. 10,798, slip op. at 3, Berger, V.C. (Del. Ch. July 13, 1990); Kirby v. Kirby, C.A. No. 8604, slip op. at 19, Berger, V.C., (Del. Ch. May 18, 1988); Sealy Mattress Co. of New Jersey v. Sealy, Inc. CA. No. 8853, slip op. at 9, Jacobs, V.C. (Del. Ch. June 19, 1987); Dalton v. American Investment Co., C.A. No. 6305, slip op at 3, Brown, C. (Del. Ch. Nov. 14, 1983); Tabas v. Bowden, C.A. No. 6619, slip op. at 4-5, Hartnett, V.C. (Del. Ch. Feb. 16, 1982).

35.1. Gulf Stream Design Group, Inc. v. Beebe Medical Center, Inc., C.A. No. 93C-03-026, slip op. at 10, Bifferato, J. (Del. Super. July 21, 1994).

© 2014  David L. Finger