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New York University Law Review
June, 1982
*443 A POST-UPJOHN CONSIDERATION OF THE
CORPORATE ATTORNEY-CLIENT PRIVILEGE
John E. Sexton [FNa]
ABSTRACT
This Article examines the contours of the corporate attorney-client privilege after the Supreme
Court's decision in Upjohn Company v. United States. After tracing the development of the corporate
privilege, Professor Sexton analyzes the Upjohn opinion itself, isolating the unspoken assumptions
that form the bases of that opinion. Then he derives a functional conception of the corporate
attorney-client privilege from those assumptions. Finally, he considers the compatibility of this
conception with select bodies of doctrine collateral to the corporate privilege. He concludes that
significant tension exists between the Upjohn privilege and those collateral rules.
INTRODUCTION
When the United States Supreme Court agreed to hear Upjohn Company v. United States, [FN1]
scholars and practitioners alike took note. For decades, the Court had accepted tacitly the proposition
that the attorney- client privilege available to individuals also was available to corporations, [FN2] but
it never had delineated the scope and meaning of the corporate attorney-client privilege. Meanwhile,
lower federal courts had become sharply split over the appropriate contours of the corporate
privilege. [FN3] Upjohn provided an opportunity for the Supreme Court both to explain its willingness
to extend to corporations a *444 privilege originally designed for individuals and to define precisely
the scope and meaning of the corporate privilege.
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The Upjohn Court allowed the opportunity to pass, however. Justice Rehnquist's opinion for eight
Justices does manifest a firm commitment to the notion that the attorney-client privilege is available
to corporations, but it does not attempt to justify that commitment. Moreover, the Court expressly
refused to promulgate standards to govern application of the privilege. Instead, in an opinion largely
characterized by unexplicated conclusory language, the Court purported to decide little more than the
communications in the case before it were protected by the privilege.
Notwithstanding the failure of the Upjohn Court to articulate a justification for the corporate
attorney-client privilege, the issue of the availability of the privilege to corporations is, for all
practical purposes, now settled. Even granted that fact, however, the important task of delineating the
appropriate contours of that privilege still remains. In that regard, the goal of this piece is a modest
one: it seeks only to frame for discussion important issues regarding the scope of the corporate
privilege.
Part I sketches the development of doctrines relating to the attorney-client privilege, particularly to
the corporate attorney-client privilege. Part II analyzes the majority opinion in Upjohn, suggesting
the limits of the Court's approach. The Court determined that the privilege applied to the facts before
it by using an ad hoc, functional mode of analysis. In essence, the Court asked whether application of
the privilege under the circumstances of the case would foster the perceived purpose of the privilege.
In large part, the Court based its analysis on two critical, yet unsupported, assumptions about the
behavior of corporate actors: first, that application of the privilege in the corporate setting does, in
fact, induce corporate clients to provide their attorneys with information that, absent the privilege,
they would not provide and second, that once attorneys inform corporate decision makers of the
demands of the law, the decision makers will conform their behavior to those demands voluntarily.
But, even when judged on those assumptions, the Court's functional approach suffers from serious
deficiencies that can be remedied only by the development of carefully delineated rules to guide
lawyers and their clients. Therefore, without questioning the assumptions made by the Upjohn Court,
Part III of the Article sketches the portrait of the corporate attorney- client privilege that flows from a
principled application of them. [FN4] Using an analytical approach that looks beyond the purposes
*445 of the privilege identified by the Upjohn Court and that focuses on the principles that emerge
from that opinion, the Article seeks to develop rules consistent with the Upjohn opinion that address
some of the major practical questions regarding the corporate privilege. Finally, Part IV considers the
compatibility of those rules with select bodies of doctrine collateral to the corporate attorney-client
privilege. It concludes that the content of some of the rules that flow from a principled application of
the assumptions made by the Upjohn Court is such that the Court may ultimately choose to limit
Upjohn rather than to embrace all that it implies.
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DOCTRINAL DEVELOPMENT AND THE CORPORATE ATTORNEYCLIENT PRIVILEGE
A. The Development of an Attorney-Client Privilege
Wigmore reports that the attorney-client privilege is "the oldest of the privileges for confidential
communications" known to the common law. [FN5] Indeed, " t he history of this privilege goes back to
the reign of Elizabeth I, where the privilege already appears as unquestioned." [FN6] The privilege,
based initially upon "the oath and the honor of the attorney," embodied the notion that a gentleman
never revealed confidences: [FN7] "A barrister was considered not merely an 'officer' of the court but a
member of it, who could no more properly be asked to reveal a client's confidences than a modern
judge could be *446 asked to disclose matters heard in camera." [FN8] By the last quarter of the
eighteenth century, however, the doctrine fell out of favor and was rejected as antithetical to the
judicial search for truth. [FN9]
The privilege reemerged in the early nineteenth century. Utilitarian considerations sparked its
resurrection; Wigmore suggests that it was perceived that the privilege would "promote freedom of
consultation of legal advisers by clients." [FN10] Such unfettered communication, it was thought,
would provide important information to advocates and to the court, would assure client compliance
with the law, and would vindicate other substantive rights. [FN11] Ostensibly, a privilege was needed
to foster consultation; the apprehension of subsequent disclosure would otherwise inhibit open
communication to attorneys. [FN12] Although Professor Hazard has argued that the historical roots of
the privilege are different from those described by Wigmore, [FN13] most commentators would agree
that, today, the privilege is based on Wigmore's utilitarian model and is designed to promote freedom
of consultation between lawyer and client. [FN14]
Notwithstanding the interests that the attorney-client privilege purports to serve, even its staunchest
proponents concede that, whenever the privilege is invoked, otherwise relevant and admissible
evidence may be suppressed. Inherently, the attorney-client privilege, like all privileges, potentially
hinders the administration of justice. Indeed, although the benefits of the privilege are indirect, in the
words of Wigmore, "its obstruction is plain and concrete." [FN15] In other words, a tension exists
between the secrecy required to effectuate the privilege and the openness demanded by the factfinding process. Because of this tension, it has been concluded broadly that the contours of the
privilege should "be strictly confined within the narrowest possible limits consistent with the logic of
its principle." [FN16]
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*447 This maxim is more easily stated than practiced, however, particularly in cases that apply the
privilege to corporations. As the following subsection illustrates, the rules for applying the privilege
to corporations and the justifications underlying the existence of the corporate privilege have
remained unclear. These ambiguities tend to stymie attempts to confine the corporate privilege
within "the narrowest possible limits consistent with the logic of its principle."
B. The Corporate Attorney-Client Privilege
It is not self-evident that the attorney-client privilege available to individuals also should be available
to corporations. Indeed, in 1962, in Radiant Burners, Inc. v. American Gas Association, [FN17] the first
federal court to consider the question expressly held that the privilege was unavailable to
corporations. [FN18] Nonetheless, as early as 1915 in United States v. Louisville & Nashville Railroad,
[FN19]
the Supreme Court permitted a corporation to assert the attorney-client privilege. [FN20] And
*448 even before the Seventh Circuit reversed the district court's denial of the corporate privilege in
Radiant Burners, another district court was constrained to conclude that, notwithstanding the "sound
logic" of the district court judge's opinion in Radiant Burners, "the availability of the privilege to
corporations has ... been so generally accepted that courts must recognize that it does exist." [FN21]
The Supreme Court's unhesitating recognition of the Upjohn Company's right to invoke some form
of the attorney-client privilege in the Upjohn case underscores this statement. [FN22]
*449 In contrast to the broad consensus among federal courts regarding the availability of an
attorney-client privilege for corporations, conflicting views have evolved over who in the
corporation may communicate as the "client" for purposes of the privilege. The traditional rule is that
a non-corporate client is free to communicate with his attorney through an agent and that the
protection of the privilege is not lost because the client speaks through an agent. [FN23] This principle
is difficult to apply, however, when the "client" invoking the privilege is a corporation. [FN24]
Characteristically, a corporate entity can speak only through its agents or employees, and there are
often hundreds or even thousands of agents or employees associated with the corporation. Therefore,
if the privilege applies to communications between an attorney and her corporate client, it is
necessary to determine precisely the identity of the client, that is, to designate the persons within the
corporation whose communications are protected by the privilege.
The first federal court to discuss the corporate attorney-client privilege at length was the district
court in United States v. United Shoe Machinery Corp. [FN25] That court held that the privilege applies
to "information furnished to the attorney by an officer or employee of the corporation in confidence
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and without the presence of third persons," but not to "facts disclosed to the attorney by a person
outside the organization of the corporation and its affiliates." [FN26] However, *450 most courts found
unacceptable a rule that so broadly protected the communication of any employee with the
corporation's attorney. Consequently, the debate over the appropriate scope of the corporate attorneyclient privilege soon centered on two competing theories: the so-called "control group" and "subject
matter" tests.
Although the control group test was first enunciated in City of Philadelphia v. Westinghouse Electric
Corp., [FN27] its roots can be traced to the Supreme Court's decision in Hickman v. Taylor. [FN28] The
Hickman litigation stemmed from a tugboat accident in which five crewmembers were drowned. The
tugboat company's attorney interviewed the surviving crewmembers in preparation for trial and made
notes on the interviews. One year later, the administrator of one of the deceased crew members'
estates brought a claim against the company and sought to obtain through discovery the attorney's
notes on the interviews. When the company's attorney refused to produce his memoranda, the
plaintiff asked the district court to compel disclosure. The trial court ordered production of the
documents, but the attorney persisted in refusal. The district court held him in contempt, the Third
Circuit reversed, and the Supreme Court granted certiorari. In dicta, the Court asserted that the
surviving crew members were mere witnesses and that the attorney-client privilege did not apply to
the attorney's communications with them: " T he protective cloak of the privilege does not extend to
information which an attorney secures from a witness while acting for his client in anticipation of
litigation." [FN29] Nonetheless, the Hickman Court held that the attorney's notes were protected by the
qualified "work product" immunity that has subsequently been enshrined in Rule 26 of the Federal
Rules of Civil Procedure. [FN30]
*451 Fifteen years after Hickman, in City of Philadelphia v. Westinghouse Electric Corp., the United
States District Court for the Eastern District of Pennsylvania squarely faced the question of the scope
of the attorney-client privilege as applied to corporations. That court reasoned that the language in
Hickman quoted above "clearly show[ed] the distinction between statements by employees of the
client [company] and statements by the client [company] itself." [FN31] The court rejected United
Shoe's expansive approach to the corporate attorney-client privilege as overly broad. To say, as the
United Shoe court had said, that all corporate employees are, by virtue of nothing more than their
employee status, the corporate "client" for purposes of the attorney-client privilege was to ignore the
teaching of Hickman. [FN32] Thus, the judge in City of Philadelphia announced a more restrictive test;
one he believed defined the corporate "client" in a manner consistent with Hickman:
If the employee making the communication, of whatever rank he may be, is in a position to control
or even to take a substantial part in a decision about any action which the corporation may take upon
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the advice of the attorney, or if he is an authorized member of a body or group which has that
authority, then, in effect, he is (or personifies) the corporation when he makes his disclosure to the
lawyer and the privilege would apply. [FN33]
A majority of the federal courts that considered the scope of the corporate attorney-client privilege
over the next two decades adhered to the control group test. [FN34]
*452 The counterpoint to the control group test is the subject matter test first enunciated by the
Seventh Circuit in Harper & Row Publishers, Inc. v. Decker. [FN35] Harper & Row reached the court
of appeals by writ of mandamus after the trial judge, applying the control group test, had held the
privilege inapplicable to communications between lower level employees of the defendant
corporation and the corporation's attorneys regarding the employees' testimony before a federal
grand jury. [FN36]
The Seventh Circuit concluded that the control group test was inadequate because the lower echelon
employees involved in the case clearly were more than fortuitous witnesses. Rather, they were
corporate actors who, by virtue of their on-the-job activity, possessed information vital to the
company's legal position. The Harper & Row court asserted that such lower echelon employeeactors are frequently the very persons in the corporation who possess the information most vital to
the corporation's legal position; yet the control group test would not protect communications from
such employees. [FN37] To redress this inadequacy, *453 the court promulgated what became known
as the subject matter test:
We conclude that an employee of a corporation, though not a member of its control group, is
sufficiently identified with the corporation so that his communication to the corporation's attorney is
privileged where the employee makes the communication at the direction of his superiors in the
corporation and where the subject matter upon which the attorney's advice is sought by the
corporation and dealt with in the communication is the performance by the employee of the duties of
his employment. [FN38]
A significant minority of the federal courts that subsequently considered the scope of the corporate
attorney-client privilege adopted the subject matter test. [FN39]
*454 Once the counterpoints represented by the control group and the subject matter tests had been
established, some federal courts attempted variations or syntheses of them. These courts concluded
that neither test, standing alone, adequately accounted for the manner in which the modern
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corporation functions, [FN40] and they formulated a variety of approaches to redress this inadequacy.
For example, in Duplan Corp. v. Deering Milliken, Inc., [FN41] the district court combined the two
tests [FN42] by holding that the attorney-client privilege applies in the corporate setting only if (1) the
person communicating on behalf of the corporation is a member of the control group or an employee
authorized to communicate by a member of that group, (2) the subject matter of the communication
is related to the employee's duties in the corporation, and (3) the communication is necessary to the
rendering of legal advice. [FN43] The district court in IN re Ampicillin Antitrust Litigation took a
different approach. [FN44] It completely rejected the control group requirement [FN45] and instead
modified the subject matter *455 test [FN46] by focusing on the relationship between the subject matter
of the particular communication and the decision making process regarding the corporation's legal
problem. [FN47] Still another example was the Eighth Circuit's opinion in Diversified Industries, Inc. v.
Meredith, [FN48] which varied the subject matter test to provide protection only if the communicating
employee and his superiors intended that the communication result in legal advice. [FN49]
*456 On the eve of the Supreme Court's decision in the Upjohn case, therefore, federal courts agreed
that corporations could invoke the protection of the attorney-client privilege. They disagreed sharply,
however, over the contours of the privilege as applied to corporations. The control group test and the
subject matter test provided the two contrapuntal strains, but several variations on those basic themes
had developed. [FN50]
THE SUPREME COURT'S DECISION IN UPJOHN
A. The Court's Opinion
The Upjohn Company is a pharmaceutical manufacturer doing business in the United States and
approximately 150 other countries. [FN51] *457 In 1976, independent accountants conducting an audit
of one of Upjohn's foreign subsidiaries discovered evidence that the subsidiary had made improper
payments to foreign government officials. The accountants reported their discovery to Upjohn's
General Counsel, who then discussed the discovery with the Chairman of Upjohn's Board and with
outside counsel.
As a result of these discussions, Upjohn commenced an internal investigation of "questionable
payments," and its attorney sent a questionnaire to all of the company's overseas managers soliciting
information regarding such payments. The letter accompanying the questionnaire indicated that
Upjohn's officers needed all available information concerning payments by Upjohn to foreign
officials. It requested that responses be sent directly to Upjohn's General Counsel. Finally, it
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indicated that the matter should be treated as highly confidential and should be discussed only with
Upjohn employees who might possess the needed information. After receiving the responses,
Upjohn's in- house and outside counsel interviewed personally approximately eighty-six officers and
employees of the company (drawn from senior management). The attorneys made handwritten notes
during these interviews that reflected the content of the conversations and their impressions of them.
Later in 1976, Upjohn voluntarily submitted a report to the Securities and Exchange Commission
and to the Internal Revenue Service (IRS) disclosing the questionable payments. Shortly thereafter,
when the IRS instituted an investigation of the tax consequences of the payments, agents requested
and received lists of those employees and former employees who had submitted questionnaires or
who had been interviewed by Upjohn's attorneys. Upjohn offered to make all of these individuals
available for interrogation. When the IRS issued an administrative summons for the production of all
documents gathered during Upjohn's investigation, [FN52] however, the company *458 refused on the
ground that the documents were protected from disclosure by either the attorney-client privilege or
the work product immunity. [FN53]
The IRS sought and was granted enforcement of the summons in the United States District Court for
the Western District of Michigan. [FN54] On appeal, the Sixth Circuit, adopting the control group test,
held that the privilege did not apply " t o the extent that the communications were made by officers
and agents not responsible for directing Upjohn's actions in response to legal advice ... for the simple
reason that the communications were not the 'client's."' [FN55] Consequently, it remanded to the
District Court for a determination of which Upjohn employees fell within the control group. [FN56]
Upjohn filed a petition for certiorari, and the Supreme Court granted the writ.
When the Supreme Court agreed to hear the Upjohn case, it was widely assumed that the Court
would resolve the conflict that had developed in the circuits by choosing either the control group test,
the subject matter test, or one of the possible variations. [FN57] The expectation proved only partially
correct. Although the Court unanimously rejected the control group test, [FN58] the majority refused
"to draft a set of rules to govern challenges to investigatory subpoenas" [FN59] because " any such
approach would violate the spirit of Federal Rule of Evidence 501." [FN60] Consequently, the Justices
rejected the control group *459 test without embracing the subject matter test. [FN61] Indeed, the
Court's opinion did not even mention the subject matter test by name. [FN62]
A close reading of the Court's opinion, however, reveals something more than a mere rejection of the
control group test. By tracing the Court's treatment of Upjohn's claim of privilege, one can discern a
style of analysis that is, in effect, the heart of the Court's treatment of the scope of the corporate
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attorney-client privilege. The Court's approach is a functional one: it focuses primarily on the
perceived purposes of the privilege. In large part, the Court's inquiry resolves into a single question:
Would application of the privilege under the circumstances of this particular case foster the flow of
information to corporate counsel regarding issues about which corporations seek legal advice? [FN63]
The Court's treatment of the circumstances before it in Upjohn illustrates the primacy of this
functional style of analysis. After presenting the underlying facts of the case, the Court immediately
notes that the function of the attorney-client privilege is "to encourage full and frank
communications between attorneys and their clients and thereby promote broader public interests in
the observance of law and administration of justice." [FN64] In the Court's view, "sound legal advice or
advocacy serves public ends and ... such advice or advocacy depends upon the lawyer being fully
informed by the client." [FN65] Later, the Court concedes that complications arise when the privilege is
extended to corporations, [FN66] but it hastens to add that a special public interest is served when
corporations are able to consult freely with attorneys regarding compliance with the "vast and
complicated array of regulatory legislation." [FN67]
*460 Having delineated the function that the privilege serves, the Court continues its functional
analysis by asking whether the control group test enunciated in City of Philadelphia is consistent
with the function of the privilege. [FN68] It finds the control group test inadequate in three respects.
First, that test overlooks the need for the privilege to protect not only the professional advice given
by the attorney to corporate employees who can act on it (the control group) but also the information
given to the attorney to enable her to form a judgment and provide advice. [FN69] If the attorney is to
receive the information she needs to make her judgment, the privilege must cover all persons who
possess that information. [FN70] Because many middle or low echelon corporate employees possess
information that the corporate attorney should receive, the control group test is unduly restrictive.
Second, the control group test frustrates the purpose of the privilege by discouraging an attorney
from conducting a full investigation of the facts before rendering advice. [FN71] Under the control
group test, the privilege does not extend to communications from all employees who possess the
information she needs. Because this increases the likelihood of a subsequent finding of liability, the
attorney might opt to forgo communication with employees outside of the control group and to
render advice on an incomplete picture of the facts. Such an outcome is contrary to public interest.
Finally, the Court criticizes the control group test for being unpredictable and difficult to apply in
practice. [FN72] Citing apparently inconsistent results in lower courts, [FN73] the Court reasons that if the
purpose of the attorney-client privilege is to be served, the attorney and client must be able to predict
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with some degree of certainty whether particular discussions will be protected. An uncertain*461
privilege, or one which purports to be certain but results in widely varying applications by the courts,
is little better than no privilege at all. [FN74]
Thus, the three reasons that led the Court to reject the control group test are each grounded in a
functional analysis of the privilege. A similar functional analysis led the Court to conclude that, on
the facts before it, the communications between Upjohn's attorneys and its employees were
privileged. [FN75]
Notwithstanding the absence of any mention of the subject matter test in the opinion, some
commentators have argued [FN76] that the Upjohn Court embraced the modified subject matter test
first enunciated by Judge Weinstein in his treatise on evidence [FN77] and later adopted by the Eighth
Circuit in Diversified Industries, Inc. v. Meredith. [FN78] The facts in Upjohn do closely parallel those
in Diversified Industries, [FN79] and the key elements of the Weinstein test certainly are satisfied. The
communications were made by Upjohn employees, [FN80] to counsel for Upjohn acting as such, at the
direction of corporate superiors, and to secure legal advice; they concerned matters within the scope
of the employees' duties, and the employees were aware that they were being questioned so that the
corporation could obtain legal advice; and finally, the communications were considered and were
kept "highly confidential." [FN81] However, although the Upjohn Court *462 listed each of these
elements seriatim as it applied its analysis to the facts before it, the Court nowhere explicitly ratified
the Diversified Industries test. [FN82] The majority opinion gave no indication that its summary of the
evidence was meant to be anything more than a reiteration of its finding that the privilege applied in
the circumstances before it. In fact, Justice Rehnquist, the author of the majority opinion, quite
expressly refused to promulgate or embrace any particular test. [FN83] Moreover, Chief Justice Burger
wrote a concurring opinion decrying the majority's refusal to promulgate a test to guide lower courts.
[FN84]
There is, however, a different point that is noteworthy about the factual coda that Justice Rehnquist
inserted in his opinion for the Court. In that coda, after listing the elements of the case before the
Court, he returned to the overriding functional theme of the opinion: Given the listed elements, the
purposes underlying the attorney-client privilege could be satisfied only if the communications at
issue were protected against disclosure. On that functional basis, Upjohn's claim of privilege was
honored.
In sum, the Upjohn Court clearly and unequivocally rejected the control group test as a basis for
delineating the scope of the corporate attorney- client privilege. Nonetheless, the Court did not
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embrace the subject matter test or any of its modifications. Instead, it utilized a functional mode of
analysis to determine whether the privilege should apply in the situation before it, that is, it asked
whether application of the privilege in circumstances of the kind at issue would enhance the flow of
information to corporate counsel regarding issues about which corporations seek legal advice.[FN85]
*463 B. The Limits of the Upjohn Opinion
The Upjohn opinion rests on several critical assumptions. The first, a theoretical one, is that the
attorney-client privilege available to individuals should also be available to corporations. This
proposition is not self- evident. [FN86] Yet with little more than a reference to a case that sixty- six
years earlier had assumed the applicability of the privilege to corporations, the Court itself assumed
the point. [FN87] To the extent the Court offers an explanation for its willingness to extend the
protection of the privilege to corporations, its analysis is based upon two problematic assumptions
with regard to the behavior of corporate actors: first, application of the privilege in the corporate
setting does, in fact, induce corporate clients to provide their attorneys with information that, absent
the privilege, they would not provide and second, that once attorneys inform corporate decision
makers of the demands of the law, the decision makers will conform their behavior to those
demands.
That a corporate privilege yields an increase in communication between corporate clients and their
attorneys is open to challenge. One may question whether the attorney-client privilege actually
induces any client, individual or corporate, to provide information that would not otherwise be
forthcoming. More narrowly, even assuming that the availability of the privilege may induce
individuals to communicate more freely with their attorneys, such may not be the case *464 with
corporate clients. In this regard, several commentators have argued that because of the exigencies of
the regulatory state and because of their general business needs, corporations would communicate
with attorneys even if the privilege were not available. [FN88]
A corporation's activities undeniably tend to involve many more legal questions, larger sums of
money, and greater potential liability than do the activities of most individuals. Citing these facts,
critics of the corporate privilege argue that corporate clients are candid with their attorneys not
because of the privilege but because they realize that the costs of withholding information are likely
to be far greater than the disadvantages flowing from the risk that the communication will later be
divulged. According to this theory, modern corporations are "ineluctable bedfellows" [FN89] of
lawyers because they have "no choice but to communicate with attorneys." [FN90] The result, the
critics say, is that the extension of the privilege to corporations induces little additional information
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for the attorney. [FN91]
Arguments that the corporate attorney-client privilege will not produce additional communications
with corporations' attorneys must be tempered, however. First, they generally ignore the pluralism of
corporations and the fact that a great deal of information within corporations is possessed by lower
echelon employees. Corporations are not monolithic. [FN92] Consequently, even in a situation where
the corporation as an entity has a need for legal advice, it does not necessarily follow that the
individual possessing the information *465 shares that need-and with it the need to communicate
with an attorney. Lower echelon employees frequently lack an overarching corporate perspective and
the concomitant motivation to provide the information in their possession. Moreover, both lower
echelon employees and those senior actors who possess the necessary perspective might find a
conflict between corporate and personal needs. [FN93] A reluctance to communicate would be a natural
reaction for an employee who, rightly or wrongly, fears that widespread dissemination of his
information by the attorney could render him liable to civil or criminal penalties, prejudice a claim
he may have against either the corporation or a third-party, prevent his promotion, lead to his
dismissal, or simply embarrass him. [FN94] In this circumstance, the result may be either that such
employee will withhold information or supply information that is incomplete, distorted, or otherwise
lacking in candor. Therefore, even if it is granted that the modern corporation has "no choice but to
communicate with attorneys," [FN95] a corporate privilege still might serve to make those
communications that do occur more candid and truthful, as well as to prevent corporate employees
from simply refraining from supplying information.
Whether this is the case depends upon the capacity of a corporate attorney- client privilege to render
individuals within corporations *466 more willing to speak to the corporation's attorney. In this
regard, it is noteworthy that many individuals-most particularly those whose interests do not conflict
with the corporation-will gladly speak even without the protection of its privilege. [FN96] Others,
ordinarily reluctant, will speak if ordered to do so-perhaps out of a fear, justifiable or otherwise, that
they will be dismissed or that their career development will be impaired if they fail to do so. [FN97] A
third group will not speak even if they are assured that their communications will not be
disseminated beyond those involved in the litigation both because they fear recrimination within the
corporation and because they understand that at least some corporate officials [FN98] will be privy
even to privileged communications. [FN99] Finally, there is a fourth group who, by hypothesis, will
speak only if their communications are protected from disclosure. [FN100] The existence of a corporate
attorney-client privilege might be significant to this group. However, the fact that the corporation
may be able to waive the privilege [FN101] or that otherwise privileged communications *467 may be
available to plaintiffs in shareholder litigation [FN102] means that such information-holders have no
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guarantee that their communications, even if initially protected by the privilege, will be permanently
protected against dissemination. Since the threat of waiver or of shareholder litigation is present
whenever there is an issue of corporate liability, this fourth group of information-holders might be
generally unwilling to speak to the corporation's attorneys notwithstanding the initial availability of
the privilege.
Even assuming the validity of the points just made with regard to the willingness of individual
information-holders to speak absent the protection of the privilege, the Court's assumption that a
corporate attorney-client privilege will generate additional communication with attorneys may still
be correct. An important component of the argument just made is that most information-holders
either will speak voluntarily with the corporation's attorney or can be ordered to do so. But this
assumes that the corporation wants them to speak to the attorney. Nevertheless, the existence vel non
of the protection provided by the privilege even if not determinative of the information-holder's
attitude, may be determinative of the corporation's attitude. It is significant that if, because of the
absence of protection, the corporation desires that its employees refrain from speaking, even those
information-holders who would otherwise gladly provide information would not do so-either because
no lawyer would have been retained or, if a lawyer is on the scene, because of fear of corporate
recrimination.
Notwithstanding this view, there are reasons to doubt the Upjohn Court's assumption that application
of the privilege in the corporation setting does, in fact, induce corporate clients to provide their
attorneys with information that, absent the privilege, they would not provide. It may be that the Court
is correct in assuming that a significant number of information-holders would be less inclined to
speak to the corporation's attorney if there were no corporate attorney-client privilege and that these
information-holders will not be *468 affected by the fact that there is a chance that the privilege will
be abrogated. Certainly the Court and many lawyers [FN103] believe that this is the case. And, of
course, nobody would argue that the corporate attorney- client privilege produces no additional
communication at all. The point here is that, notwithstanding serious arguments to the contrary, the
Court assumed that application of the privilege induces significant additional communications.
Arguably, uninhibited communication between attorney and client is good in itself. Such
communication enables the attorney to serve her client with "industry and efficiency," and it may be
a necessary part of the adversarial process. [FN104] But the Upjohn Court goes beyond this relatively
modest rationale for the privilege to assert that increased communication between corporations and
their attorneys will produce another socially beneficial outcome, to wit, increased corporate
compliance with the law. In this regard, a second assumption about the behavior of corporate actors,
equal in importance to the one just discussed and equally unsupported, informs the Court's analysis.
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The Court employs what might be called a "voluntary compliance" model to describe the typical
corporate response to governmental regulation. [FN105] Its assumption is that, as a general rule, once
attorneys inform corporate decision makers of the demands of the law, those decision makers will
conform their behavior to those demands. [FN106] *469 On this view of corporate behavior, the
corporation's attorney is strategically placed to facilitate the process of voluntary compliance: if she
is given all of the relevant information, she can inform corporate officials of their legal duties, and
they, as law-abiding citizens, will execute them. It is this perception of attorney-client interplay that,
in large part, leads the Upjohn Court to bestow preeminent value upon fostering the flow of
information between corporate clients and attorneys.
The voluntary compliance model of corporate behavior flows naturally from the facts of the Upjohn
case. However, it is far from clear that the activity of the corporate officials at Upjohn during 1976 is
typical of corporate behavior in the United States. A case can be made that at least a significant
number of corporate officials seek to push the law to its limits-to avoid, as far as possible, complying
with its mandates-and that corporate compliance with the law is better achieved by relying primarily
on a strategy of vigorous enforcement by government and by private attorneys-general. [FN107] In this
"regulatory" *470 model of corporate behavior, the corporation's attorney is strategically placed to
help stymie enforcement; any diminution in the amount of information available to the public or
private adversaries of corporations by virtue of a corporate attorney-client privilege is potentially
harmful to the enforcement effort.
The Court's implicit decision to emphasize voluntary compliance has immediate implications for a
discussion of the corporate attorney-client privilege. On the voluntary compliance model, an
expansive privilege is desirable to get as much information as possible to the corporation's attorney,
thereby enabling her to guide the compliance effort. On the regulatory model, a narrow privilege is
desirable to minimize the amount of relevant information protected, for protected information is
generally undiscoverable by public and private adversaries of corporations.
One's willingness to rely primarily on voluntary compliance (with a concomitantly broader privilege)
rather than regulation (with a concomitantly narrower privilege) turns upon one's degree of
confidence in a regime of corporate self-policing. The emphasis on voluntary compliance adopted by
the Upjohn Court and politically in vogue today stands in counterpoint to the assumption of the New
Deal, for example, that corporate behavior is most effectively governed by a vigorous regulatory
effort. This Article will not choose between these two approaches; nor will it suggest a particular
blend of the two. The point here is that the Upjohn Court emphasized voluntary compliance and
based important parts of its analysis upon the effectiveness of that approach. Indeed, one of the
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ironies of the Upjohn case is that the Court endorsed this strategy over the vigorous objection of the
agency charged with ensuring corporate law-abidance in the area at issue. In *471 essence, the Court
told the IRS that a voluntary compliance strategy was better for the IRS than the IRS thought it was.
Of course, the reality of corporate behavior falls somewhere between the two models just described;
they are starkly contrasting paradigms, and the reality is neither black nor white, but gray. The
models do not capture the diversity and complexity of corporate activity, nor government's response
to it. They simply describe a tactical cleavage between two broad approaches to the policing of
corporate activity. Moreover, just as nobody would deny that a corporate attorney-client privilege
induces some (though perhaps minimal) increased communication with attorneys for corporations, so
also would nobody deny that voluntary compliance occurs at least some of the time.
The choice of models just described, therefore, is not an absolute one, but one of degree. It is a
choice of primary emphasis-of a strategy to achieve corporate compliance with the law. In this vein,
it is clear that the voluntary compliance emphasis adopted by the Upjohn Court does not abandon
regulation or rely exclusively on corporate self-policing. And if a corporate attorney-client privilege
generated sufficient voluntary compliance to produce a net increase in corporate law-abidance, it
might well be justified. It must be emphasized, however, that the Court had before it a case of
voluntary compliance by a corporation. The Court neglected to require evidence of voluntary
compliance as a condition precedent to invoking the privilege. Thus, to the extent that there is a
significant number of cases characterized by less vigorously law-abiding corporate conduct, an
underlying assumption of the Upjohn Court is extremely fragile. Unless it is limited by subsequent
cases, Upjohn recognizes a corporate attorney-client privilege applicable to all cases involving
corporations, not only to those cases (like Upjohn itself) where corporate behavior comports with the
voluntary compliance approach.
Thus far, examination of the Upjohn opinion has revealed that the Court made several fundamental
but unsupported assumptions. Even considered on its own terms, however, the Upjohn majority's
approach to the corporate attorney-client privilege is problematic. By declining to promulgate a
broad rule to govern application of the attorney-client privilege to corporations, the Justices adopted
a course that arguably will occasion unpredictability and confusion for corporate attorneys, their
clients, and the courts. In his concurring opinion, Chief Justice Burger asserted the necessity of
setting a clear standard in this area to guide practitioners and clients. [FN108] The Court, however, *472
ignored his plea. This failure to provide such guidance may be unfortunate for two reasons. First, as
Justice Rehnquist recognized in the Court's opinion, unless the privilege is reasonably predictable at
the time that a communication is made, it cannot completely fulfill its function. [FN109] More
specifically, Justice Rehnquist conceded that the case-by-case approach adopted by the Upjohn Court
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might "to some slight extent undermine desirable certainty in the boundaries of the attorney- client
privilege." [FN110] If the boundaries of protection are uncertain, some information-givers may be
unwilling to speak to the attorney. And the greater the uncertainty, the greater the threat that the
privilege will not fulfill its function. [FN111]
Second, although by the Court's reasoning the privilege must be broad enough to ensure that the
attorney receives the information she needs to provide requested legal advice, the Court would deem
it undesirable to insulate otherwise discoverable information from discovery unnecessarily. The
Federal Rules of Civil Procedure embody a commitment to liberal discovery, which is deemed
"essential to proper litigation." [FN112] To honor that commitment, application of the privilege must be
crafted to extend protection only as far as is necessary to serve its purpose.
In this regard, it is noteworthy that, absent carefully defined principles governing the application of
the privilege, the approach taken by the Upjohn Court may produce unnecessary expansion of the
privilege. As noted earlier, the Court's central inquiry was whether application of the privilege under
circumstances like those in the case before it would foster the perceived purposes of the privilege.
The emphasis was on the goals, that is, on the benefits, of the privilege, *473 not on its costs. Such a
focus, with its relative inattentiveness to the costs of each extension, tends to foster expansion of the
scope of the privilege. By relegating determination of the scope of the privilege to lower courts
acting under the impetus of this potentially expansive approach, the Upjohn Court increased the
probability that those courts will protect material unnecessarily. [FN113]
It is important to note, however, that the Court's failure to articulate a precise standard, not its
functional mode of analysis, causes the problems of under-inclusiveness and over-inclusiveness just
mentioned. Precise standards are fully compatible with a functional mode of analysis. Indeed,
because a clearly defined privilege provides the certainty of protection assumed necessary to
stimulate communication, a functional mode of analysis arguably requires precise standards. The
next Part is the beginning of an effort to provide such standards.
The Contours of the Post-Upjohn Corporate Attorney-Client Privilege
The previous Part highlighted three fundamental assumptions made by the Upjohn Court. To a
certain extent, any meaningful discussion of the post- Upjohn privilege must proceed on these
assumptions. The first that the attorney-client privilege is available to corporations-must now be
considered settled law. Although commentators legitimately may bemoan the Court's failure to offer
a reasoned justification for extending the privilege to corporations, [FN114] any effort to chart the
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development of the law in this area must take as a given the existence of a corporate privilege.
The Court's assumption that a corporate attorney-client privilege induces communication that would
not otherwise occur is still open to challenge. At present, there is no authoritative empirical evidence
to support or refute the assumption. [FN115] The Court's attitude appears to be *474 based more on
instinct and tradition than anything else. [FN116] Hence, if solid empirical evidence is someday
developed to demonstrate that the corporate privilege in fact does not foster the flow of information
to attorneys, it should persuade the Court to abandon its present position. Unless such evidence is
available, however, the development of doctrine regarding the corporate privilege will be heavily
influenced by the Court's belief that the privilege produces an increment in the information available
to attorneys.
The Court's final assumption-that a strategy emphasizing voluntary compliance is the one best
calculated to achieve corporate adherence to the law-is, as we have seen, extremely controversial. A
choice between an emphasis on voluntary compliance and an emphasis on regulation cannot be made
empirically because authoritative empirical evidence is unavailable. Reasonable persons can make
theoretical arguments on behalf of either. Nonetheless, the Upjohn Court has clearly opted for the
voluntary compliance model. Therefore, in attempting to craft principles consistent with the Upjohn
decision to guide consideration of problems in this area, this Article will incorporate-without
ratifying-the Court's assumption with regard to corporate behavior. The attempt here is to develop
the implications that this voluntary compliance strategy carries for development of specific rules
regarding the corporate privilege.
To this end, Section A of this Part describes, within the framework of the assumptions made by the
Upjohn Court, [FN117] the benefits and costs potentially associated with the corporate privilege. Based
upon that discussion, Section B develops principles consistent with the Upjohn opinion that should
help to delineate the contours of the *475 corporate privilege. Finally, Section C applies those
principles in an illustrative way to develop some of the major rules that should govern application of
the post-Upjohn corporate privilege.
A. The Benefits and Costs Associated with a Corporate Attorney-Client Privilege
1. The Benefits
The Upjohn Court made a general assumption that the attorney-client privilege fosters the free flow
of the information necessary for legal advice, thereby promoting corporate law-abidance and
effective judicial administration. If analysis of the corporate privilege is to move forward, it is useful
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at this point to develop a more precise understanding of the nature of the benefit allegedly obtained
from the flow of information the Court assumed the privilege would generate.
If one accepts, as the Upjohn Court did, a serious voluntary compliance component of corporate
behavior, society has a significant interest in the typical interaction between corporation and
attorney. According to this model, "public norm" regulatory legislation, which is directed primarily
at corporations, cannot be effective without the voluntary compliance that results from the attorney's
advice to the corporate client. [FN118] In part this is true because compliance with much regulatory
legislation is not an instinctive matter, if only because of the number, pervasiveness, and complexity
of these regulations. A corporation's attorney consequently is positioned to impart "preventive" legal
advice; she acts as a private law enforcement agent. As one commentator stated: "If there exists any
single place where society needs the buffer of legal advice to separate the whims of a client from
immediate gratification, that place is the boardroom of the modern corporation." [FN119] Moreover, the
benefit of the attorney's intercession is *476 felt beyond the boardroom. Legally binding acts take
place throughout the corporate structure, and advice must be given even to lower echelon corporate
actors. Advocates of a broad corporate privilege argue that the protection it affords stimulates
communication (in both directions) between the attorney and these corporate actors because the
attorney does not have to confront a "Hobson's choice" between advising the corporation without all
of the relevant information and obtaining the information at the risk of subsequently having to
disclose it to an adversary. [FN120]
Given the special role of the corporate attorney, any diminution in the amount of information
available to her could engender serious costs for society as well as the corporation. Moreover, in
light of the complex nature of the law with which she deals, it is extremely important that the
corporate lawyer completely understand the facts before she advises her client. The attorney needs an
unimpeded flow of information to analyze objectively all the facts. [FN121] Only if such information is
available can society's interest in voluntary compliance be satisfied.
2. The Costs
As with the benefits of the privilege, it is useful at this point to focus more precisely on the nature of
the costs allegedly flowing from a corporate attorney-client privilege. The cost of all testimonial
privileges, including this one, is that potentially they detract from the public's "right to every man's
evidence" [FN122] and serve as "an obstacle to the investigation of truth." [FN123] The danger is that the
privilege might deny an opposing party a ready source of relevant information. Even *477 if the
party can obtain the information by other means, [FN124] the extra effort required to obtain the
information can consume additional time and money.
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To the extent that privileges do impede an adversary's quest for information, a corporate attorneyclient privilege may be particularly troubling. Information about corporate behavior can be widely
dispersed; it can be held by many individuals in various parts of the world. Consequently, "[t]he
greater portion of evidence of wrongdoing by an organization or its representatives is ... found in the
official records and documents of that organization. Were the cloak of the privilege to be thrown
around those impersonal records and documents, effective enforcement of many federal and state
laws would be impossible." [FN125] The "impersonal records and documents" referred to are the
corporation's "paper trail." If that trail is somehow shielded from discovery by the corporation's
adversary, there simply may not be an effective alternative source of proof. [FN126] The primary
negative result of this loss is that, in the absence of alternative means of obtaining the information,
adversaries of the corporation in litigation may lose more often than they should simply because of
lack of information. [FN127]
It must be noted, however, in mitigation of the cost of the privilege just described, that the loss of the
"paper trail" is not absolute. Any information obtained by an attorney from the employees of a
corporation remains with those employees and is thus fully subject to discovery. Communications,
not facts, are protected by the privilege. As the Court in City of Philadelphia v. Westinghouse
Electric Corp. explained:
A fact is one thing and a communication concerning that fact is an entirely different thing. The client
cannot be compelled to answer the question, "What did you say or write to the attorney?," but *478
may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a
statement of such fact into his communication to his attorney. [FN128]
Thus, in civil cases, for example, the full range of discovery devices may be used by the party
opposing the corporation to discover information that was communicated to the attorney. The
opposing party's position is no worse than it would have been had the corporation not sought the
advice of counsel. Clearly it would be more convenient for the corporation's adversary to obtain the
information in bulk from the attorney than to discover it from the employees, but "[d]iscovery was
hardly intended to enable a learned profession to perform its functions ... on wits borrowed from the
adversary." [FN129]
The fact that the privilege protects only communications between attorney and client and not the
underlying information communicated is not a complete answer, however. Unlike individuals (who
will find it extremely difficult to shield information from discovery by speaking to an attorney), a
corporation can structure even its routine transactions so that information is not rendered in any
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discoverable form until it is transmitted to the corporation's attorney. In this way, the information can
be given the character of a privileged communication by funneling it through the corporate counsel's
office. Of course, if one assumes, as the Upjohn Court did, that most corporate actors voluntarily
comply with the law, the possibility of using the privilege to circumvent the rules of discovery is not
alarming. To the extent that some corporate actors are willing to employ this "funneling" tactic to
shield otherwise discoverable information, however, there is cause for concern.
B. Principles Consistent with Upjohn to Guide Delineation of the Corporate Attorney-Client
Privilege
In general, courts have developed the contours of the corporate attorney- client privilege by direct
analogy to the privilege possessed by natural persons, that is, they have sought to identify those
corporate actors who sufficiently personify the corporation to be treated as the corporate "client" and
have extended the protection of the privilege *479 to communications made by the persons thus
identified. [FN130] There are, however, important differences between the way natural persons and
corporations behave as clients.
The disjunction is obvious: the individual is a single person; the corporation is composed of many. A
client interacts in several ways with his attorney. He communicates information, receives advice, and
acts upon the advice. When the client is a natural person, he performs each of these functions
personally. In him, there is a unity of all of the relevant factors: knowledge, decision making
authority, and, perhaps most important, the apprehension of liability or other adverse consequences
that stimulates communications with the attorney. When the client is a corporation, however, those
who possess the information are often different from those who make the corporate decisions.
Characteristically, modern corporations, especially large ones, are decentralized, with significant
authority and information vested in middle management and lower echelon employees. [FN131]
Moreover, often neither the information-holders nor the corporate decision makers are themselves
potentially liable.
These fundamental differences in the way individuals and corporations interact with their attorneys
make fruitless any attempt to base doctrines of corporate attorney-client privilege on a simplistic
conceptual identification of who in the corporation most resembles an individual client. [FN132] A
strength of the functional approach employed by the Upjohn Court is that it does not attempt to
analogize the corporate attorney-client privilege to the privilege available to individuals. Instead, it
focuses on the purposes of the corporate privilege. Thus, the Court determined that the privilege
should cover the communications in the Upjohn case because such an extension would foster the
purposes of the privilege.
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*480 As judges and practitioners attempt to apply Upjohn, they will be forced to move beyond a
mere invocation of the purposes of the privilege; they will be required to delineate specific rules to
govern the availability of the privilege. But it is impossible to establish those rules without
developing a priori a set of intermediate principles that reflect and explicate the purposes of the
privilege as described in the Upjohn opinion. The principles, once developed, can then guide the
delineation of specific rules, linking them to the purposes.
1. First Shaping Principle: The Ideal Is to Maximize Benefits and Minimize Costs. [FN133]
That the privilege may be used to shield otherwise discoverable evidence signals the importance of
tailoring the privilege precisely to protect only the information it was designed to protect. By
hypothesis, a perfectly defined corporate privilege would protect "only those disclosures-necessary
to obtain informed legal advice-which might not have been made absent the privilege." [FN134] With
such a privilege, only communications that would not have taken place if the privilege did not exist
would be shielded from discovery. An ideal privilege would generate no costs because all protected
information would be undisclosed absent the privilege. On the other hand, it would obtain all of the
benefits that the privilege could possibly obtain because unprotected information would be
forthcoming to the lawyer in any event. This ideal privilege would maximize benefits and minimize
costs. As far as possible, the contours of the corporate attorney-client privilege developed after
Upjohn should conform to this ideal. [FN135]
*481 Of course, it is impossible in any one case to fix with precision the exact point at which
benefits are maximized and costs are minimized. The ideal, therefore, is never fully attainable. It is
possible to come closer to the ideal, however, by being cognizant of the phenomena of "false
benefits" and "false costs" that sometimes plague analysis in this area. When one or the other is
present, one need only recognize that the benefit or cost is illusory and then either deny protection (if
the supposed benefit is illusory) or extend protection (if the supposed cost is illusory).
Consider the following example of an illusory benefit. Hypothesize an information-possessor,
embarrassed by his information or fearful of the consequences of its disclosure, who will speak to a
lawyer only if he has some assurance that further dissemination of the information will be restricted.
In such an instance, it is important to identify the nature of the information. Only communication that
produces the benefits the privilege is calculated to secure, that is, information that facilitates or
makes more efficacious the rendering of legal services by a lawyer, should be encouraged.
Regardless of the potential costs to the information-possessor, shielding communication involving
information that does not facilitate the rendering of legal services would incur a cost, but would
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obtain no benefit germane to the privilege. The privilege therefore should not extend to such cases.
Similarly, if the information-possessor would have divulged the information to someone else,
regardless of whether the other person is a lawyer or whether legal services were being sought,
extending the privilege would not procure any benefit relevant to the privilege. The lawyer could
obtain the information through other channels. Once again, shielding the communication would
produce loss-at least in extra time, trouble, and expense to the adversary's counsel-but would obtain
no benefit germane to the privilege. In this circumstance, as in the last, the privilege should not
attach.
On the other hand, consider this example of an illusory cost. As we have seen, [FN136] the argument is
often made that the corporate attorney-*482 client privilege enables corporations to create "zones of
silence" [FN137] by instructing employees to direct information to a corporate attorney, in effect
"funneling" information to the attorney so that the protection of the privilege would attach.
Hypothesize, however, a corporation which voluntarily orders its activities to comply fully with the
law-which, in other words, does not order them to circumvent discovery. In the case of such a
company, the only communication shielded from discovery by the privilege would be a
communication that would not have been made absent the privilege. Here, the adversary has incurred
no additional cost because of the existence of the privilege. If the privilege had not existed to create
the communication, the communication would not have occurred and there would have been no
information for the adversary to obtain. In this circumstance, the privilege should attach.
2. Second Shaping Principle: The Need for Predictability.
The principle just stated is constrained by another important principle. Whatever definition of the
corporate attorney-client privilege is ultimately selected, it must lend itself to prospective
application. Attorneys and corporate actors must have rules of sufficient clarity so that they can
predict with confidence, which communications will be privileged and which will not be. In the
absence of such predictability, the corporate privilege may not act to induce any increment in
communication with corporate counsel. Predictability is necessary because the relevant actors (the
attorney and the information-giver) must judge prospectively whether the privilege will protect their
communication.
To the extent that potential protection is (as advocates of the privilege assume) determinative of the
decision to communicate, [FN138] an inability to forecast accurately whether a claim of privilege will
be recognized by courts will chill communications. A definition ideal in theory but uncertain in
practice might realize fewer benefits than would be realized by a theoretically less precise but more
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predictable definition. [FN139] For example, one definition of the corporate privilege, *483
unimpeachable in terms of our first shaping principle, would flow directly from that principle: The
corporate attorney-client privilege should protect only those communications that would not have
been made absent the existence of the privilege. Yet this rule, when applied to concrete cases, would
entail such problems of proof that potential disseminators of information could seldom know in
advance whether their communications would be protected.
When the first two shaping principles are joined, it is clear that, as far as possible, the contours of a
corporate privilege consistent with the Upjohn opinion must be shaped both to tailor the definition of
privilege to maximize the benefits while minimizing the costs and to render that definition operative
in a readily predictable fashion. The need is for unambiguous standards, sensitive to the benefits and
costs of the privilege.
In developing particular rules to guide application of the corporate attorney-client privilege, it is
impossible to accommodate fully the demands of the first two shaping principles. The first shaping
principle seeks the ideal balance between costs and benefits and thus requires flexibility to account
for factors varying with each situation. Conversely, the second principle emphasizes the need for
predictability and thus urges a rigid, bright-line standard. A standard forged to yield predictable
results necessarily sacrifices some of the benefits of an ideal privilege or incurs some cost that would
be avoided by that privilege. A bright-line rule entails the acceptance of one type of imprecision or
the other. The rule utilitarianism [FN140] embodied in this second shaping principle self-consciously
accepts that in a given case the ideal balance of benefits and costs may not be achieved, but does so
in order to achieve a more acceptable balance of benefits and costs for society as a whole.
*484 3. Third Shaping Principle: A Presumption in Favor of Protection Where Precise Balancing
of Benefits and Costs Is Not Possible
The type of imprecision to absorb in a given situation depends upon the relative risks of overinclusiveness or under-inclusiveness. A privilege that is over-inclusive would protect illusory
benefits at increased cost; an under-inclusive privilege would inadequately promote the benefits
while unnecessarily protecting against illusory costs. Where it is possible to identify and weigh the
genuine benefits and costs at stake, the first shaping principle commands that the proposed brightline rule first be modified to maximize benefits or minimize costs as far as possible. Once the rule
has been modified in this way, the second shaping principle commands that a choice be made for
either an overprotective or an under-protective rule, depending upon the relative prevalence of
immitigable benefits and costs.
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There will be cases, however, where it is impossible to gauge with precision the relative prevalence
of immitigable benefits and costs. In such cases, a third shaping principle-a "presumption" in favor of
either overprotection or under-protection-is needed to guide the choice of a rule.
Fidelity to Upjohn commands that a broader, overprotective rule be chosen when it is difficult or
impossible to determine whether the risks flowing from overprotection are greater or less than the
risks flowing from under-protection. [FN141] This is so because, as the Upjohn Court posed the issue,
the benefits of the privilege, communication and its concomitant law abidance, accrue at the moment
of the communication by the client to the attorney, [FN142] while the costs of the *485 privilege are
speculative and theoretical at the time of the communication and frequently never come to be felt.
[FN143]
The costs of the privilege are litigation-related: adversaries are deprived of otherwise
discoverable information thereby enabling the corporation to win lawsuits that it should lose.
It is significant for several reasons that the costs of the privilege are litigation-related. First, it is clear
that there are many instances where clients communicate with their attorneys about matters that
never eventuate in litigation: preventive or remedial action is taken before litigation becomes a
possibility, potential litigation does not develop into actual litigation, the aggrieved party declines to
sue, or the matter is settled on grounds unrelated to the protected information. Second, even in
situations where litigation does occur, the protected information sometimes will be logically and
emotively insignificant to the adversary's cause of action or defense. Third, even if the protected
information is vital, it frequently will be available from a source other than the attorney. [FN144] And
finally, even if the protected information is not available from an alternative source, given the
vagaries of litigation (and of triers of fact), its absence is not necessarily outcome- determinative.
Most importantly, perhaps, a comparison of the costs of overprotection with those of underprotection reveals that, in cases where it is impossible to balance precisely the benefits and costs of
the two, the benefits of overprotection are greater. As a result of overprotection, some cases will
arise where the information lost would affect the outcome of litigation (or evaluation of the chance of
success and, therefore, the incentive to settle). In those cases, corporations will win because of their
ability to prevent information from being disclosed rather than because of the merits of their position.
This is the cost of unnecessarily extending protection.
Conversely, if under-protection were chosen, both the same type of harm and even more serious
types of harm would ensue. First, where litigation does occur, the outcome might be altered because
a narrow privilege would prevent the corporation's counsel from receiving some information possibly
useful for the preparation of the litigation. Thus, the corporation, which under a broad privilege
would win too often, would lose too often under a narrow privilege. The outcome *486 of litigation
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merely is skewed in the opposite direction. [FN145] Second, if one accepts the Upjohn Court's
voluntary compliance model of corporate behavior, other, more serious harms would arise in the
larger number of cases where legal advice is sought but no lawsuit occurs. The flow of accurate
information that the corporate attorney needs to advise her clients adequately would be impeded by
her inability to ensure the confidentiality of a communication by an otherwise unwilling informationgiver. Because a more limited privilege would stifle communication whenever there was a chance of
future litigation, there would be a diminution of communication in a variety of contexts that, as
matters turn out, do not produce litigation. To the extent the Court's voluntary model is accurate, this
would seriously disrupt corporate planning and compromise the important public interest in
voluntary corporate compliance with local, state, and federal laws and regulations.
The three shaping principles just described are consistent with and required by the functional
approach to the corporate attorney-client privilege employed by the Upjohn Court. The first principle
is inspired by the Court's functional analysis: a truly functional approach demands the greatest
possible maximization of benefits and minimization of costs, and any genuine attempt to achieve the
optimal balance demands sensitivity to the occasions that involve actual as opposed to illusory
benefits and costs.
That the second principle is inspired by the functional mode of analysis is less immediately apparent.
Indeed, the Upjohn majority foreswore certainty of application to gain the flexibility of a gradual
development of norms in this area. Nevertheless, a choice of any standard but one capable of
prospective application is ultimately inimical to the goals of a functional approach: it robs
prospective information-givers of the assurance of confidentiality. Such confidentiality is necessary
to induce the free flow of information to lawyers that is the root of the benefits produced by the
attorney-client privilege.
*487 Finally, the third shaping principle is inspired by the Upjohn Court's assessment of the nature
of the benefits and costs of a corporate attorney-client privilege. As we have seen, the Court's
assumptions in this area are open to challenge. However, once those assumptions are granted, it
follows that in cases where it is impossible to assess precisely the relative benefits and costs of
overprotection and under-protection, a presumption in favor of overprotection should operate.
C. Developing Rules to Govern Application of a Corporate Attorney-Client Privilege
The Upjohn Court did not promulgate rules to control the application of the corporate attorney-client
privilege. Yet such rules are necessary to guide practitioners and courts. The three shaping principles
just described can be employed to guide delineation of specific rules implementing a corporate
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attorney-client privilege that comports with the Upjohn decision. This Section will utilize those
principles to develop a series of conditions consistent with Upjohn to govern application of the
privilege. The rules are illustrative, not exhaustive, and other rules will have to be developed for
special contexts. But such illustration presumably will provide insight into how the privilege is likely
to be interpreted by lower courts and, by bringing into focus some of the more important
ramifications of Upjohn, will aid critical evaluation of that opinion by courts and commentators.
As will be shown, the following five rules are among the more important rules that should guide a
principled application of the Court's opinion.
1) The communication must be one that would not have been made but for the contemplation of legal
services.
2) The content of the communication must relate to the legal services being rendered.
3) The information-giver must be an employee, agent, or independent contractor with a significant
relationship to the corporation and the corporation's involvement in the transaction that is the subject
of legal services.
4) The communication must be made in confidence.
5) The privilege may be asserted either by the corporation or by the information-giver.
The balance of this Section will demonstrate how each of these five requirements flows from Upjohn
and the shaping principles described in the previous Section.
*488 1. The communication to the attorney must be one that would not have been made but for the
contemplation of legal services.
This first condition contains three key terms: (a) "the contemplation of"; (b) "legal services"; and (c)
"but for." They will be discussed seriatim.
a. The contemplation of. The phrase "the contemplation of" does not require that an attorney have
been formally retained. [FN146] The key inquiry relates not to time but to purpose. The function of the
privilege is motivation; it would exalt mere formalism to require that a retainer have been paid, or
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that legal services already have been in progress. As shall be seen, however, the phrase does require
that the communicator reasonably expect that an attorney will be retained or, on the basis of the
proffered information, should be retained. This means both that the information-giver must in fact
harbor the belief and that his belief be reasonable.
Extending the privilege to all situations in which the communicator reasonably expects that an
attorney will be retained creates what was called earlier a genuine conflict. There is a cost because
sometimes the information- giver's belief, although reasonable, is in error. In those cases, the
communication will be protected unnecessarily. No flow of information to the lawyer will have been
stimulated, for no legal services will be rendered.
In all cases of genuine conflict, the first step of the analytical approach suggested earlier is to attempt
to minimize the conflict. Here, requiring that the belief be reasonable averts loss of information *489
resulting from gross errors in judgment. No further mitigation of cost is possible without creating
new costs, so one confronts the stark choice between cost and benefit. In this case, the broader, more
protective view is preferable because of the need for predictability. A narrower rule would mean that
an information-holder could not be sure that his communications with the attorney would be
privileged, even if the communicator reasonably believed the communication would lead to legal
services. To protect himself, the information-giver might tend to avoid communicating with the
attorney [FN147] in circumstances where it would be desirable to have him disclose information. [FN148]
b. Legal services. It is generally recognized that the privilege does not attach to a communication
simply because it is made to or by an attorney. For the privilege to apply, therefore, the
communication must be made to the attorney acting in her capacity as counsel. [FN149] If the
communication is made to the attorney in her capacity as a business adviser, for example, it ought
not be privileged.
Common formulations of this requirement have somewhat constricted it, however, thereby creating a
danger of under-inclusiveness. For example, the Eighth Circuit, in Diversified Industries v. *490
Meredith, limited the privilege to communications made "for the purpose of securing legal
advice." [FN150] This constriction, though understandable, overlooks the fact that attorneys perform
professional services that often do not entail advice to the client-for example, the administration of
an estate or the litigation of an antitrust matter. Such activities do not necessarily produce an increase
in corporate law-abidance, the justification for the privilege emphasized by the Upjohn Court. But
protection of communications necessary for the completion of such activities is justified by the
fundamental systemic interest in enabling clients to utilize their lawyers when they need them. [FN151]
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If such communications should be protected, a concept broader than the one conveyed by a literal
application of the term "legal advice" is necessary. More appropriately, the communication must
have as its object the facilitation of "legal services." [FN152] In this context, the term legal services
means any action by the attorney requiring peculiarly legal skills. If the attorney is called upon
purely in her capacity as a business or personal adviser, or to take some other non-legal action, the
privilege would not apply.
This legal services requirement may discourage some kinds of communication with attorneys (those
seeking purely non-legal advice), but the result achieved by broadening the protection of the
corporate attorney-client privilege to include communications in pursuit of something other than
legal services is an illusory benefit. All of the benefits germane to the privilege entail the facilitation
of legal action. It is not the function of the privilege to make the lawyer a better business adviser or
general counselor.
A more complicated situation arises when the attorney is asked to take both legal and non-legal
action. In the process of extending the privilege to cover all communications calculated to produce
legal action, it is necessary at the same time to protect some communications wholly unrelated to that
objective. This phenomenon creates a danger of over-inclusiveness. In such cases of genuine
conflict, the first step of the analytical approach outlined above is to attempt to minimize the conflict.
In this case, minimization is often possible through the device of segregation. Where it is possible to
segregate the information relevant to the legal action from that relevant to the non-legal *491 action,
a simple rule should apply: The privilege should attach to the former, but not to the latter. [FN153]
If it is impossible or infeasible to segregate the components of a communication, however, then the
stark choice between loss of some benefit and absorption of some cost must be made. Here,
application vel non of the privilege should turn upon whether the dominant purpose of the
communication is legal or non-legal. [FN154] If the dominant purpose of the communication is nonlegal, then it is likely that the communication would have been forthcoming even without the
privilege. On the other hand, if the dominant purpose of the communication is legal, it may well not
have been made absent the existence of the privilege. This analysis of purpose implicates the third
key term of this first requirement, "but for." c. But for. [FN155] This final term is perhaps the most
important. As articulated by the Upjohn Court, the purpose of the corporate attorney-client privilege
is, at the primary level, to increase the flow of information to attorneys so that they may render legal
services. This justification presupposes the existence of a class of otherwise unwilling informationholders who would not speak to the attorney but for the existence of the privilege and the pursuit of
legal services. Thus, an inquiry into causation is necessary. If the information-holder will
communicate with the attorney even if the privilege does not exist, or if a non-legal objective is
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sufficient to stimulate communication with the attorney, then there is no reason for the privilege to
attach. The *492 communication would occur even absent the privilege, and extending the privilege
would produce no true benefit. Three points regarding the application of this requirement should be
noted. First, to invoke the privilege, the claimant must demonstrate that the communication would
not have been made but for the pursuit of legal services. In an ideal world, the claimant would also
have to demonstrate that the communication would not have been made but for the existence of the
privilege. But this is not an ideal world, and the second shaping principle noted earlier, the need for
predictability, precludes imposing the burden of the second showing upon potential claimants. Such
a showing is impossible to make for the same reasons that it is impossible to quantify the effect of
the privilege. To impose upon communicators the burden of making such a demonstration would
lead to one of two results: either the protection of the privilege would never be extended, or the
requirement would become meaningless as courts came to accept mere assertion by communicators
as sufficient to meet it.
Second, sometimes the motives inducing a communication are unclear or mixed. In such
circumstances, the judge must decide, preferably in camera, whether a non-legal motive would have
sufficed to induce the communication. The protection of the privilege should be extended if either
the person claiming the privilege can demonstrate that he, subjectively, would not have spoken to the
attorney but for the fact that he was seeking legal assistance, or the judge concludes that a rational
but self-interested person would have so behaved.
Cases in which the motives that induced communication are unclear or mixed may be cases of
genuine conflict. Allowing the privilege to attach even in the absence of a showing of subjective
motivation can engender a cost because in some cases communications will be protected which
would have been made even in the absence of the privilege. However, given the difficulties of proof
associated with any demonstration of subjective motivation, and given the absence of predictability
that would result if protection were extended only in cases where the communicator could carry that
burden of proof, to confine the test to a subjective standard would seriously diminish the willingness
of information-possessors to communicate with counsel. [FN156]
*493 Third, in deciding whether a non-legal motive is present and causative, any duty the
information-possessor may have to speak, whether fiduciary or otherwise, is irrelevant. [FN157] A
functional approach is designed to encourage the flow of information to the attorney, not to sanctify
notions of how moral people should behave or to punish those who behave otherwise. Therefore the
test is not whether the information-possessor should speak, but whether absent the privilege he
would. This test rests on naked self-interest, not high-mindedness. It assumes that people often prefer
personal motives to moral or social obligations. It is at least as important (if not more so) for the
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attorney to receive the information of the wicked as that of the virtuous. [FN158]
*494 2. The content of the communication must relate to the legal services being contemplated.
Courts have devoted much attention to the relationship between the content of the communication
and its legal purpose. Two predominant approaches have emerged. The first is the subject matter test,
which limits protection to communications in which the "subject matter upon which the attorney's
advice is sought by the corporation and dealt with in the communication is the performance by the
employee of the duties of his employment." [FN159] The second approach consists of various necessity
tests. For example, the courts in Duplan Corp. v. Deering Milliken, Inc., [FN160] In re Ampicillin
Antitrust Litigation, [FN161] and Diversified Industries, Inc. v. Meredith, [FN162] each indicated in one
form or another that, to be protected, a communication must have been necessary to the decision
making process on a particular legal problem. [FN163]
Judged by the standard that Upjohn produces, the subject matter test takes an excessively narrow
view of which communications merit protection under the privilege. That view stems from a
correspondingly narrow view of the information-giver's duty to the corporation. An employee or
agent is responsible, narrowly, for the performance of his assigned daily work but also more broadly
for cooperating in the overall conduct of the employer or master's business. [FN164] Information
gathered in this second capacity may be just as important to the corporation, to its attorney, and to
the voluntary compliance effort as information learned in the first.
The fundamental failing of the subject matter test is that it considers the content of the
communication in relation to the job title of the employee or agent. The real question is the
relationship of the *495 content of the communication to the legal purpose at hand. No constructed
concept of occupational categorization, such as the narrowly defined duties requirement of the
subject matter test, should discourage communication of information provided by an employee in
one department or function about the wrongdoing of another employee in another department or
function for, in a larger sense, it is each employee's responsibility to help assure the lawful and
effective operation of all elements of the corporation.
The various necessity tests are also inadequate under the Upjohn standard because, although they are
inspired by functional concerns, they create grave problems of uncertainty. At the time a statement is
given, no one-surely not the employee or agent-can be sure of its eventual significance. There is
really no basis, then, for a "reasonable belief" that the information is "necessary" to the rendering of
legal advice or to other professional action. This lack of certainty will chill communications, thereby
undermining the purpose of the privilege.
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The approach most compatible with Upjohn should render a communication privileged when the
information-holder reasonably could have believed, and in fact did believe, that the content of the
communication related to the legal services. This will reduce uncertainty and foster communication
for two reasons: first, relevance is far easier to gauge than absolute necessity; and second, the
information-giver is not required to make a correct judgment of ultimate relevance but need only
avoid assessments of relevance that are objectively unreasonable.
There is a genuine conflict here: sometimes the information-holder will be wrong and the
information will be useless to the lawyer. Consequently, there is no immediate benefit, but there is a
cost. As dictated by the analytical approach outlined earlier, we must first attempt to mitigate this
cost. The requirement that the information-giver believe the information to be relevant and have
some reasonable basis for that belief checks attempts to funnel information to the attorney in order to
create zones of silence. Moreover, the same requirement eliminates loss of information that results
from good faith but wholly unreasonable calculations of relevance. Still, even after this attempt at
mitigation, some cost, that associated with well intentioned and reasonable but ultimately wrong
calculations, will exist. Therefore, we must decide whether avoidance of the now mitigated cost or
pursuit of the benefit is preferable.
A narrow privilege would require the information-giver to be correct in his assessment of relevance
at risk of losing the privilege. Requiring the information-giver to gauge the relevance of his
communication to legal services imposes upon a layperson the burden of *496 making a legal
judgment he is not qualified to make. It would be unfair to visit legal consequences upon a nonlawyer by virtue of his inability to make an accurate legal judgment. No doubt such a rule would be
quite chilling. At a minimum it can be said that the cost-avoidance value is not obviously weightier
than the benefit-securing motive. In such a case, the third shaping principle dictates resolving the
question in favor of a broader privilege.
3. The information-giver must be an employee, agent, or independent contractor with a significant
relationship to the corporation and the corporation's involvement in the transaction that is the
subject of the legal services.
Absent this requirement, the privilege as delineated by the two requirements listed thus far would
entail a serious and unnecessary cost. Communications from those who are mere witnesses to a
transaction, who have no stake in its resolution or any connection with the corporation, would be
protected by a privilege designed for the corporation. To protect those communications arguably
would contravene the teaching of Hickman v. Taylor that "the protective cloak of this privilege does
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not extend to information which an attorney secures from a witness while acting for his client in
anticipation of litigation." [FN165] More important for present purposes, to protect those
communications would violate the first shaping principle by incurring a cost unnecessary to the
attainment of any benefit. Mere witnesses are likely to speak to the attorney without the prompting of
the privilege. *497 For this reason, the privilege approved in Upjohn is a corporate privilege, not a
witness privilege. And, because the Upjohn privilege is a corporate privilege, it is necessary to
demand some relationship between the information-giver whose communications it protects and both
the corporation and the corporation's involvement in the underlying transaction.
Two approaches to defining the required relationship have received much of the attention of courts
and commentators. Courts and commentators favoring the control group test have required that the
information-giver be in a position to take a substantial part in the legal decision under discussion.
[FN166]
By contrast, the court in United States v. United Shoe Machine Corp., [FN167] required only that
the disclosure be made by "an officer or employee of the defendant," as opposed to "a person outside
the organization of defendant and its affiliates." [FN168] Problems beset each approach.
A primary reason that the Upjohn Court rejected the control group test was that in the Court's eyes
the restriction placed upon the relationship of the information-giver to the corporation undermined
the purposes of the corporate attorney-client privilege. The Court recognized that middle and lower
echelon employees often possess information that is important to the corporation's attorney. [FN169]
Hence, judged by the Court's functional analysis, the control group formulation was seriously underinclusive. [FN170]
The much more liberal United Shoe test is both over-inclusive and under-inclusive. As to employees,
it is over-inclusive in that employees may acquire information in ways wholly unrelated even to the
broadest view of their capacities and activities as employees-for example, the "witness" employee in
Hickman or an employee who witnesses some action by the "corporation" (that is, by another
employee) while driving to work. Such witnesses presumably do not require the protection of the
privilege to motivate them to speak to the corporation's attorney. Consequently, extending the
corporate privilege to protect their communications with her would incur an unnecessary cost in
violation of the first shaping principle. [FN171]
*498 In other respects, the United Shoe test shares some of the under-inclusiveness of the control
group test. Specifically, at times there will be potential information-givers who are not employees of
the corporation but who are nonetheless meaningfully associated with the corporation in a way that
makes it appropriate to consider them "insiders" for purposes of the privilege. Outside agents and
certain independent contractors with a special relationship to the corporation are two examples of
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such persons. For instance, consider an accountant who, though an independent contractor, performs
regular accounting services for a corporation over many years. [FN172] As the accountant, he has an
insider's knowledge of the corporation's operations that few people even on the corporation's payroll
have. Assume he represents the corporation at an IRS audit. Finally, assume that a tax indictment
issues against the corporation and that an attorney is retained. Clearly, the accountant has knowledge
of extraordinary importance to the attorney's investigation of the tax matter. And, equally clearly, the
logic of Upjohn commands that the mere fact that the accountant was not an employee of the
corporation should not preclude application of the privilege. There is no reason to differentiate
between an accountant-employee and a regularly retained outside accountant when both occupy the
same extremely sensitive and continuing position as financial adviser, reviewer, and agent: both
possess information of equal importance to the lawyer. [FN173]
A literalistic extension of the privilege only to persons on the corporation's payroll would invariably
prevent a corporation's attorney from engaging in a confidential discussion with a corporation's
regular independent accountant, no matter how important the accountant's information would be to
the attorney. [FN174]
*499 For the reasons just stated, therefore, both the control group test and the United Shoe test do not
adequately delineate the range of relationships between the information-giver and the corporation
that merit the protection of the corporate attorney-client privilege. What, then, is the proper
delineation of that range of relationships? It is helpful to begin by identifying acceptable
relationships between employees, agents, and independent agents on the one hand and the matter
requiring legal services on the other. Courts adopting the subject matter test have attempted to define
this relationship by requiring that the information be communicated at the direction of a superior in
the corporation. [FN175] This rule is inadequate in three respects. First, employees, agents, and
independent contractors should not be discouraged from going unbidden to the attorney. Such
submissions further the voluntary compliance effort by permitting the attorney to operate as an
objective party, urging the client to correct its action. [FN176] Second, a requirement that
communication with the attorney be authorized by a superior, if taken literally, would bar application
of the privilege to communications with the attorney by former employees of a corporation-even
former employees who were directly involved in matters under investigation by the attorney. [FN177]
Although the Supreme Court expressly refused to decide this issue in Upjohn, [FN178] a formalistic
distinction based solely on the timing of the interview cannot make a difference if the goals of the
privilege as outlined in Upjohn are to be achieved. [FN179] Third, and finally, there may be times when
the attorney, either by necessity or through inadvertence, may go directly to an employee, agent, or
independent contractor without obtaining formal instruction from a superior directing *500 the
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interviewee to submit to questioning. If the attorney is rendering legal services as that concept is
defined above, omission of the formal intervention of a superior should not affect attachment of the
privilege.
A corporate attorney-client privilege faithful to Upjohn would protect the communications of those
persons (otherwise qualifying) who, either when they are speaking or after they have acquired their
information: (1) possess decision making responsibility regarding the matter about which legal help
is sought, (2) are implicated in the chain of command relevant to the subject matter of the legal
services, [FN180] or (3) are personally responsible for [FN181] or involved in the activity that might lead
to liability for the corporation.
Sensitivity to actual, as opposed to illusory, costs and benefits demanded by a functional approach
underlies this aspect of the standard. Nobody who could reasonably be expected to need the privilege
falls outside of the classes delineated. Therefore, no benefit associated with the privilege is lost due
to under-inclusiveness. Moreover, this approach defines the relationship of the possessor of
information to the corporation more appropriately than traditional approaches. First, this approach
brings within the protection of the privilege an important group of corporate actors unprotected by
other approaches; for example, independent contractors possessing a special relationship to both the
corporation and the transaction giving rise to the need for legal services. Second, by constricting as
much as feasible the number of corporate actors who can be brought within the protection of the
privilege, this approach complements other parts of the overall standard proposed here in such a way
as to hamper the funneling of information through the corporate attorney to create "zones of silence."
Third, this approach clearly excludes from the protection of the privilege mere witnesses-persons
who would be likely to speak regardless of the existence of the privilege.
*501 4. The communication must be made in confidence. [FN182]
A breach of confidentiality by the client, either when the communication with the attorney is made or
even after it has occurred, vitiates the privileged nature of the communication. [FN183] This rule has
been applied, appropriately, to the attorney-client privilege as possessed by both individuals and
corporations. [FN184] Neither the functions of the corporate privilege nor the differences between
natural persons and corporations demand otherwise. Nonetheless, the differences between natural
persons and corporations do require a consideration of how confidentiality should be defined in the
corporate setting.
In the individual setting, confidentiality is considered to have been breached when the attorney-client
communication is made in the presence of, or later disclosed to, a third party. [FN185] Such a breach is
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construed as a waiver of the privilege. [FN186] The rationale for this rule is obvious: the communicator,
by making the disclosure in the presence of another or later recounting the communication to
another, has evinced a lack of desire for secrecy. [FN187] Exceptions to this principle arise, however,
when the third party is an agent of the attorney or the client [FN188] or when the third party has a
common interest in the legal services sought. [FN189]
*502 Since every corporate employee is in some sense an agent of the corporation, and since
information-holders within the corporation will frequently have a common interest in the legal
services sought, [FN190] wholesale application of these traditional doctrines to the corporate privilege
would abrogate the confidentiality requirement at least with respect to intra-corporation
dissemination: the privileged communication could be shared with almost any corporate employee
without losing the protection of the privilege. Because, at least in some cases, a willingness to
disseminate a communication unduly (even within the corporate family) does manifest the
communicator's lack of concern for secrecy and his concomitant willingness to communicate even
without the protection of the privilege, such a rule inevitably would extend protection to many
communications unnecessarily, thereby violating the first shaping principle. Thus, rules on
confidentiality must be developed that are designed expressly to address the realities of corporate
existence.
The nature of the corporate entity requires some dissemination of the privileged information among
corporate actors, for corporate actors other than the information-giver may be involved in
formulating decisions based on legal advice. A narrowly defined requirement of confidentiality
either would force these decision makers to make legal judgments without the benefit of the
information underlying the attorney's recommendation or would cause the information-giver to
forfeit the protections of the privilege. But neither should indiscriminate dissemination of
confidential information throughout the corporation be permitted.
Though a corporation may function through many actors, each of whom necessarily is part of the
corporation; a confidential communication widely disclosed throughout the corporation should not
necessarily maintain its confidential status. To say that some dissemination is necessary is not to say
that indiscriminate disclosure is permissible. The question is, then: How much?
The exceptions to the confidentiality requirement in the individual setting provide a conceptual basis
for deciding how much divergence from the "no disclosure to third parties" principle is appropriate
*503 in the corporate context. The rationale for permitting disclosure to agents and joint defendants
in the individual setting is the perceived necessity or efficacy of involving those third parties with the
subject matter of the communications. Invoking this rationale, the Eighth Circuit in Diversified
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Industries, Inc. v. Meredith, [FN191] ruled that in the corporate setting the requirement of
confidentiality was satisfied as long as the privileged communication was disseminated only to
"those persons within the corporation who, because of the corporate structure, need to know its
contents." [FN192]
Disclosure on a "need to know" basis should not destroy the privilege, providing the necessity is
somehow related to the rendering of legal services or the process of acting thereon. An individual is
both the substantive actor and the legal reactor; in a corporation, however, different persons may
play these roles. Therefore, the test offered by the court in Diversified Industries provides a basis for
defining confidentiality in the corporate setting. The first shaping principle commands that it be finetuned, however, to avoid whatever possibility of over-inclusiveness it risks.
Given the Upjohn Court's focus upon improving the legal decision making capacity of corporations,
it is clear that a communication between an employee or agent of the corporation and the
corporation's attorney may be shared with those who have a role to play in the process of legal
decision making. Confidentiality is preserved where the information is provided by corporate
information-givers to the corporation's attorney, [FN193] and where the attorney shares the information
*504 with those empowered to make legal decisions for the corporation. Disclosure beyond this
group of corporate actors, however, might foreclose the possibility of claiming the privilege. The
proscription against unnecessary protection embodied in the first shaping principle commands that
disclosure to a corporate actor who has no role to play in the process of legal decision making, even
disclosure to a corporate officer who might "need to know" the information for some purpose
unrelated to the legal matter at issue, should destroy confidentiality (and hence abrogate protection)
in most cases. [FN194] The corporate privilege is designed to enhance that class of communications
relevant to the rendering of legal services, not to promote these non-legal matters.
There are, however, limited circumstances where fidelity to the reasoning employed by the Upjohn
Court requires an exception to the rule just stated. In those circumstances, dissemination of the
contents of a privileged communication to a corporate actor who has no role to play in the process of
legal decision-making should not destroy confidentiality. Suppose, for example, that the attorney for
the corporation wishes to disclose the contents of a privileged communication to the head of the
personnel department (who by hypothesis has no role to play in the process of legal decision making)
so that the personnel officer is aware that one of the corporation's employees was engaged in
illegality. It would thwart the voluntary compliance effort to forbid the attorney to so inform the
personnel officer. [FN195] Therefore, a limited exception to the general rules on confidentiality, one
permitting disclosure of a privileged communication to corporate officials not involved in the
process of legal decision making but involved in the relevant voluntary compliance effort, is
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necessary to render the governing regime more compatible with Upjohn. [FN196]
*505 To the extent that it is imposed in the corporate setting, the requirement of ongoing
confidentiality is unlikely to sacrifice any true benefit of the corporate attorney-client privilege. The
information-giver sacrifices nothing by making the initial confidential communication. With few
exceptions, [FN197] he controls the continued application of the privilege by choosing whether or not to
maintain the confidentiality of his remarks. The requirement of continued confidentiality (in order to
invoke the privilege) does not prevent him from announcing his information publicly if he so
chooses; neither does it, so long as he maintains secrecy, require him to do so.
5. The privilege may be asserted either by the corporation or by the information-giver.
Just as concepts developed to identify the client for purposes of the attorney-client privilege available
to individuals proved inadequate to identify the corporate actors who may communicate with the
corporation's attorney on behalf of the corporate client, so also those concepts prove inadequate to
identify the corporate actors who may assert or waive the protection of the corporate privilege. [FN198]
Thus far, this Article has offered guidelines consistent with Upjohn for identifying those who may
communicate on behalf of the corporate client. It remains to consider the identity of those who may
assert or waive the corporate privilege. In that regard, it is clear that the corporation, acting in some
institutionally acceptable way, may assert the privilege for itself. Thus, the difficult question is not
whether the corporation may assert the privilege, but whether it may waive the privilege over the
objection of the information-provider, thereby rendering discoverable his otherwise protected
statements.
*506 As a general matter, a corporate client, just like an individual client, may choose to waive the
protection of the attorney-client privilege. [FN199] The mechanics of waiver are relatively
straightforward when the information-giver has no independent legal interest in the facts
communicated. In such circumstances, the corporation may waive the protection provided by the
privilege (just as it would assert it) through the action of any individual or group-the chairperson of
the board, the president of the corporation, a litigation committee-that is authorized by law or charter
to speak on its behalf in such matters. [FN200] Authorization to waive the privilege is the fundamental
element. [FN201]
The mechanics of waiver and the question of who can waive the corporate attorney-client privilege
become considerably more complicated where the person who communicates with the attorney on
behalf of the corporation also has a personal legal interest in the facts communicated. This will often
be the case, for example, in the area of corporate crime, where the very acts that render the
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corporation vulnerable to sanction also may render the individual liable, or in the area of tort law,
where the individual's negligence may render both the corporation and the individual liable. [FN202] In
such circumstances, *507 the individual has a strong interest in maintaining the secrecy of his
communication with the attorney. This interest is adequately protected as long as the corporation
persists in invoking the protection of the corporate privilege but may be compromised if the
corporation is willing and able to waive that privilege, that is, if the information-giver, quite apart
from the corporation, is unable to assert the privilege to prevent disclosure of his remarks. [FN203]
Few courts have addressed this issue, and even fewer have discussed it in detail. Judge Joiner, a
member of the Advisory Committee that drafted the Federal Rules of Evidence, faced the problem in
IN re Grand Jury Proceedings (Jackier). [FN204] The grand jury subpoenaed an attorney for Arnolds,
Inc., to testify about his communications with Faudman, a vice president of the corporation. Between
the time of the communication and the subpoena, Faudman left his job at Arnolds. Partly in response,
the corporation waived its attorney-client privilege. Faudman moved to quash the grand jury
subpoena served on the attorney, claiming that he could assert the privilege despite the corporation's
waiver. In denying the motion to quash, Judge Joiner stated:
If the communicating officer ... makes it clear when he is consulting the company lawyer that he
personally is consulting the lawyer and the lawyer sees fit to accept and give communication
knowing the possible conflicts that could arise, he may have a privilege. But in the absence of any
indication to the company's lawyer that the lawyer is to act in any other capacity than as lawyer for
the company in giving and receiving communications from control group personnel, the privilege is
and should remain that of the company and not that of the communicating officer. [FN205]
*508 Because Fraudman did not qualify as attorney Jackier's client under this test, and because
Arnolds had waived the privilege, Judge Joiner denied Faudman's motion to quash. [FN206]
The passage quoted above represents the totality of judicial reasoning supporting an oft-repeated
maxim: The attorney-client privilege belongs to the corporation, not to the corporate agent who
communicates with the attorney, and the privilege is the corporation's to waive if it wishes. Dicta in
subsequent opinions, two by circuit courts, merely relate this maxim with nothing more than a
reference to Judge Joiner's opinion or to each other. [FN207] Yet, the maxim propagated in the Jackier
opinion is inconsistent with the vision of the corporate attorney-client privilege embodied in the
Upjohn opinion.
If employees and agents of a corporation who communicate with the corporation's attorney cannot
prevent the corporation from disclosing the communications, they will be unable to depend upon the
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assurance of secrecy conferred by the privilege. The attorney could not promise that their
communications would remain secret, since the destiny of each communication would rest with the
corporation. In this context, information-holders, or at least those with an independent interest in the
information, would rightly fear that communicating with the attorney would risk at least
embarrassment, if not personal criminal or civil liability. Consequently, such information-holders
might well prove uncooperative when information is requested by the corporation or its attorneys.
[FN208]
Of course, an employee or agent of a corporation may not be completely free to refuse to
communicate with the corporation's attorney. His job may be put in peril by such obstreperousness.
[FN209]
Nonetheless, an employee or agent confronted by this possibility is just as likely to provide
misinformation (thereby maintaining the illusion of cooperation while protecting himself from
disclosure of the truth) as accurate information.
*509 In sum, in those cases where the information-holder has a personal, as well as a corporate, legal
interest in the information he possesses, the possibility that the corporation might waive the attorneyclient privilege, thereby rendering the information discoverable, would create a powerful incentive
either to refuse to communicate with the attorney or to prevaricate when speaking to her. Either
result diminishes the extent to which the privilege attains the goals set for it by the Upjohn Court.
There may be little increase in the flow of information, or at least in the flow of truthful information,
to the corporation's attorney and, consequently, the voluntary compliance effort may falter. Indeed,
the effect might be to render the privilege fruitless in this significant class of cases.
Thus, application of the Upjohn Court's analysis leads ineluctably to the conclusion that the privilege
ought not be the corporation's, and its alone, to waive. [FN210] If the privilege is to be effective in
stimulating reluctant information-holders to communicate with the corporation's attorney in cases
where the information-giver has an independent legal interest in the communication, [FN211] the rule
must be that the privilege may be waived only if the employee or agent who provides the information
waives the privilege. [FN212] Absent waiver by him, the *510 information-giver may assert the
privilege to prevent disclosure of the communication. [FN213]
As noted, conflicts regarding waiver of the corporate attorney-client privilege will arise most often in
situations in which the corporation and the information-giver are both potentially liable to criminal or
civil sanctions. It is worth noting, therefore, that the rule that flows from Upjohn, one permitting
either the corporation or the communicating employee or agent to assert the privilege, has strong
precedent in the traditional common law rule governing the assertion of the attorney-client privilege
by individuals engaged in a joint defense. While comparisons to rules governing the application of
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privilege to individuals are generally not helpful in developing rules governing its application to
corporations, here the analogy is appropriate because the situations in which conflicts involving
waiver of the corporate privilege arise most often are those where there is a de facto joint defense
situation.
It is well established that communications between codefendants and their counsel preparing for a
joint defense are privileged. [FN214] This *511 "common purpose" application of the privilege dates
back over a century. In Chahoon v. Commonwealth, [FN215] the Virginia Supreme Court of Appeals
ruled that in a meeting between codefendants on a conspiracy charge and the counsel for one
defendant, all communications of those present were privileged because "it was natural and
reasonable, if not necessary, that these parties, thus charged with the same crimes, should meet
together in consultation with their counsel, communicate to the latter all that might be deemed proper
for them to know, and make all necessary arrangements for the defense." [FN216]
Aside from the requirement of common purpose, which generally is required for the application of
the doctrine, [FN217] there are some uncertainties regarding the circumstances that trigger a joint
defense situation. For example, the case law is in conflict over whether litigation must be imminent
when the communications occur in order to trigger a joint defense situation. Although some courts
have indicated that the temporal connection must be very close, [FN218] at least one court *512 of
appeals has held that the privilege attaches "irrespective of whether litigation has begun or is
contemplated." [FN219]
Of course, a joint client may waive the protection of the privilege to reveal his own communication
to the attorney. [FN220] Thus, if an analogous rule is used in the corporate setting, the employee or
agent who communicates with the corporation's attorney may testify voluntarily about the
information he supplied to the attorney. But a joint defendant may reveal only his own statements not
those of his codefendant or of the attorney. [FN221] Disclosure of the latter requires a waiver by all
relevant parties. [FN222]
There is one complicating exception to this doctrine, however. The traditional rule with regard to the
joint defense doctrine is that the privilege does not prevent one former joint defendant from
disclosing statements made by another former joint defendant in a suit inter sese, that is, a suit
between those two parties. [FN223] The statements remain protected vis-a-vis "strangers"; but they are
not protected in a suit between the codefendants themselves. [FN224]
This exception, if applied to the corporate attorney-client privilege, would have important
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repercussions. Often, when conflicts regarding waiver of the corporate privilege arise, an inter sese
dispute will be part of the litigation package that confronts the parties. Most often, it will appear in a
cross- claim between codefendants or in a *513 third-party complaint (usually by the corporation
against its employee or agent) for indemnification. Happily, there can be no such inter sese conflict
in criminal cases, where the protection afforded by the attorney-client privilege may have
constitutional underpinnings. [FN225] The situation will arise, however, in civil cases. For reasons of
fairness wholly unrelated to the purposes of the attorney-client privilege it might be reasonable to
require the corporation's attorney to warn the generally uninformed employee or corporate agent of
the danger that his candor could be detrimental to his position in subsequent litigation. [FN226] After
all, the communicating employee or agent is a layperson putting himself into the hands of the
corporation, its controlling persons, and its attorneys. If he is led to believe that his communications
are confidential and privileged, the privilege will turn into a trap for the communicant and lead him
to incriminate himself before persons who might use his admissions to their own advantage. As one
court has stated, "laymen consulting lawyers should not be expected to anticipate niceties perceptible
only to judges," [FN227] and the privilege should not "become a trap." [FN228]
One further consideration must be mentioned. It is possible that the warnings required will prevent
employees and agents from communicating information they otherwise would provide. This is
unlikely, however. It is precisely in the potential inter sese situation where the employee or agent is
most inclined to relay information to the corporation's attorney that is colored in favor of the
communicator; it is already likely that there is misinformation. Any lost information thus would be
likely to be inaccurate to begin with. Second, and more important, in the potential inter sese
situation, corporate officials are likely to know that the employee or agent possesses information
*514 that they would like to get to the corporation's attorney. In such a case, the corporation can
exert considerable non-legal pressure, such as a threatening loss of job, to coerce the information.
Moreover, the corporation can use discovery against the employee if his position becomes adverse.
The Post-Upjohn Privilege and Collateral Bodies of Doctrines
The major rules that flow from a principled application of the assumptions upon which the Upjohn
decision is based have been explicated. It is useful to consider briefly the compatibility of those rules
with select bodies of doctrine collateral to the corporate attorney-client privilege. This Part focuses
upon three doctrines, each of which is revealed to be at odds with one of the basic assumptions of the
Upjohn Court, and hence with the rules that flow from those assumptions.
A. Shareholder Litigation and the "Good Cause" Rule
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Because of the division between ownership and control in the modern corporation [FN229] that may
result in a divergence of interest between a corporation's owner-shareholders and its managers, [FN230]
special rules have evolved to govern application of the attorney-client privilege in shareholder
litigation. [FN231] These rules comprise an important*515 body of doctrine collateral to the corporate
attorney-client privilege.
In the seminal case of Garner v. Wolfinbarger, [FN232] the Fifth Circuit limited the ability of the
corporation to invoke the attorney-client privilege in shareholder suits. [FN233]
[W]here the corporation is in suit against its shareholders on charges of acting inimically to
stockholder interests, protection of those interests as well as those of the corporation and of the
public require that the availability of the privilege be subject to the right of the stockholders to show
cause why it should not be invoked in the particular instance. [FN234]
The court listed several indicia of "good cause," including the number of shareholders involved, the
importance of the information to their action, their ability to obtain the information from other
sources, the content of the information (for example, whether it contains trade secrets), and the
specificity of the request. [FN235] Subsequent cases have liberally construed Garner's "good cause"
exception by granting shareholders increased access to otherwise privileged attorney-client
communications. [FN236]
Though the Garner "good cause" rule has been sharply criticized, [FN237] it represents the prevailing
rule today. Yet the rule threatens one of the basic assumptions of the Upjohn Court, to wit, that the
corporate attorney-client privilege induces communication with the corporation's attorney that would
not otherwise occur. [FN238] To the extent that information- holders communicate only because their
statements are protected by the privilege, the Garner rule may undercut *516 their willingness to
speak, especially since information disclosed in shareholder litigation can be used by nonshareholders in subsequent litigations.
B. Specialized Disclosure Obligations
A second body of doctrine collateral to the corporate attorney-client privilege imposes a duty,
sometimes on the corporation [FN239] and sometimes on the corporation's attorney, [FN240] to disclose
certain types of information that otherwise might be privileged. Creation of these disclosure
obligations is an integral part of the voluntary compliance strategy embraced by the Upjohn Court.
To the extent that such disclosure must occur, however, the protection afforded by the corporate
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attorney-client privilege is further eroded, and its capacity to motivate reluctant information-holders
to communicate with the corporation's attorney is diminished. [FN241] Rules imposing a duty to
disclose on either the corporation or its attorney will often render assurances of secrecy by the
attorney illusory and therefore present an additional challenge to the Court's assumption that the
privilege can increase the flow of information to attorneys.
*517 C. Corporate Liability for Employee Conduct
A final body of doctrine collateral to the corporate attorney-client privilege defines the conditions
under which a corporation is liable for activities of its employees and agents. The general rule is that
a corporation is liable for the acts of its employees done on its behalf and within the scope of the
employee's duties. [FN242] However, when the employee acts for his own benefit or gain, the
corporation may not be liable. [FN243] The corporation, therefore, may try to exculpate itself by
arguing that the conduct giving rise to liability was beyond the scope of the employee's
responsibilities or was even forbidden by corporate policy. [FN244] Though courts have not been
sympathetic to such arguments, [FN245] corporations and higher echelon officials have sometimes
successfully pressed them. [FN246]
*518 These rules on corporate liability, and the potential defenses that accompany them, have
significant implications for the rules governing the corporate attorney-client privilege. Hypothesize a
case where a corporation and its senior management may be exculpated by a showing that the
employee acted against company policy. Assume that the corporation's attorney discovers, in an
interview with the employee, that he knowingly violated that policy. Would the corporation be free
to expose the employee and exonerate itself?
In this hypothetical case, two of the Upjohn decision's basic premises conflict with each other. On
the one hand, disclosure by the corporation comports with the voluntary compliance strategy. [FN247]
On the other hand, a rule allowing the corporation to waive the protection of the privilege over the
objection of the information-giver would likely diminish the willingness of information-givers to
communicate with the corporation's attorney. [FN248]
D. Implications of Collateral Bodies of Doctrine for the Post-Upjohn Privilege
Even this brief examination of bodies of doctrine collateral to the corporate attorney-client privilege
demonstrates that they are in tension with some of the assumptions upon which the Upjohn opinion
is based. Of course the collateral bodies of doctrine could be modified to comport with the rules that
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flow from Upjohn. For example, the Garner rule for shareholder derivative suits could be changed so
that shareholders would be denied access to privileged communications (thus insuring the secrecy
ostensibly required to stimulate communication). But such modification often would involve major
changes in settled law-and at least in some cases, modification to accommodate one of the Court's
assumptions would compromise another of those assumptions (as in the case of the rules on
corporate liability). Alternatively, the Court could reconsider or limit the assumptions upon which
Upjohn is based.
One possible limitation, however, appears to involve little more than a change in emphasis. The
Upjohn Court understood the key to increasing communication to be the information-holder and
accordingly shaped the corporate privilege to motivate the information-holder to speak. This
approach prompted the Court to widen protection *519 beyond the control group so that other
employees would feel free to divulge their information. Changing this emphasis might still increase
the flow of information while minimizing the tension between rules governing the corporate
privilege and collateral bodies of doctrine. Specifically, it might be possible to rely on the
corporation's suasion (by threats of sanction or otherwise) to motivate the information-giver to speak.
The function of the privilege would be solely to motivate the corporation to use that suasion. Though
this change in emphasis would not resolve all of the conflicts with collateral bodies of doctrine, it
would eliminate some significant conflicts. Thus, for example, the corporation might still be
reluctant to have communication occur when a shareholder suit was possible, but the problem of
waiver would disappear. This change in emphasis, however, would move doctrine regarding the
corporate attorney-client privilege in the direction of the now repudiated control group test. It is
doubtful that the Court would be willing to move along that path.
CONCLUSION
The Supreme Court in Upjohn failed to address several fundamental issues, and it expressly declined
to promulgate standards to govern implementation of the corporate attorney-client privilege.
Nevertheless, the case may be an important watershed in the development of doctrine regarding the
privilege. By disapproving the control group test, the Court repudiated what had been the most
popular analytical approach to problems in this area; by refusing to embrace the obvious alternative,
the subject matter test, it issued an invitation to courts and commentators to delineate the contours of
the privilege.
In the end, what at first appeared to be a major weakness of the Upjohn opinion-its failure to
promulgate an across-the-board rule to govern application of the corporate privilege-may prove to be
its greatest strength. If the assumptions upon which the Upjohn Court's decision was based are valid
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at all, they are valid in cases similar to Upjohn, where a corporation voluntarily attempts to comply
with the law. Had the Court extrapolated a general rule from what might be an atypical fact pattern,
the scope of the privilege might have been inappropriate when corporations failed to comply with the
law voluntarily.
As it stands, the Court is free to reexamine its assumptions and their implications for cases unlike the
one presented in Upjohn. When the Court does so, it may decide to limit Upjohn sharply, perhaps to
that class of cases for which the Upjohn Court's salient assumption *520 about corporate behavior is
valid. Therefore, it remains to be seen whether Upjohn will prove to be a seminal decision or an
oddity. The ultimate importance of the case will turn on how steadfastly the Court adheres to the
assumptions, as yet untested, that produced its opinion and how representative the class of cases
presented in Upjohn proves to be.
Copyright (c) 1982 by the New York University Law Review; John E. Sexton
Notes
[FNa]. Associate Professor of Law, New York University. B.A., 1963, M.A., 1965, Ph.D., 1978,
Fordham University; J.D., 1979, Harvard University.
I would like to thank Professors Samuel Estreicher, Jeffrey Gordon, William Nelson, Lawrence
Sager, and Linda Silberman as well as attorneys John Ale, Lisa Goldberg, Steve Johnson, Michael
Ryan, and Stanley Teitler, all of whom were kind enough to comment on an earlier draft of this
Article. I would also like to acknowledge the generous support of the New York University Law
Center Foundation Faculty Research Program.
[FN1] 449 U.S. 383 (1981).
[FN2] See, e.g., United States v. Louisville & N.R.R., 236 U.S. 318 (1915), discussed at note 20
infra.
Several commentators have argued that because of the exigencies of the regulatory state and because
of their general business needs, corporations would communicate with attorneys even if the privilege
were not available to them. See, e.g., Morgan, Foreword, Model Code of Evidence 25-27 (1942);
The Supreme Court, 1980 Term, 95 Harv. L. Rev. 91, 276-77 (1981) [hereinafter Supreme Court
Note]; Note, The Attorney-Client Privilege: Fixed Rules, Balancing, and Constitutional Entitlement,
91 Harv. L. Rev. 464, 473-74 (1977) [hereinafter Note, Fixed Rules]; Note, Attorney-Client
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Privilege for Corporate Clients: The Control Group Test, 84 Harv. L. Rev. 424, 427-29 (1970)
[hereinafter Note, Control Group]. Since the primary justification for the attorney-client privilege is
that it encourages clients to communicate with their attorneys, these commentators conclude that the
extension of the attorney-client privilege to corporations is inappropriate. This argument is
developed more fully in text at notes 88-102 infra.
[FN3] Compare City of Philadelphia v. Westinghouse Electric Corp., 210 F. Supp. 483 (E.D. Pa.),
mandamus denied sub nom. General Elec. Co. v. Kirkpatrick, 312 F.2d 742 (3rd Cir. 1972), cert.
denied, 372 U.S. 943 (1963), with Harper & Row Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir.
1970), aff'd per curiam by an equally divided court, 400 U.S. 348 (1971).
[FN4] Sincein large part this Article accepts for purposes of discussion the assumptions of the
Upjohn Court, it leaves unaddressed some fundamental questions that may be addressed in other
critiques of Upjohn. See, e.g., text accompanying notes 229-48 infra.
[FN5] 8 J. Wigmore, Wigmore on Evidence
2290, at 542 (McNaughton rev. ed. 1961).
Wigmore's treatise On Evidence provides the most widely cited formulation of the elements of the
attorney-client privilege as presently understood. It states that:
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as
such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6)
are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8)
except the protection be waived.
Id.
2292, at 554 (footnote and emphasis omitted).
Judge Wyzanski provided a slightly different formulation:
The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client;
(2) the person to whom the communication was made (a) is a member of the bar of a court, or his
subordinate and (b) in connection with this communication is acting as a lawyer; (3) the
communication relates to a fact of which the attorney was informed (a) by his client (b) without the
presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii)
legal services or (iii) assistance in some legal proceedings, and not (d) for the purpose of committing
a crime or tort: and (4) the privilege has been (a) claimed and (b) not waived by the client.
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United States v. United Shoe Mach. Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950).
[FN6] 8 J. Wigmore, supra note 5,
2290, at 543 (footnote omitted).
[FN7] Id.
[FN8] Hazard, An Historical Perspective on the Attorney-Client Privilege, 66 Calif. L. Rev. 1061,
1071 (1978).
[FN9] 8 J. Wigmore, supra note 5,
2290, at 543; see Hazard, supra note 8, at 1073-81.
[FN10] 8 J. Wigmore, supra note 5, 2291, at 545. See also Note, Fixed Rules, supra note 2, at 465
(footnote omitted): "The privilege became simply a convenient means to the end of maximum legal
consultations and judicial efficiency."
[FN11] See Note, Fixed Rules, supra note 2, at 470.
[FN12] See 8 J. Wigmore, supra note 5,
2291, at 545; Hazard, supra note 8, at 1083-85.
[FN13] See Hazard, supra note 8, at 1070-91.
[FN14] See, e.g., Note, Fixed Rules, supra note 2, at 465-66; Comment, The Application in the
Federal Courts of the Attorney-Client Privilege to the Corporation, 39 Fordham L. Rev. 281 (1970).
[FN15] 8 J. Wigmore, supra note 5,
2291, at 554.
[FN16] Id.
[FN17] 209 F. Supp. 321 (N.D. Ill.), rev'd, 320 F.2d 314 (7th Cir. 1962), cert. denied, 375 U.S. 929
(1963).
[FN18] Id. at 324. The district court relied in part upon the unavailability to corporations of a Fifth
Amendment privilege against self- incrimination. Id. See United States v. White, 322 U.S. 694, 699
(1944); Wilson v. United States, 221 U.S. 361, 378-79, 382-85 (1911). The Radiant Burners court
reasoned that the attorney-client privilege, like the Fifth Amendment privilege, is personal in nature
and thus can be claimed only by natural persons. The court also reasoned that, given the number of
persons within a corporation who have access to documents and files, it would be impossible to
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preserve the confidentiality of communications with the attorney; thus, even if initially extended, the
protection of the privilege would eventually be lost. 209 F. Supp. at 324.
See also Weissenberger, Toward Precision in the Application of the Attorney-Client Privilege for
Corporations, 65 Iowa L. Rev. 899, 899 (1980) (social good allegedly stemming from the privilege
has not been established); Supreme Court Note, supra note 2, at 270-80 (arguing that there is no
justification for extending the protection of the attorney-client privilege to the corporate context);
Note, The Lawyer-Client Privilege: Its Application to Corporations, the Role of Ethics, and Its
Possible Curtailment, 56 Nw. U.L. Rev. 235, 241, 257 (1961) (the application of the privilege to
corporations has not been justified) [hereinafter Note, The Lawyer-Client Privilege].
[FN19] 236 U.S. 318, 336 (1915).
[FN20] Louisville involved an appeal by the government from the district court's denial of a writ of
mandamus to compel the railroad to disclose certain confidential correspondence between the
railroad and its attorneys. The demand for the writ was made pursuant to 20 of the Act to Regulate
Commerce, ch. 3591, 34 Stat. 584, 594, 595 (1906) (codified as amended in scattered sections of 49
U.S.C. (1976)), which authorized agents of the Interstate Commerce Commission to examine "the
accounts, records, or memoranda" of the railroads. Id. at 334. In denying the writ, the Court stated:
The desirability of protecting confidential communications between attorney and client as a matter of
public policy is too well known and has been too often recognized by text books and courts to need
extended comment now. If such communications were required to be made the subject of
examination and publication, such enactment would be a practical prohibition upon professional
advice and assistance.
Id. at 336 (citations omitted). The Court thus gave no indication that the application of the privilege
to a corporation required any different or special analysis than would application of the privilege to
an individual.
Even in United States v. United Shoe Mach. Corp., 89 F. Supp. 357 (D. Mass. 1950), the first federal
case to discuss the application of the attorney- client privilege to corporations in any depth, Judge
Wyzanski delineated the contours of the corporate attorney-client privilege without questioning the
application of the privilege in the corporate setting. See text accompanying notes 25-26 infra.
[FN21] City of Philadelphia v. Westinghouse Elec. Corp., 210 F. Supp. 483, 484 (E.D. Pa.),
mandamus denied sub nom. General Elec. Co. v. Kirkpatrick, 312 F.2d 742 (3d Cir. 1962), cert.
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denied, 372 U.S. 943 (1963).
[FN22] This has not prevented commentators from addressing the subject, however. See articles
cited in note 18 supra; Gardner, A Personal Privilege for Communications of Corporate ClientsParadox or Public Policy?, 40 U. Det. L.J. 299, 300 (1963) (extension of the attorney-client privilege
to corporations does not accord with its original design or "true rationale"); Heininger, The AttorneyClient Privilege As It Relates to Corporations, 53 Ill. L.J. 376 (1965) (affirming the existence of a
corporate attorney-client privilege); Jox, Attorney-Client Privilege-Its Application to a Corporate
Client, 3 Washburn L.J. 33 (1964) (discussing the special problems involved in applying the
attorney-client privilege to corporations); Maurer, Privileged Communications and the Corporate
Counsel, 16 Bus. Law. 959, 982 (1961) (concluding that "the legal papers of corporate counsel have
received essentially the same treatment as privileged communications as would have been the case
had they resided in the files of a general practitioner"); Simon, The Attorney-Client Privilege as
Applied to Corporations, 65 Yale L.J. 953, 956 (1956) (concluding that application of the attorneyclient privilege to corporations is justified, but that special difficulties exist); Note, The Corporate
Attorney-Client Privilege, Culpable Employees, Attorney Ethics, and the Joint Defense Doctrine, 58
Tex. L.J. 809, 810, 817-24 (1980) (proposing a functional justification for the corporate attorneyclient privilege) [hereinafter Note, Culpable Employees]; Note, The Applicability of the AttorneyClient Privilege to a Corporation-The Current Evolution of an "Accepted" Rule of Law, 17 U. Miami
L. Rev. 382, 389 (1963) (concluding that the Radiant Burners court's rejection of the attorney-client
privilege to corporations is incorrect based on both policy and historical rationales); Comment,
Attorney-Client Privilege: Does It Apply to Corporations?, 12 De Paul L. Rev. 263 (1963)
(discussing the arguments relevant to considering the corporation as "client" for the purpose of the
attorney-client privilege).
It is noteworthy that in Upjohn, counsel for the government did not dispute the proposition that the
privilege is available to a corporation. 449 U.S. at 390. There is, however, still some doubt about the
availability of the attorney-client privilege to corporations in stockholder derivative class actions.
See Garner v. Wolfinbarger, 430 F.2d 1093, 1103-04 (5th Cir. 1970) ("[A]vailability of the privilege
[must] be subject to the right of the stockholders to show cause why it should not be invoked in the
particular instance." (footnote omitted)), cert. denied, 401 U.S. 974 (1971).
[FN23] 8 J. Wigmore, supra note 5, 2317, at 618. See also Model Code of Evidence Rule 209(a)
(1942); Rodriguez v. North American Rockwell Corp., 28 Cal. App. 3d 441, 449, 104 Cal. Rptr. 678,
683 (1972); Ellingsgard v. Silver, 352 Mass. 34, 40, 223 N.E.2d 813, 817 (1967); Wise v. Western
Union Tel. Co., 178 A. 640, 644 (Del. Super. Ct. 1935); Ill. Sup. Ct. R. 201(b)(2).
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[FN24] Traditional agency doctrine teaches that the actions of employees are frequently imputed to
corporate employers. See, e.g., Franklin Supply Co. v. Tolman, 454 F.2d 1059, 1070 (9th Cir. 1972)
(knowledge obtained by an employee during employment is imputed to the corporation); United
States v. American Radiator & Standard Sanitary Corp., 433 F.2d 174, 204-05 (3d Cir. 1970), cert.
denied, 401 U.S. 948 (1971) (corporation is liable for the actions of an employee within the scope of
his employment); Fed. R. Evid. 801 (d)(2)(D) (admission by an employee regarding a matter within
the scope of his employment is admissible in a suit against a corporation). It does not automatically
follow, however, that the attorney-client privilege covers the communications of any corporate
employee with the corporation's attorney. Surely a corporation, just like an individual, may engage
an agent to communicate with his attorney. See, e.g., In re Aspinwall, 2 F. Cas. 64 (S.D.N.Y. 1874)
(No. 591). But it may be that this principle is limited to agents who, at the client's request,
communicate facts known to the client. If this is so, reference to agency law will not identify the
corporate actors who are the "client" for purposes of the corporate attorney-client privilege, for
agency law itself would require that those corporate actors be identified.
[FN25] 89 F. Supp. 357 (D. Mass. 1950). United Shoe was a civil antitrust action. The government
subpoenaed copies of correspondence between employees of the defendant corporation and its
attorney dealing with the company's patent business. The company moved to quash the subpoena on
the basis of the attorney-client privilege.
[FN26] Id. at 359, accord Zenith Radio Corp. v. Radio Corp. of Am., 121 F. Supp. 792, 795 (D. Del.
1954) (third parties whose communications with the corporation's attorneys should not be privileged
are "those not affiliated with the corporation as employees, officers, directors, or 'outside counsel"').
[FN27] 210 F. Supp. 483, 485 (E.D. Pa.), mandamus denied sub nom. General Elec. Co. v.
Kirkpatrick, 312 F.2d 742 (3d Cir. 1962), cert. denied, 372 U.S. 943 (1963). City of Philadelphia
involved 1800 antitrust actions by various customers against electrical equipment manufacturers. The
plaintiffs sought to discover detailed information about meetings involving officials of the defendant
corporations. One of the defendants, General Electric, asserted the attorney-client privilege in
refusing to supply information communicated by one of its employees to its attorneys.
[FN28] 329 U.S. 495 (1947).
[FN29] Id. at 508. The "witnesses" in Hickman were, of course, employees of the tugboat company
(a partnership). Thus, if the dicta in Hickman regarding the attorney-client privilege is read in
context, it must be concluded that the Court did not regard the privilege as extending to
communications from all employees. If this was the view of the Supreme Court, it apparently was
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shared by the two lower courts which heard (both en banc) the Hickman case. 4 F.R.D. 479, 482
(E.D. Pa. 1945) (en banc); 153 F.2d 212, 222 (3d Cir. 1945) (en banc). But see note 37 infra.
[FN30] 329 U.S. at 507-14; see Fed. R. Civ. P. 26(b)(3); Fed. R. Crim. P. 16. The work product
doctrine is a qualified immunity protecting from disclosure materials prepared by counsel in
anticipation of litigation. There are two types of work product: (1) "opinion work product," which, in
the language of Rule 26 (b)(3), consists of the attorney's "mental impressions, conclusions, opinions,
or legal theories," and (2) "ordinary work product," which consists of all other materials developed in
anticipation of trial. "Opinion work product" is absolutely protected against disclosure. 329 U.S. 495,
511-12 (1947). See also In re Murphy, 560 F.2d 326, 336 (8th Cir. 1977); Duplan Corp. v.
Moulinage Et Retorderie De Chavannoy, 509 F.2d 730 (4th Cir. 1974), cert. denied, 420 U.S. 997
(1975). But "ordinary work product" is not protected if the adversary can demonstrate some necessity
or justification for intruding upon the attorney's preparation of her client's case, such as the
unavailability of the information through normal discovery devices.
In Hickman, the Court's rejection of the tugboat company's claim of an attorney-client privilege
meant that although the adversary's counsel was free to examine the employees regarding their
statements to the company's attorney, the attorney could not be forced to disclose his memoranda on,
or impressions of, those statements. See 329 U.S. at 512-13.
[FN31] 210 F. Supp. at 485.
[FN32] Id.
[FN33] Id.
[FN34] See, e.g., United States v. Amerada Hess Corp., 619 F.2d 980, 986- 87 (3d Cir. 1980);
United States v. Upjohn Co., 600 F.2d 1223, 1226-27 (6th Cir. 1979), rev'd, 449 U.S. 383 (1981); In
re Grand Jury Investigation, 599 F.2d 1224, 1237 (3d Cir. 1979); Natta v. Hogan, 392 F.2d 686, 692
(10th Cir. 1968); United States v. Lipshy, 492 F. Supp. 35, 42-43 (N.D. Tex. 1979); Jarvis, Inc. v.
American Tel. & Tel. Co., 84 F.R.D. 286, 291-92 (D. Colo. 1979); In re Grand Jury Subpoena Dated
Dec. 19, 1978, 81 F.R.D. 691, 693-94 (S.D.N.Y.), rev'd on other grounds, 599 F.2d 504, 510 (2d Cir.
1979) (applying work product doctrine rather than attorney-client privilege); In re Anthracite Coal
Antitrust Litig., 81 F.R.D. 516, 520 (M.D. Pa. 1979); Herbert v. Lando, 73 F.R.D. 387, 400
(S.D.N.Y.), rev'd on other grounds, 568 F.2d 974 (2d Cir. 1977), rev'd, 441 U.S. 153 (1979); Hearn
v. Rhay, 68 F.R.D. 574, 579 (E.D. Wash. 1975); Virginia Elec. & Power Co. v. Sun Shipbldg. & Dry
Dock Co., 68 F.R.D. 397, 400 (E.D. Va. 1975); United States v. International Bus. Machs. Corp., 66
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F.R.D. 154, 178 (S.D.N.Y. 1974); Burlington Indus. v. Exxon Corp., 65 F.R.D. 26, 35-36 (D. Md.
1974); Honeywell, Inc. v. Piper Aircraft Corp, 50 F.R.D. 117, 120 (M.D. Pa. 1970); Congoleum
Indus., Inc. v. GAF Corp., 49 F.R.D. 82, 84 (E.D. Pa. 1969); aff'd mem., 478 F.2d 1398 (3d Cir.
1973); Garrison v. General Motors Corp., 213 F. Supp. 515, 517-18, 520 (S.D. Cal. 1963). See also
Committee on Rules of Practice and Procedure of the Judicial Conference of the United States,
Preliminary Draft of Proposed Rules of Evidence for the United States District Courts and
Magistrates, Proposed Rule 503, 46 F.R.D. 161, 249-51 (1969) [hereinafter Preliminary Draft];
Advisory Committee Note to Proposed Rule 503(a)(3), 46 F.R.D. 252, 252-53 (1969) [hereinafter
Advisory Committee Notes].
[FN35] 423 F.2d 487 (7th Cir. 1970), aff'd per curiam by an equally divided court, 400 U.S. 348
(1971). Harper & Row was an antitrust action brought by over 40 plaintiffs (local governments,
public schools and libraries) against over 20 defendants who were allegedly involved in a conspiracy
to inflate the prices of books. Employees of the defendant corporations testified before a grand jury
and were debriefed by attorneys for the corporations. The plaintiffs sought to discover the attorneys'
notes on the debriefing sessions, but the defendants refused to supply them, claiming the protection
of both the attorney-client privilege and the work product immunity.
[FN36] Id. at 490-91.
[FN37] The Seventh Circuit apparently believed that the City of Philadelphia court had misread the
Supreme Court's opinion in Hickman. Though the Seventh Circuit did not mention Hickman by
name, the result it reached necessarily entails the view that Hickman merely denied the protection of
the privilege to statements made to the corporation's attorney by corporate employees who,
independent of their corporate responsibilities, fortuitously observe the relevant activities of the
corporation-for example, while parking their cars in the company lot. The crew members who
witnessed the tugboat disaster in Hickman did so while at work, of course; arguably, however, their
observations were independent of their corporate responsibilities. On this alternative reading of
Hickman, the Supreme Court did not go so far as to deny the protection of the privilege to statements
made to the corporation's attorney by employees who obtained the information they impart to the
attorney within the scope of their employment. See also note 165 infra. The City of Philadelphia
court had read Hickman to deny protection to such employees if they were not members of the
control group.
[FN38] 423 F.2d at 491-92. The Supreme Court granted certiorari in Harper & Row and heard oral
argument. Justice Douglas did not participate in the consideration of the case, however, and the
remaining Justices divided equally. 400 U.S. 348 (1971). It is impossible to tell whether the four
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Justices who voted to reverse did so on the merits or because they believed that the case was an
inappropriate one for using the extraordinary writ of mandamus. After four Justices voted to affirm
the Seventh Circuit's decision in Harper & Row, the Federal Rules Committee withdrew its
recommendation of the "control group" test, a recommendation that had been embodied in the
preliminary draft of the Federal Rules of Evidence. See Advisory Committee Note, supra note 34, at
252-53. Subsequently, Congress did not accept even this modified proposal of the Committee. Act of
Jan. 2, 1975, Pub. L. No. 93-595, 1, 88 Stat. 1926, 1933-34 (enacted as Fed. R. Evid. 501). (For a
discussion ofthe congressional changes, see H.R. Rep. No. 650, 93d Cong., 1st Sess. 8-9, reprinted in
1974 U.S. Code Cong. & Ad. News 7075, 7082-83; H.R. Rep. No. 1597, 93d Cong., 2d Sess. 7-8,
reprinted in 1974 U.S. Code Cong. & Ad. News 7098, 7100; S. Rep. No. 1277, 93d Cong., 2d Sess.
11-13, reprinted in 1974 U.S. Code Cong. & Ad. News 7051, 7058-59). Present Federal Rule of
Evidence 501 states that, with respect to claims governed by federal law, the attorney- client
privileges, and all other privileges, shall be "governed by the principles of the common law as they
may be interpreted by the courts of the United States in the light of reason and experience."
[FN39] In re Grand Jury Subpoena Dated July 13, 1979, 478 F. Supp. 368, 372 (E.D. Wis. 1979);
Sylgab Steel & Wire Corp. v. Imoco-Gateway Corp., 62 F.R.D. 454, 456-57 (N.D. Ill. 1974), aff'd
mem., 534 F.2d 330 (7th Cir. 1976); Hasso v. Retail Credit Co., 58 F.R.D. 425, 428 (E.D. Pa. 1973);
Panduit Corp. v. Burndy Corp., 172 U.S.P.Q. (BNA) 46, 47 (N.D. Ill. 1971). See also Diversified
Indus., Inc. v. Meredith, 572 F.2d 596, 608-09 (8th Cir. 1978) (en banc) (Eighth Circuit modifies the
subject matter test, see text accompanying notes 48-49 and note 49 infra); In re Ampicillin Antitrust
Litig., 81 F.R.D. 377, 384-87 (D.D.C. 1978) (United States District Court for the District of
Columbia modifies the subject matter test in a different manner than the Diversified Industries court,
see text accompanying notes 44-47 and notes 45-47 infra).
[FN40] See, e.g., Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1164 (D.S.C. 1974).
See also Diversified Indus., Inc. v. Meredith, 572 F.2d 606, 608-09 (8th Cir. 1978) (rehearing en
banc); In re Ampicillin Antitrust Litig., 81 F.R.D. 377, 385-86 (D.D.C. 1978).
[FN41] 397 F. Supp. 1146 (D.S.C. 1974).
[FN42] In the court's view, the subject matter test was a necessary corollary of the control group test.
Id. at 1165.
[FN43] Id. at 1163-65. In developing its synthesis of City of Philadelphia's control group test and
Harper & Row's subject matter test, the Duplan court misread both cases. The former case clearly
intended to limit the protection of the privilege to communications made by those in the control
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group itself. See City of Philadelphia v. Westinghouse Elec. Corp., 210 F. Supp. 483, 485-86 (E.D.
Pa.), mandamus denied sub nom. General Elec. Co. v. Kirkpatrick, 312 F.2d 742 (3d Cir. 1962), cert.
denied, 372 U.S. 943 (1963). Indeed, this limitation flowed inexorably from the court's assumption
that by identifying the control group it had identified the corporate "client." See id. at 485. On this
view, any employee who is not a member of the control group ipso facto is not the "client" and may
not trigger the privilege, regardless of the nature of the information he possesses. See text
accompanying notes 31-34 supra. Therefore, by "modifying" the control group test to extend
protection to employees outside of the control group, the Duplan court did violence to a central
premise of the City of Philadelphia decision. Similarly, the Duplan court misread Harper & Row
Publishers, Inc. v. Decker, 423 F.2d 487 (7th Cir. 1970), aff'd per curiam by an equally divided
court, 400 U.S. 348 (1971). The Harper & Row court certainly did not see the subject matter test as a
corollary to the control group test; it viewed it as an alternative. See text accompanying notes 35-39
supra. Moreover, when the hybrid offered by the Duplan court is assessed against the standard
established in Harper & Row, the Duplan rule is under-inclusive because it fails to protect
communication by non-control group employees regarding the subject matter about which advice is
sought unless the communication has been authorized by a member of the control group. The Duplan
rule is therefore unfaithful to both of the cases upon which it purported to rely.
[FN44] 81 F.R.D. 377 (D.D.C. 1978).
[FN45] The Ampicillin court found the control group test inadequate because a corporation's
attorney frequently requires information possessed only by lower echelon employees. Id. at 385-87.
[FN46] The court found the subject matter test as formulated in Harper & Row inadequate because it
protects communications containing information unnecessary to the legal decision-making process,
thereby immunizing from disclosure an unnecessarily large body of information. Id. at 386-87.
[FN47] The Ampicillin court understood the privilege to attach on the following conditions:
1) The particular employee or representative of the corporation must have made a communication of
information which was reasonably believed to be necessary to the decision-making process
concerning a problem on which legal advice was sought;
2) The communication must have been made for the purpose of securing legal advice; and
3) The subject matter of the communication to or from the employee must have been related to the
performance by the employee of the duties of his employment.
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Id. at 385 (footnote omitted).
[FN48] 572 F.2d 596 (8th Cir. 1977), aff'd on rehearing, 572 F.2d 606 (8th Cir. 1978) (en banc).
[FN49] The Eighth Circuit expressly chose as its starting point the subject matter test because, unlike
the control group test, it focused upon "why an attorney was consulted, rather than with whom the
attorney communicated." Id. at 609. However, inspired by Judge Weinstein's treatment of the subject
in his treatise on evidence, id., citing 2 J. Weinstein & M. Berger, Weinstein's Evidence 503(b)
[04] (1975), the court added a gloss to the subject matter test enunciated by the Harper & Row court,
a gloss designed to prevent corporations from routinely funneling corporate communications through
their attorneys in order to prevent subsequent disclosure. As formulated by the Diversified Industries
court,
[T]he attorney-client privilege is applicable to an employee's communication if (1) the
communication was made for the purpose of securing legal advice; (2) the employee making the
communication did so at the direction of his corporate superior; (3) the superior made the request so
that the corporation could secure legal advice; (4) the subject matter of the communication is within
the scope of the employee's corporate duties; and (5) the communication is not disseminated beyond
those persons who, because of the corporate structure, need to know its contents. We note, moreover,
that the corporation has the burden of showing that the communication in issue meets all of the
above requirements.
... Under this test, the mere receipt of routine reports by the corporation's counsel will not make the
communication privileged, either because the communication will have been made available to those
who do not need to know or because the communication was not made for the purpose of securing
legal advice. Moreover, application of the attorney-client privilege will do little to further encourage
this type of communication since they will continue to be made for independent business reasons. By
confining the subject matter of the communication to an employee's corporate duties, we remove
from the scope of the privilege any communication to which the employee functions merely as a
fortuitous witness. These are also communications that ordinarily would be made in any event.
542 F.2d at 609 (rehearing en banc) (footnote omitted).
Arguably, the gloss added by the Diversified Industries court is not a gloss at all, but is a requirement
already present in the Harper & Row test by virtue of the background rules regarding the attorneyclient privilege. See note 5 and accompanying text supra. These rules indicate that the privilege is
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inapplicable unless the communication is made for the purpose of securing legal advice. Id.
Similarly, the proscription against dissemination beyond those in the corporate structure who need to
know its contents (the fifth element listed by the Eighth Circuit) is mandated by the traditional
requirement of confidentiality. Id. Nonetheless, Diversified Industries has been cited with approval
and followed by other courts. See, e.g., Columbia Pictures Indus. v. D.H. Overmeyer Telecasting Co.
(In re D.H. Overmeyer Telecasting Co.), 470 F. Supp. 1250, 1254-55 (S.D.N.Y. 1979); Union
Planters Nat'l Bank v. ABC Records Inc., 82 F.R.D. 472, 475 (W.D. Tenn. 1979); cf. In re Grand
Jury Subpoena Dated Dec. 19, 1978, 599 F.2d 504, 510-11 (2d Cir. 1979) (Second Circuit
determined that the information sought fell squarely under the protection of the work product
privilege but approved of the subject matter test in principle); Mead Data Cent. v. United States Dep't
of the Air Force, 566 F.2d 242, 253 n.24 (D.C. Cir. 1977) (dictum) (modified subject matter test).
[FN50] While the control group test was becoming the prevailing view in the federal courts, a
different alignment was developing in state appellate courts. Six states did incorporate the control
group test in state rules of evidence: Arkansas (Ark. R. Evid. 502(a)(2)); Maine (Me. R. Evid. 502);
Nevada (Nev. Rev. Stat. 49.075 (1979)); North Dakota (N.D. R. Evid. 502(a)(2)); Oklahoma
(Okla. R. Evid. 502); South Dakota (S.D. 2 (R. Evid. 502(a)(2)). These states acted in the period
between the promulgation of the preliminary draft of the Federal Rules of Evidence (which
recommended the control group test), see note 34 supra, and the revision of that draft (which
eliminated the recommendation, see note 38 supra). One state, Illinois, adopted the control group test
by judicial decision. See, e.g., Consolidation Coal Co. v. Bucyrus-Erie Co., 432 N.E.2d 250 (Ill.
1982) (reaffirming control group test even in light of Upjohn, but extending the definition of the
control group to include any employee whose advisory role to top management in the particular area
is such that a decision would not normally be made without his advice and whose advice in fact
forms a basis of any final decision).
However, most of the state courts that have considered the scope of the corporate attorney-client
privilege have opted for a broader test-often one echoing the United Shoe court's willingness to
protect communications made to a corporation's attorney by any employee or agent of the
corporation. See, e.g., Jay v. Sears, Roebuck & Co., 340 So. 2d 456, 457-58 (Ala. Civ. App. 1976);
D.I. Chadbourne, Inc. v. Superior Court, 60 Cal. 2d 723, 736-38, 388 P.2d 700, 709-10, 36 Cal. Rptr.
468, 477-78 (1964); Lindberg v. Safeway Stores, Inc., 525 S.W.2d 571, 572 (Mo. Ct. App. 1975);
State ex rel. Union Oil Co. v. District Court, 160 Mont. 229, 236-37, 503 P.2d 1008, 1012 (1972);
Stewart Equip. Co. v. Gallo, 32 N.J. Super. 15, 17-18, 107 A.2d 527, 528 (1954); Ford Motor Co. v.
O.W. Burke Co., 299 N.Y.S.2d 946, 949, 59 Misc. 2d 543, 546 (Sup. Ct. 1969).
[FN51] This account of the facts is drawn from the Court's opinion, Upjohn Co. v. United States, 449
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U.S. 383 (1981), and from the Briefs of the Petitioner and Respondent. Specific or additional citation
is provided only where necessary for this Article.
[FN52] The Internal Revenue Service issued the summons pursuant to 26 U.S.C.
demanding:
7602 (1954),
[A]ll files relative to the investigation conducted under the supervision of Gerard Thomas [Upjohn's
General Counsel] to identify payments to employees of foreign governments and any political
contributions made by the Upjohn Company or any of its affiliates since January 1, 1971 and to
determine whether any funds of the Upjohn Company had been improperly accounted for on the
corporate books during the same period.
The records should include but not be limited to written questionnaires sent to managers of the
Upjohn Company's foreign affiliates, and memorandums or notes of the interviews conducted in the
United States and abroad with officers and employees of the Upjohn Company and its subsidiaries.
United States v. Upjohn Co., 1978-1 U.S. Tax Cas. (CCH) 9277, at 83,598 (W.D. Mich. Feb. 23,
1978), remanded, 600 F.2d 1223 (6th Cir. 1979), rev'd and remanded, 449 U.S. 383 (1981).
[FN53] Upjohn Co., 1978-1 U.S. Tax Cas. at 83,598. See note 30 supra for a discussion of the work
product doctrine.
[FN54] United States v. Upjohn Co., 1978-1 U.S. Tax Cas. (CCH)
under 26 U.S.C.
7402(b), 7604(a) (1976).
9277. Enforcement was granted
[FN55] United States v. Upjohn Co., 600 F.2d 1223, 1225 (6th Cir. 1979), rev'd and remanded, 449
U.S. 383 (1981).
[FN56] 600 F.2d at 1228. In a closing footnote, the circuit court also rejected Upjohn's claim of work
product immunity on the ground that the work product doctrine "is not applicable to administrative
summonses issued under 26 U.S.C. 7602." Id. at 1228 n.13. Before the Supreme Court, the
government conceded that the Sixth Circuit erred in concluding that the work product doctrine did
not apply to the IRS summonses. Brief for Respondents at 16, 48. The Court characterized this
concession as wise. Upjohn Co. v. United States, 449 U.S. at 397. This Article will not address this
aspect of the Court's decision. See generally note 30 supra.
[FN57] The Court recognized that the parties and amici had "described [its] task as one of choosing
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between two tests." 449 U.S. at 386.
[FN58] Id. at 397, 402 (Burger, C.J., concurring in part and concurring in judgment).
[FN59] Id. at 396.
[FN60] Id. Federal Rule of Evidence 501 provides that "the privilege of a witness ... shall be
governed by the principles of the common law as they may be interpreted by the courts of the United
States in light of reason and experience." Although the original draft of the Proposed Federal Rules
of Evidence adopted the control group test, Congress decided that the content of privileges should be
developed on a case-by-case approach in the courts. See Trammel v. United States, 445 U.S. 40, 47
(1980). Based in part upon this legislative history, Justice Rehnquist, in his opinion for the Upjohn
Court, opted for case-by-case development: "Needless to say, we decide only the case before us, and
do not undertake to draft a set of rules." 449 U.S. at 396.
[FN61] 449 U.S. at 397; see text accompanying notes 76-84 infra.
[FN62] Chief Justice Burger, however, proposed the following variation of the subject matter test:
[A] communication is privileged at least when, as here, an employee or former employee speaks at
the direction of the management with an attorney regarding conduct or proposed conduct within the
scope of employment. The attorney must be one authorized by the management to inquire into the
subject and must be seeking information to assist counsel in performing any of the following
functions: (a) evaluating whether the employee's conduct has bound or would bind the corporation;
(b) assessing the legal consequences, if any, of that conduct; or (c) formulating appropriate legal
responses to actions that have been or may be taken by others with regard to that conduct.
Id. at 403 (Burger, C.J., concurring).
[FN63] There are, of course, other factors to be considered-for example, whether a close enough
relationship exists between the information-giver and the corporation to justify application of the
privilege to the speaker, see text accompanying notes 165-74 infra.
[FN64] 449 U.S. at 389.
[FN65] Id.
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[FN66] Id. at 389-90.
[FN67] Id. at 392.
[FN68] 210 F. Supp. 483 (E.D. Pa.), mandamus denied sub nom. General Elec. Co. v. Kirkpatrick,
312 F.2d 742 (3d Cir. 1962), cert. denied, 372 U.S. 943 (1963); see text accompanying notes 26-34
supra.
[FN69] 449 U.S. at 391-92.
[FN70] Id. at 391.
[FN71] Id. at 391-92.
[FN72] Id. at 393.
[FN73] The Court contrasted Hogan v. Zletz, 43 F.R.D. 308, 315-16 (N.D. Okla. 1967), aff'd in part
sub nom. Natta v. Hogan, 392 F.2d 686, 691-93 (10th Cir. 1968) with Congoleum Indus., Inc. v.
GAF Corp., 49 F.R.D. 82, 83- 85 (E.D. Pa. 1969), aff'd, 478 F.2d 1398 (3d Cir. 1973), 449 U.S. at
393, noting that employees with similar titles were held in the former case to be within the control
group but in the latter case outside the control group. This comparison is somewhat unsound,
however, since the duties of the employees, not their titles, should be determinative under the control
group test. See Congoleum Indus., Inc. v. GAF Corp., 49 F.R.D. at 85.
[FN74] 449 U.S. at 393.
[FN75] Id. at 395.
[FN76] See, e.g., Feld, Supreme Court in Upjohn Protects Attorney-Client Privilege; Upholds the
Work Product Doctrine, 54 J. Tax'n 210, 212 (1981) ( "the facts it relied on ... are remarkably similar
to the criteria of the previously-mentioned modified 'scope of employment' [subject matter]
standard"); Note, Attorney-Client Privilege, 19 Am. Crim. L. Rev. 251, 257 (1981); Note, The
Implications of Upjohn, 56 Notre Dame Law. 887, 892-94 (1981); Comment, Upjohn Co. v. United
States, The Attorney Client Privilege in the Corporate Setting, 65 Marquette L. Rev. 241, 241 (1981)
("the Court appeared to rely on the Eighth Circuit's modified approach in resolving the matter before
it").
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[FN77] 2 J. Weinstein, Weinstein's Evidence
Page 60 of 91
503(b)[04] (1981).
[FN78] 572 F.2d 596 (8th Cir. 1977), aff'd on rehearing, 572 F.2d 606 (8th Cir. 1978) (en banc). See
notes 48-49 and accompanying text supra.
[FN79] While Upjohn involved illegal payments to foreign officials, see 449 U.S. at 386-87,
Diversified Industries concerned illegal payments to purchasing agents of other business entities, see
572 F.2d at 600. In Upjohn, the IRS sought production of the documents, see 449 U.S. at 387- 88,
while in Diversified Industries, private litigants sought the documents, see 572 F.2d at 599-600. Both
cases, however, involved similar investigations conducted by counsel at the request of corporate
superiors. Compare 449 U.S. at 386-87 with 572 F.2d at 600-01.
[FN80] The Court declined to determine whether the privilege extended to seven of the 86
employees interviewed by Upjohn's attorneys who had terminated their employment with Upjohn by
the time of the interview. Since the lower courts had not addressed the application of the privilege to
those non-employees, the Court declined to do so. 449 U.S. at 394 n.3.
[FN81] Id. at 387, 395.
[FN82] See Baxter Travenol Labs. v. LeMay, 89 F.R.D. 410, 413 (S.D. Ohio 1981) (in rejecting
control group test, Upjohn Court did not adopt subject matter test). But see SEC v. Gulf & W. Indus.,
Inc., 518 F. Supp. 675, 681 n.9 (D.D.C. 1981) (Upjohn Court indicated "it preferred a modified
subject matter test.").
[FN83] 449 U.S. at 386. Justice Rehnquist asserted that the use of a formal test might violate the
spirit of the Federal Rules of Evidence. Id. at 396; see text accompanying notes 59-60 and note 60
supra.
[FN84] 449 U.S. at 402 (Burger, C.J., concurring).
[FN85] One anomalous result of the Upjohn opinion is worth noting. By the terms of Rule 501, in
diversity cases the state laws of privileges govern, while in federal question cases the law of
privileges is governed by "the principles of the common law as they may be interpreted by the courts
of the United States in the light of reason and experience." Upjohn rejects the control group test in
favor of some as yet unspecified broader test. Yet, several states have adopted-and presumably will
continue to employ-the less solicitous control group test. See note 50 supra. Consequently, in at least
some cases, a federal court will be in the unusual position of being more solicitous of corporate
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communication than the applicable state law (and perhaps the law of the state of incorporation)
would require it to be. Moreover, the federal court will be bestowing this extra kindness upon the
corporation notwithstanding the presence of a significant federal interest in the case.
[FN86] See note 2 and text accompanying notes 17-18 supra. It must be noted that, to the extent that
they are accepted, arguments justifying a corporate attorney-client privilege also justify a privilege
for government agencies, labor unions, nonprofit corporations, associations, and partnerships. See,
e.g., Mead Data Cent., Inc. v. United States Dep't of the Air Force, 566 F.2d 242, 253 n.24 (D.C. Cir.
1977). Hence, Upjohn may foreshadow the development of an "enterprise" privilege.
[FN87] 449 U.S. at 390 (citing United States v. Louisville & N.R.R., 236 U.S. 318, 336 (1915)). As
noted earlier, supra note 22, the government did not argue that the privilege did not apply to
corporations.
Certainly, it is not enough to say that the privilege must apply to corporations simply because they,
like individuals, are entitled to seek legal advice. Individuals and corporations are not treated as
equals by the law. Seventy-five years ago, the Supreme Court noted that "the corporation is a
creature of the State ... [and as such] receives certain special privileges and franchises [which it]
holds ... subject to the laws of the State and the limitations of its charter." Hale v. Henkel, 201 U.S.
43, 74 (1906). Following this principle, the Court denied to corporations the protection against selfincrimination provided to individuals by the Fifth Amendment. Id. at 75. See also United States v.
White, 322 U.S. 694, 698 (1944) ("the constitutional privilege against self-incrimination is
essentially a personal one, applying only to natural individuals"). By extending this rationale, some
might argue that it would be similarly proper to deny corporations the protection of the attorneyclient privilege. This argument would be especially persuasive if the attorney-client privilege is
founded upon Fifth Amendment considerations. See Note, Fixed Rules, supra note 2, at 485- 86.
[FN88] See, e.g., Morgan, Foreword, Model Code of Evidence 26 (1942); Supreme Court Note,
supra note 2, at 276-77; Note, Control Group, supra note 2, at 427-29 (1970).
[FN89] Note, Fixed Rules, supra note 2, at 474.
[FN90] Supreme Court Note, supra note 2, at 276. See also Simon, supra note 22, at 953-55;
Comment, The Attorney-Client Privilege in Shareholders' Suits, 69 Column. L. Rev. 309, 317
(1969).
[FN91] Such critics note that corporate clients consulted with their attorneys frequently in recent
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years in spite of the fact that the definition of the corporate privilege was unsettled. See, e.g.,
Supreme Court Note, supra note 2, at 277. This argument fails to consider several factors, however:
(1) both corporate clients and attorneys have generally assumed that the privilege was available to
corporations; (2) both corporate clients and attorneys have generally assumed that the privilege
protected at least the control group; and (3) there is no way to determine how much those
communications that did take place were circumscribed, either in terms of the facts related or in
terms of the persons relating them.
[FN92] See generally Coffee, Beyond the Shut-Eye Sentry: Toward a Theoretical View of Corporate
Misconduct and an Effective Legal Response, 63 Va. L. Rev. 1099, 1139-41 (1977); Arrow, On the
Agenda of Organizations, in The Corporate Society 214, 224 (R. Marris ed. 1974). As one
commentator put it: "If decentralization was a managerial invention in 1920, it was an articulated
philosophy by 1950, a re-organizational trend by 1960, and a universal practice by 1970. Today, the
issue for a manufacturing corporation of any size is not whether it should decentralize, but how
much." Vancil, Decentralization: Managerial Ambiguity by Design 25 (Financial Executives
Research Foundation 1979).
[FN93] See Rosenfeld, Between Rights and Consequences: A Philosophical Inquiry into the
Foundations of Legal Ethics in the Changing World of Seventies Regulation, 49 Geo. Wash. L. Rev.
462, 493 (1981). That the interests of the corporation and the employee may diverge can be seen
from rules and cases governing the attorney's potential conflict of interest. Model Code of
Professional Responsibility EC 5-14 to 5-20, DR 5-105 (1976); In re Investigation Before Apr. 1975
Grand Jury, 403 F. Supp. 1176, 1179-83 (D.D.C. 1975), vacated, 531 F.2d 600 (D.C. Cir. 1976);
Pirillo v. Takiff, 462 Pa. 511, 518, 524-32, 341 A.2d 896, 899, 902-06, aff'd per curiam, 466 Pa. 187,
352 A.2d 11 (1975), cert. denied, 423 U.S. 1083 (1976).
[FN94] Jeremy Bentham argued that only the guilty fear disclosure. 7 The Works of Jeremy
Bentham 473-75, 477-79 (Bowring ed. 1842), reprinted in 8 J. Wigmore, supra note 5, 2291, at
549. There certainly are circumstances where information-holders within the corporation will be
liable along with the corporation. See, e.g., 12 U.S.C. 378 (1976 & Supp. IV 1980) (officers,
directors, and employees liable for securities violations); 15 U.S.C. 20 (1976) (directors and
officers liable for certain activities involving contracts between common carriers with interlocking
directorates); United States v. Wise, 370 U.S. 405, 409 (1962) (construing 15 U.S.C. 1 (1976), of
the Sherman Act, to hold liable for violations any corporate actor who has a responsible share in the
forbidden activity); United States v. Dotterweich, 320 U.S. 277, 284-85 (1943) (construing 21 U.S.C.
331(a), 33(a) (1976), of the Food, Drug, and Cosmetics Act, in the same way).
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More often, at least today, the person in possession of information is not sure of his legal position
and is not in a position to determine his guilt or innocence, liability or non-liability. As David Simon
asserted: "It seems ... that the true subjects of the privilege are the clients who are in the common
position of not really 'knowing' the facts because they do not understand the significance of what
they think they saw or now remember." Simon, supra note 22, at 954 n.6.
[FN95] Supreme Court Note, supra note 2, at 276.
[FN96] The facts of Upjohn suggest that employees will at least sometimes respond to inquiries by
the corporation's attorney for no other reason than that they were directed to do so by their superiors
in the corporation. There are, of course, some cases where an order from a superior will not be
sufficient to cause the employee to speak to the attorney, cases where the perceived benefit derived
from being a cooperative employee is outweighed by some perceived cost, be it legal or otherwise.
See text accompanying notes 98- 102 infra.
[FN97] Private sector employees are ordinarily dischargeable at will, and even public sector,
employees are dischargeable for refusal to provide information relevant to their duties. Cf. Nelson v.
County of Los Angeles, 362 U.S. 1 (1960) (county is entitled to fire employees who refused, on first
and fifth amendment grounds, to answer questions put to them by the House Un- American
Activities Committee). Nonetheless, threats of sanction or dismissal may not be calculated to induce
frank communication by recalcitrant employees.
More fundamentally, before the corporation can order any employee to communicate with its
attorney, it must be aware that the employee possesses information. In many cases, therefore, the
information will not be forthcoming unless the unidentified information possessor is moved to
communicate on his own initiative.
[FN98] The rule has been that information provided to the corporation's attorney in confidence can
be disseminated to officials within the corporation who "need to know" the information for legal
purposes. See, e.g., Diversified Indus. Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977), aff'd on
rehearing, 572 F.2d 606 (1978) (en banc). See text accompanying notes 190- 92 infra.
[FN99] An example of an employee in this situation is an employee who has stolen money from the
corporation, causing a shortage of funds not yet traced to him but sufficient to produce a stockholder
suit.
[FN100] An example of an employee in this situation is an employee who would prefer not to have
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his sexual preferences made public, but whose sexual preferences are somehow relevant to litigation
(perhaps grounded on charges of sex discrimination) in which the corporation is involved.
[FN101] The rule has been that the privilege is the corporation's, not the employee's, and that the
corporation is entitled to waive its protection. See, e.g., In re Grand Jury Proceedings, Detroit, Mich.,
Aug., 1977 (Jackier), 434 F. Supp. 648 (E.D. Mich. 1977), aff'd per curiam, 570 F.2d 562 (6th Cir.
1978). See text accompanying notes 198-213 infra.
The Third Circuit, in In re Grand Jury Investigation (Sun Co.), 599 F.2d 1224, 1236 (3d Cir. 1979),
asserted that the protection afforded lower echelon employees by the corporate privilege was
"illusory" because, in its view, the corporation could waive the privilege, thereby exposing the
employees' statements.
[FN102] The rule has been that, at least under some circumstances, plaintiff shareholders can gain
access to otherwise privileged communications between employees of the corporation and the
corporation's attorney. See, e.g., Garner v. Wolfinbarger, 430 F.2d 1093, 1101-04 (5th Cir. 1970),
cert. denied, 401 U.S. 974 (1971). See text accompanying notes 229-38 infra. Indeed, under certain
circumstances, the SEC, as the protector of the public, may be able to overcome the corporation's
claim of attorney-client privilege. See SEC v. Gulf & W. Indus., 518 F. Supp. 675, 686 (D.D.C.
1981).
[FN103] The amici briefs submitted in the Upjohn case are ample evidence of the organized bar's
belief that a corporate attorney-client privilege fosters attorney-client communication. See, e.g., Brief
of the American Bar Association as Amicus Curiae at 11-17, 449 U.S. 383 (1981); Brief of the
American College of Trial Lawyers and 33 Law Firms at 7-14, id.
[FN104] Developments in the Law-Discovery, 74 Harv. L. Rev. 940, 1029 (1961). See also W.
Glasser, Pretrial Discovery and the Adversarial System vii (1968); Note, Upjohn Co. v. United
States: Note, Attorney-Client Privilege-Diversified Industries, Inc. v. Meredith: New Rules for
Applying the Privilege When the Client is a Corporation, 57 N.C.L. Rev. 306, 310 (1979); Death
Knell for the Control Group Test and a Plea for a Policy-Oriented Standard to Corporate Discovery,
31 Syracuse L. Rev. 1043, 1052-53 (1980).
[FN105] See, e.g., 449 U.S. at 392-93. Paradoxically, the Court's voluntary compliance model arises
from the same phenomenon that gave rise to the argument that the privilege does not induce
increased communication between corporate actors and the corporation's attorneys: the complexity of
corporate life in the age of the regulatory state. Opponents of the privilege argue that that complexity
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inextricably ties corporations to their lawyers, rendering the privilege unnecessary to foster the
communication. See text accompanying notes 88-102 supra. The Court rejected that argument and,
starting with the very same "vast and complicated array of regulatory legislation confronting the
modern corporation." 449 U.S. at 392-93, concluded that the privilege is necessary to ensure
voluntary compliance. Id.
[FN106] The decision to rely primarily upon a strategy of voluntary compliance to foster adherence
to corporate law is also born of the perception that government agencies lack the resources required
to enforce the plethora of laws and regulations that fall under their jurisdiction. See, e.g., Shenefield,
Compliance Programs as Viewed from the Anti-trust Division, 48 Antitrust L.J. 73,73 (1979) ("the
private bar is the front line of antitrust enforcement"); Burnham, The Attorney-Client Privilege in the
Corporate Arena, 24 Bus. Law. 901, 914 (1969) ("[S]ecurities law (both federal and state) ... [and]
antitrust laws of all kinds ... are areas of corporate law where there would seem to be an immense
social benefit deriving from free interchange between corporations and their attorneys about how the
law should be complied with. Without this level of primary enforcement by lawyers, these areas of
the law in the modern context would be virtually unmanageable."). See also Note, Voluntary
Disclosure Programs, 47 Fordham L. Rev. 1057, 1057, 1063-68 (1979); text accompanying notes
118-20 infra.
It cannot be gainsaid that in areas such as antitrust, and environmental and securities regulation,
voluntary compliance has become an important component of the effort to assure adherence to
corporate law. See, e.g., Anderson, Effective Antitrust Compliance Programs and Procedures, 18
Bus. Law. 739 (1963) (antitrust); Block & Barton, Internal Corporate Investigations: Maintaining the
Confidentiality of a Corporate Client's Communications with Investigative Counsel, 35 Bus. Law. 5
(1979) (securities regulation) [hereinafter Internal Corporate Investigations]; What the SEC Expects
from Corporate Lawyers, Fortune, Oct. 23, 1978, at 143 (securities regulation); Forrow, The
Corporate Law Department Lawyer: Counsel to the Entity, 34 Bus. Law. 1797 (1979) (broad range
of activities including antitrust and environment); Weiss, The EPA Tries to Woo Business, Dun's
Rev., April 1978, at 87 (environment).
[FN107] As noted in text, the approach to the corporate attorney-client privilege taken by the Upjohn
Court may have been influenced by the picture of corporate activity and corporate-attorney
interaction presented by that case. The Upjohn corporation was attempting to comply voluntarily
with the law, and it enlisted the aid of its attorney in a relatively straightforward compliance effort.
But the factual context presented by the Upjohn case may be atypically uncomplicated. See, e.g.,
Armstrong, Social Responsibility in Management, 5 J. Bus. Research 185 (1977) (managers often
make socially irresponsible decisions to advance corporate interests); Coffee, "No Soul to Damn: No
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Body to Kick": An Unscandalized Inquiry Into the Problem of Corporate Punishment, 79 Mich. L.
Rev. 386, 395 (1981) ("experiments have found ... businessmen willing to ignore extremely strong
evidence of social irresponsibility and legal obstacles when making business decisions involving the
introduction of dangerous and unsafe products"); Ross, How Lawless Are Big Companies? Fortune,
Dec. 1, 1980, at 56-57 (11% of over 1,000 major companies surveyed were involved in either
bribery, criminal fraud, illegal political contributions, or price fixing during the 1970's). The
likelihood of illegal or antisocial corporate behavior increases when individual corporate actors are
motivated totake illegal or unethical shortcuts for short range personal gain (for example, to avoid
being branded incompetent by telling superiors that they ask too much). Coffee, supra, at 393 ("the
lower echelon executive with a lackluster record may deem it desirable to resort to illegal means to
increase profits (or forestall losses) in order to prevent his dismissal or demotion").
This understanding lends support to the claim that adherence to corporate law is better achieved by
relying primarily on vigorous regulation. That claim is buttressed by attacks upon the strategy of
voluntary compliance. It can be argued, first, that voluntary compliance, to the extent that it occurs,
occurs for reasons other than the privilege and would occur even in its absence. The desire to
forestall liability or to avoid adverse publicity is a potential force pressuring corporate actors to
comply with the law. Driven by that desire, this first argument continues, they will seek out the
lawyer's advice whether or not the privilege exists. See text accompanying notes 88-94. Second, it
can be argued that to the extent that voluntary compliance is desirable, Congress, not the Court,
should structure rules to encourage it. Finally, it can be argued that an expansive privilege is not a
desirable vehicle for encouraging voluntary compliance because, by its nature, it is not limited to
"house cleaning" situations like Upjohn but rather it extends coverage to circumstances where the
antithesis of voluntary compliance prevails.
[FN108] 449 U.S. at 402 (Burger, C.J., concurring).
[FN109] 449 U.S. at 393.
[FN110] Id. at 396-97. About this remark, Chief Justice Burger opines:
[B]ecause Federal Rule of Evidence 501 provides that the law of privileges "shall be governed by the
principles of the common law as they may be interpreted by the courts of the United States in light of
reason and experience," this Court has a special duty to clarify aspects of the law of privileges
properly before us. Simply asserting that this failure "may to some slight extent undermine desirable
certainty," ante, at 393, neither minimizes the consequences of continuing uncertainty and confusion
nor harmonizes the inherent dissonance of acknowledging that uncertainty while declining to clarify
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it within the frame of issues presented.
Id. at 403-04 (Burger, C.J., concurring).
[FN111] It may be that, if an employee is reluctant to speak to the corporation's attorney, it is for
reasons wholly independent of the scope of the privilege, such as the fear of dismissal or of a
negative impact on career. These factors have already been discussed. See text accompanying notes
96-102 supra. However, to the extent that the scope of the privilege is uncertain, there will be an
additional chill on communication.
[FN112] Hickman v. Taylor, 329 U.S. 495, 507 (1947).
[FN113] One possible example of the overinclusiveness problem left by Upjohn is illustrated in
Baxter Travenol Labs. v. LeMay, 89 F.R.D. 410 (S.D. Ohio 1981). In Baxter, the court extended the
privilege to communications between corporate counsel and an employee of the client corporation
when the communications concerned matters that occurred prior to the information-giver's
employment with the corporation-matters by definition not within the scope of the employee's
corporate duties.
[FN114] See, e.g., Supreme Court Note, supra note 2, at 273-80.
[FN115] The results of the only empirical study of the subject are inconclusive since they contain
propositions that can be deemed supportive of either view. See Note, Functional Overlap Between
the Lawyer and Other Professionals: Its Implications for the Privileged Communications Doctrine,
71 Yale L.J. 1226, 1255 (1962) (while survey of lay opinion indicates that absence of privilege for
psychiatrists, psychologists, marriage counselors, and social workers impairs communication, there
is little evidence to suggest that patient treatment is hindered in states where privilege does not exist).
[FN116] The intensity with which the Court holds this intuition cannot be doubted. In speaking of
the privilege the Court has stressed the links that it perceives between the existence of its protection
and the lawyer's ability to deal with her client: "If such communications were required to be made
the subject of examination and publication, such enactment would be a practical prohibition upon
professional advice and assistance." United States v. Louisville & N.R.R., 236 U.S. at 318, 336. See
also Hunt v. Blackburn, 128 U.S. 464, 470 (1888); Blackburn v. Crawfords, 70 U.S. (3 Wall.) 175,
192-93 (1865); Chirac v. Reinicker, 24 U.S. (11 Wheat.) 280, 294 (1826).
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The Court has shown a remarkable willingness to assume that assurances of confidentiality foster the
flow of information. See, e.g., Trammel v. United States, 445 U.S. 40 (1980) (spousal immunity
privilege); United States v. Nixon, 418 U.S. 683, 706 (1974) (executive privilege); Hickman v.
Taylor, 329 U.S. 495, 511-12 (1947) (work product privilege). The one instance in which the Court
has been unwilling to indulge the assumption that a privilege produces increasd communication is
the reporter's privilege. Branzburg v. Hayes, 408 U.S. 665 (1972).
[FN117] See note 4 supra.
[FN118] In A.B. Dick Co. v. Marr, 95 F. Supp. 83, 102 (S.D.N.Y. 1950), aff'd, 197 F.2d 498 (2d Cir.
1951), cert. denied, 344 U.S. 878 (1952), the court stated that "the legal rights and duties of large
corporations and those who dispute with them would not be susceptible of judicial administration in
the absence of lawyers, nor, in the absence of the privilege could lawyers properly represent their
clients." See also Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1164 (D.S.C. 1974)
("This court recognizes that it is not the federal government that is primarily responsible for
enforcement of the federal antitrust laws but rather the lawyers who advise their corporate clients.");
Burnham, The Attorney-Client Privilege in the Corporate Arena, 24 Bus. Law. 901, 913-14 (1969)
(justifying the corporate attorney-client privilege, in part upon "the value of promoting voluntary
compliance with the law through free interchange between clients and attorneys," id. at 913); Miller,
The Challenges to the Attorney-Client Privilege, 49 Va. L. Rev. 262, 268-69 (1963) (application of
the privilege in the corporate context helps to "promote obedience of the law" by fostering full
disclosure to the corporate attorney).
[FN119] Kobak, The Uneven Application of the Attorney-Client Privilege to Corporations in the
Federal Courts, 6 Ga. L. Rev. 339, 340 (1972).
[FN120] See, e.g., Diversified Indus., Inc. v. Meredith, 572 F.2d 596, 608-09 (8th Cir. 1978); In re
Ampicillin Antitrust Litig., 81 F.R.D. 377, 385-87 (D.D.C. 1978); Hercules, Inc. v. Exxon Corp., 434
F. Supp. 136, 145- 46 (D. Del. 1977); Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146,
1164-65 (D.S.C. 1974). The court in Diversified Industries put the argument this way:
The attorney dealing with a complex legal problem "is thus faced with a 'Hobson's choice.' If he
interviews employees not having the 'very highest authority,' their communications to him will not be
privileged. If, on the other hand, he interviews only those with the 'very highest authority,' he may
find it extremely difficult, if not impossible, to determine what happened." Thus, the control group
test inhibits the free flow of information to a legal advisor and defeats the purpose of the attorneyclient privilege.
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572 F.2d at 608-09 (citation omitted).
[FN121] See D. Binder & S. Price, Legal Interviewing and Counselling: A Client-Centered
Approach 3 (1977); Baron Shawcross, The Functions and Responsibilities of an Advocate 16 (1958).
See also L. Patterson & E. Cheatham, The Profession of Law 66-67, 72 (1971).
[FN122] 8 J. Wigmore, supra note 5,
[FN123] Id.
2192, at 70.
2291, at 554.
[FN124] The Supreme Court in Upjohn reasoned that the "privilege only protects disclosure of
communications ... [and not] disclosure of the underlying facts by those who communicated with the
attorney," 449 U.S. at 395. Thus, the adversary theoretically may still use the discovery process to
uncover the facts underlying the privileged communication.
[FN125] United States v. White, 322 U.S. 694, 700 (1944).
[FN126] See Gardner, supra note 22, at 344 (if corporate facts are not known by a single person, they
are difficult to get in discovery); Note, Evidence: Federal Rules of Civil Procedure: Attorney-Client
Privilege as Applied to Corporations, 48 Cornell L.Q. 551, 563 (1963) (a party suing a corporation
would be stymied if the corporation could protect its "paper trail" from discovery).
[FN127] A possible secondary negative result is that, to the extent that the unavailability of the
"paper trail" discourages litigation, the public and legislatures might remain unaware of corporate
abuses that would have been spotlighted by the process of litigation.
[FN128] 205 F. Supp. 830, 831 (E.D. Pa. 1962), quoted approvingly in Upjohn, 449 U.S. at 395-96.
The names of employees in possession of relevant information are not protected from discovery by
the attorney-client privilege. United States v. Amerada Hess Corp., 619 F.2d 980, 985-87 (3d Cir.
1980).
[FN129] Hickman v. Taylor, 329 U.S. 495, 516 (1947) (Jackson, J., concurring), quoted approvingly
in Upjohn, 449 U.S. at 396.
[FN130] See text accompanying notes 17-49 supra.
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[FN131] See note 92 supra.
[FN132] The American Bar Association's Code of Professional Responsibility reflects the difficulty
of identifying the corporate "client": "A lawyer employed or retained by a corporation or similar
entity owes his allegiance to the entity and not to a stockholder, director, officer, employee,
representative, or other person connected with the entity." Model Code of Professional
Responsibility EC 5-18 (1981). Although this rule appears fairly straightforward, when a
corporation's in-house attorney was asked whether he could inform various shareholders of a plan
concocted by the controlling shareholder to bribe a federal official, the ABA's Opinion Letter was
delphic: "The answer ... depends upon the identity of [the] client; is it the corporation as an entity,
the board of directors, the majority stockholders, the officers, or some other group or entity? The
question is not without difficulty." ABA Comm. on Ethics and Professional Responsibility, Informal
Op. 1349 (1975) (duty to inform state authorities of illegal act by corporate officials). The letter
concluded that disclosure to the Board of Directors was proper, but that disclosure to the minority
stockholders was not. Id.
[FN133] Nonutilitarian as well as utilitarian approaches to the attorney- client privilege have been
offered. See, e.g., Fried, The Lawyer as Friend: The Moral Foundations of the Lawyer-Client
Relation, 85 Yale L.J. 1060, 1068-73 (1976).
The strongest of the nonutilitarian arguments, however, relies upon the existence of a personal
relationship between the lawyer and her client, id., at 1073, and is therefore difficult to advance in
relation to a corporate attorney-client privilege. Moreover, although the Court in Upjohn did not
attempt to justify the existence of a corporate attorney-client privilege, its discussion of the privilege
proceeded in functional or utilitarian terms. For these reasons, and because the traditional approaches
to most evidentiary privileges reflect a utilitarian calculus of costs and benefits, see, e.g., 8 J.
Wigmore, supra note 5,
2191-2192, at 68-74, it is appropriate to take a utilitarian approach here.
But see Louisell, Confidentiality, Conformity and Confusion: Privileges in Federal Court Today, 31
Tul. L. Rev. 101, 111 (1956) ("It may be that Wigmore, despite his monumental contribution to the
law of privileges, has conduced to the current confusion by his emphasis on strictly utilitarian bases
for the privileges-bases which are sometimes highly conjectural and defy scientific validation.").
[FN134] Fisher v. United States, 425 U.S. 391, 403 (1976).
[FN135] Apart from attempting to tailor the privilege to minimize its costs, one may also attempt to
transform the initial costs of the corporate privilege into arguably more acceptable costs. For
example, one could construct a privilege that was nonexistent or weak at the discovery stage, but
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strong (operating as an exclusionary rule) at trial. Such a privilege would seek to sacrifice protection
of embarrassing facts (by permitting discovery of them) in order to make the "paper trail" available,
at least in some sense, to the corporation's adversary. This approach would lead the adversary to the
information disclosed, who could then be examined as to the facts underlying the communication,
while protecting the communications themselves from use by the adversary. However, such an
approach would be contrary to the practice employed with all other evident privileges. This very
novelty suggests that courts are unlikely to embrace it.
[FN136] See text accompanying notes 125-27 supra.
[FN137] The term was coined in Simon, supra note 22, at 955. The argument was that the control
group test, being more restrictive than the subject matter test, would better thwart the creation of
"zones of silence." See, e.g., United States v. Upjohn Co., 600 F.2d 1223, 1227 (6th Cir. 1979), rev'd
and remanded, 449 U.S. 383 (1981).
[FN138] See text accompanying notes 92-102 supra.
[FN139] As one commentator put it:
An ad hoc approach to privilege pursuant to a vague standard achieves the worst of all possible
worlds: harm in the particular case because information may be concealed; and a lack of
compensating long-range benefit because persisting uncertainty about the availability of the privilege
will discourage some communications. Thus, a bright-line test should be used.
Note, Control Group, supra note 2, at 426. See also Note, The Attorney- Client Privilege and the
Corporation in Shareholder Litigation, 50 S. Cal. L. Rev. 303, 308 (1977); Note, Evidence-Privileged
Communications-The Attorney- Client Privilege in the Corporate Setting: A Suggested Approach, 69
Mich. L. Rev. 360, 372 (1970).
[FN140] For discussions of rule utilitarianism, see R. Brandt, Ethical Theory 396-400 (1959); Rawls,
Two Concepts of Rules, 64 Phil. Rev. 3 (1955); J. Smart & B. Williams, Utilitarianism: For and
Against 9-12 (1973) ("Rule- utilitarianism is the view that the rightness or wrongness of an action is
to be judged by the goodness and badness of the consequences of a rule that everyone should
perform the action in like circumstances.").
[FN141] The traditional teaching is that privileges, which inherently deprive the factfinder of
otherwise available information, should be construed narrowly. Foster v. Hall, 29 Mass. (12 Pick.)
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89, 97 (1831). The rationale for this is that, in a close case, it is better for the court to have
information than for it not to have it.
This traditional doctrine governs the application of the privilege at trial, where it is invoked to
prevent compelled disclosure. Here, the issue is not the application of the privilege at trial, but the
articulation of rules to govern its application. Logically, articulation occurs prior to application, and
this fact effects an important change in perspective. At trial, application of a broad rule does nothing
to stimulate communication: at that point, it has either occurred or not occurred. A broad application
only incurs the costs associated with protection. The articulation of the rules, however, must refer to
the benefits and costs of each potential modification. Communication is encouraged by a broad
governing rule, since only cases involving facts that address the farthest reaches of the rule will
remain open to question and only those fact patterns will be susceptible to narrow application at trial.
In that regard the premises of the Upjohn decision regard overprotection as preferable to
underprotection in cases where the balancing is not clear precisely because the rule will facilitate
communication regardless of whether litigation occurs, while communication will be concealed only
where the legal problem results in litigation.
[FN142] Under an overprotective rule, there may be instances where no benefit occurs, precisely
because some communication that would have occurred without the privilege would be unnecessarily
protected.
[FN143] An underprotective rule strikes at costs. But, for the reasons mentioned in text, some costs,
though anticipated, never materialize.
[FN144] See text accompanying notes 128-29 supra.
[FN145] For policy reasons, one might want to construct an evidentiary system which skewed the
results of litigation against corporations by modifying the corporate attorney-client privilege. But the
political judgment underlying such a policy would most likely be based upon the assumption that
corporations are larger and more powerful than their adversaries, a generalization that frequently is
not true.
[FN146] See, e.g., Alexander v. United States, 138 U.S. 353, 358 (1891); Robinson v. United States,
144 F.2d 392, 405 (6th Cir.) ("It is beside the point that [the attorney] did not receive a fee or accept
a retainer."), cert. denied, 323 U.S. 789 (1944), aff'd on other grounds, 324 U.S. 282 (1945); Smale
v. United States, 3 F.2d 101, 101 (7th Cir. 1924) ("The communication of a client to an attorney
whom the client expects to employ falls within the rule notwithstanding the attorney may find it
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impossible to accept the retainer."), cert. denied, 267 U.S. 602 (1925); Levin v. Ripple Twist Mills,
Inc., 416 F. Supp. 876, 883 (E.D. Pa. 1976), appeal dismissed, 549 F.2d 795 (3d Cir. 1977);
Harkobusic v. General Am. Transp. Co., 31 F.R.D. 264, 266 (W.D. Pa. 1962); In re Sawyer, 129 F.
Supp. 687, 697 (E.D. Wis. 1955), aff'd, 229 F.2d 805 (7th Cir.), cert. denied, 351 U.S. 966 (1956);
United States v. Funk, 84 F. Supp. 967, 968 (E.D. Ky. 1949) ("The mere fact that no compensation is
paid or that the attorney thereafter declined the tender of employment does not remove the seal of
secrecy."), aff'd sub nom. Prichard v. United States, 181 F.2d 326 (6th Cir. 1950). But see, e.g.,
Theiser v. Dayton, 82 Iowa 74, 79, 47 N.W. 891, 892 (1891) (statements made by client to attorney
in order to secure his continued employment to "keep a mortgage alive" held not privileged since the
attorney had declined the further employment); Lamasa v. State, 109 Md. 602, 618-19, 71 A. 1058,
1064-65 (1909) (no privilege existed even when discussions concerning attorney's retention by a codefendant followed the communications at issue): Tucker v. Finch, 66 Wis. 17, 20-21 & n.1, 27
N.W. 817, 818 & n.1 (1886) (statements concerning plaintiff's request that attorney "do some work
for him quick" held not privileged when attorney declined the offer on the ground of his engagement
by the parties on the other side of the transaction).
[FN147] For example, the court in In re Grand Jury Investigation, 599 F.2d 1224, 1225 (3d Cir.
1979),stated that "the incentive to confide [in corporate counsel] is at least partially dependent upon
the client's ability to predict that the communication will be held in confidence." Since none of the
corporate employees in that case were within the control group, the court declared their
communications to corporate counsel were not privileged. Id. at 1237.
[FN148] The choice here recommended comports with traditional attorney- client doctrine for
individuals. It is the rule that the privilege attaches even when communication is to a nonlawyer if
the information-giver reasonably believed he was talking to a lawyer. See, e.g., United States v.
Boffa, 513 F. Supp. 517, 523 (D.C. Del. 1981) ("the rationale behind the privilege equally supports
the theory that the privilege should be extended to those who make confidential communications to
an individual in the genuine, but mistaken, belief that he is an attorney" as long as the belief is
reasonable and a "respectable degree of precaution" in hiring the attorney can be demonstrated,
(citing 8 J. Wigmore, supra note 5, 2302, at 584)); Dabney v. Investment Corp. of Am., 82 F.R.D.
464, 465 (E.D. Pa. 1979) ("Courts have recognized an exception ... to the general requirement that an
attorney-confidant be a member of the bar in cases where the client is genuinely mistaken as to the
attorney's credentials.); United States v. Ostrer, 422 F. Supp. 93, 97 (S.D.N.Y. 1976); see also, E.F.
Hutton & Co. v. Brown, 305 F. Supp. 371, 389 (S.D. Tex. 1969); United States v. Brown, 241 F.
Supp. 324, 326 (W.D. Tenn. 1965).
[FN149] Several cases have held that communications were outside of the privilege when the
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attorney was engaged substantially or primarily in activities other than legal services for the client.
See, e.g., United States v. Rosenstein, 474 F.2d 705, 714 (2d Cir. 1973) (business dealings); Young
v. Taylor, 466 F.2d 1329, 1332 (10th Cir. 1972) (participant in real estate transaction); NLRB v.
Harvey, 349 F.2d 900, 905 n.3 (4th Cir. 1965) (business dealings); Lowy v. Commissioner, 262 F.2d
809, 812 (2d Cir. 1959) (same); United States v. Loften, 507 F. Supp. 108, 112 (S.D.N.Y. 1981)
(business advice); In re Shapiro, 381 F. Supp. 21, 22-23 (N.D. Ill. 1974 preparation of tax returns in
capacity as accountant).
[FN150] 572 F.2d 606, 609 (8th Cir. 1978) (rehearing en banc) (emphasis added); see text
accompanying notes 48-49 supra. In so saying, the Eighth Circuit echoed Wigmore's requirement
that the communication be made in pursuit of "legal advice." See note 5 supra.
[FN151] See text accompanying note 104 supra.
[FN152] Judge Wyzanski used this broader term in his formulation of the attorney-client privilege in
United Shoe, quoted in note 5 supra.
[FN153] See, e.g., In re Walsh, 623 F.2d 489, 494 (7th Cir.) ("Business or other advice is not
privileged, and should be distinguished from professional legal services.... [A] general inquiry will
aid in identifying which areas may be pursued and which are protected."), cert. denied, 449 U.S. 994
(1980); Colton v. United States, 306 F.2d 633, 639 (2d Cir. 1962), cert. denied, 371 U.S. 951 (1963).
Once this rule is clear, counsel will be expected to try to ensure that clients will themselves segregate
the information relevant to mixed tasks by sending separate memos. This should reduce the necessity
of post facto assessments by trial judges.
[FN154] See, e.g., Hercules, Inc. v. Exxon Corp., 434 F. Supp. 136, 147 (D. Del. 1977)
(communication not privileged if "primary purpose" is advising client on nonlegal matters); D.I.
Chadbourne, Inc. v. Superior Court, 60 Cal. 2d 723, 737, 388 P.2d 700, 709, 36 Cal. Rptr. 468, 477
(1964); cf. Eutectic Corp. v. Metco Inc., 61 F.R.D. 35, 39 (E.D.N.Y. 1973) ("dominant purpose" will
control); Zenith Radio Corp. v. Radio Corp. of Am., 121 F. Supp. 792, 794 (D. Del. 1954) ("attorney
must give predominantly legal advice").
A communication may lose the protection of the privilege, even if its purpose is legal, if it is shared
with a third party (even one within the overall corporate structure) who has no relationship to the
legal aspect of the problem. See text accompanying notes 185-87 infra.
[FN155] The term "but for" was used in the context of the corporate attorney-client privilege by
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Professor Glen Weissenberger in a superb article, Weissenberger, supra note 18, at 918-24, which
was written before the Upjohn opinion was issued. His analysis forms the basis for the discussion of
this term in text, though this Article does suggest some departures from it, departures necessitated by
the Upjohn opinion. See, e.g., note 157 infra.
[FN156] The identity and role within the corporate structure of the employee or agent who initiates
the communication with the attorney is probative, but not dispositive, of whether the request was for
legal or nonlegal action. For example, if an employee having no role to play in the corporation's legal
decisionmaking communicates with the corporation's attorney about the matter, the communication
should be presumptively nonlegal. See text accompanying notes 177-82 infra.
[FN157] To deny the protection of the privilege to those who are under some obligation to speakalbeit an obligation insufficient to motivate them to speak-would have wide-ranging and undesirable
effects. It would mean, for example, that the attorney-client privilege would have extended to none
of the principal employees in the Upjohn case because the Upjohn Company and its principal
employees were under a legal obligation to see that the law was obeyed and were also under a
fiduciary obligation to their stockholders to minimize the harm that had already occurred because of
past violations. But see Weissenberger, supra note 18, at 925 (communications within scope of legal
duty to make or elicit information should not be within corporate attorney- client privilege). Such a
result would contradict the unanimous decision of the United States Supreme Court in Upjohn. More
importantly, it would create a situation in which most information-possessors would be highly
reluctant to speak to an attorney.
[FN158] In some contexts, determining whether an attorney is acting in a legal or nonlegal capacity
is quite difficult, and the result sometimes turns on fine distinctions.For example, when the attorney
for a corporation is asked to conduct a special investigation into questionable corporate practices, it
is often not clear whether she is acting in a legal or nonlegal capacity. See, e.g., Diversified Indus. v.
Meredith, 572 F.2d 596, 602 (8th Cir. 1978); Osterneck v. E.T. Barwick Indus., 82 F.R.D. 81 (N.D.
Ga. 1979); SEC v. Canadian Javelin, Ltd., 451 F. Supp. 594, 596 (D.D.C. 1978).
Application of the analysis suggested in the text, however, provides considerable guidance in
addressing these difficult questions. Thus, for example, where a special investigation is conducted as
a result of a consent decree, see, e.g., Osterneck v. E.T. Barwick Indus., 82 F.R.D. 81 (N.D. Ga.
1979); SEC v. Canadian Javelin, Ltd., 451 F. Supp. 594, 596 (D.D.C. 1978), it is appropriate to
conclude that the attorney is not acting in a legal capacity and, therefore, that the privilege should not
apply. This is so because the communications to the attorney result from the court's decree, not from
the pursuit of legal services (that is, the "but for" test is not satisfied). Employees are under a court
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order to speak. It would violate the first shaping principle to extend protection to communications
that would occur even if no protection existed.
On the other hand, when the special investigation is conducted voluntarily, see, e.g., Upjohn Co. v.
United States, 449 U.S. 383, 386 (1981), it is appropriate to conclude that the attorney is acting in a
legal capacity and, therefore, that the privilege should apply. In such cases, there is no external factor
such as a court order forcing communication, and voluntary compliance is more likely to occur if
special investigations are encouraged. Furthermore, the third shaping principle mandates that
doubtful cases be resolved in favor of protection. For an example of a doubtful case in which
protection was first denied to a communication and then later granted in a rehearing en banc,
compare the panel decision in Diversified Indus. v. Meredith, 572 F.2d 596, 603 (8th Cir. 1978)
(special counsel was hired to make an "investigation of facts" and "business recommendations") with
the rehearing en banc, id. at 610 (special counsel was hired to provide legal advice).
See generally Block & Barton, Internal Corporate Investigations: Maintaining the Confidentiality of
a Corporate Client's Communications with Investigative Counsel, 35 Bus. Law. 5 (1979).
[FN159] Harper & Row Publishers v. Decker, 423 F.2d 487, 491-92 (7th Cir. 1970), aff'd per curiam
by an equally divided court, 400 U.S. 348 (1971); see text accompanying notes 35-39 supra.
[FN160] 397 F. Supp. 1146 (D.S.C. 1974); see text accompanying notes 41- 43 supra.
[FN161] 81 F.R.D. 377 (D.D.C. 1978); see text accompanying notes 44-47 supra.
[FN162] 572 F.2d 596 (8th Cir. 1977), aff'd on rehearing, 572 F.2d 606 (8th Cir. 1978) (en banc);
see text accompanying notes 48-49 supra.
[FN163] See 572 F.2d at 609 (rehearing en banc) (no dissemination allowed beyond the circle of
those who "need to know"); 397 F. Supp. at 1165 ("necessity," not "reasonable belief of necessity,"
required); 81 F.R.D. at 386-87 ("believed to be relevant").
[FN164] See generally Whistle Blowing: The Report of the Conference on Professional
Responsibility (R. Nader, P. Petkas & K. Blackwell eds. 1972); Blumberg, Corporate Responsibility
and the Employee's Duty of Loyalty and Obedience, 24 Okla. L. Rev. 279 (1971).
[FN165] 329 U.S. 495, 508 (1947). Arguably, the references in Hickman to the attorney-client
privilege can be dismissed as dicta, since they were not necessary to the Court's holding. Indeed the
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Hickman opinion indicates that the tugboat company asserted only the work product immunity and
not the attorney-client privilege, id. at 499, and the Court expressly declined "to delineate the content
and scope of the privilege." Id. at 508.
Additionally, David Simon has advanced three bases for arguing that the references in Hickman to
the privilege should not influence development of doctrines regarding the corporate attorney-client
privilege. First, the report of the employees in Hickman was an accident report and, as such, was a
discoverable business record. The lower court in Hickman stressed the fact that "there were
compelling reasons for taking the statements of the survivors, entirely unconnected with any
anticipated suits for damages ... [such as] general safety considerations and a due regard for their
obligations to the public, as well as their own interest, in view of the possibility of unfounded or
unfair criticism." Hickman v. Taylor, 4 F.R.D. 479, 482 (E.D. Pa. 1945). Second, the attorney in
Hickman was acting as an investigator, not as a lawyer, and hence the privilege did not apply. The
district court noted that "[i]n taking down what various witnesses told him about the case [the
attorney] was acting primarily as an investigator." Id. And, third, the employees did not supply the
information on behalf of the company because they had claims of their own against the company
(and hence were "strangers"). Simon, supra note 22, at 959 n.20. Any one of the three listed factors
would have rendered the attorney-client privilege inapplicable to the statements of the surviving
crew members and might have been the basis of the Hickman Court's conclusion that they were,
insofar as the company was concerned, mere witnesses. See also notes 29 & 37 supra.
[FN166] See City of Philadelphia v. Westinghouse Elec. Corp., 210 F. Supp. 483, 485 (E.D. Pa.),
mandamus and prohibition denied sub nom. General Elec. Co. v. Kirkpatrick, 312 F.2d 742 (3d Cir.
1962), cert. denied, 372 U.S. 943 (1963); text accompanying notes 26-34 supra.
[FN167] 89 F. Supp. 357 (D. Mass. 1950); see text accompanying notes 25- 26 supra.
[FN168] 89 F. Supp. at 359.
[FN169] 449 U.S. at 390-92.
[FN170] See text accompanying notes 68-75 supra.
[FN171] See text accompanying note 165 supra.
[FN172] The illustration in the text involves invocation by an accountant of the corporation's
attorney-client privilege. Any possible accountant's privilege is irrelevant.
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[FN173] Cf. Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1164 (D.S.C. 1974)
(extending the privilege to a corporation's agents); Falcone v. Internal Revenue Service, 479 F. Supp.
985, 989 (E.D. Mich. 1979) (dicta) (privilege extends to corporations' "agents"); Harkobusic v.
General Am. Transp. Corp., 31 F.R.D. 264, 266 (W.D. Pa. 1962) (letters between plaintiff's brotherin-law and attorneys held privileged since the brother-in- law was acting as plaintiff's agent).
[FN174] See United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), in which Judge Friendly refused to
confine the attorney-client privilege only to lawyers and "menial or ministerial" employees of
lawyers, id. at 921, and extended the privilege to communications with an accountant working for a
law firm because a lawyer needs the accountant's assistance in giving sound legal advice. Id. at 92122. Judge Friendly would extend the privilege to include all confidential assistants to lawyers. He
would draw no distinction, for example, between an interpreter hired by a lawyer to translate literally
a client's interview with the lawyer and an interpreter who would interview the client himself in the
foreign language and summarize the results for the lawyer. Id. at 921.
[FN175] See text accompanying notes 35-39 supra.
[FN176] See, e.g., Upjohn Co. v. United States, 449 U.S. at 392; Diversified Indus. v. Meredith, 572
F.2d 606, 608-09 (8th Cir. 1978) (rehearing en banc): Harper & Row Publishers v. Decker, 423 F.2d
487, 490 (7th Cir. 1970), aff'd per curiam by an equally divided court, 400 U.S. 34 (1971); Duplan
Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1164-65 (D.S.C. 1974).
[FN177] Cf. Baxter Travenol Labs. v. LeMay, 89 F.R.D. 410 (S.D. Ohio 1981) (communications by
current employee to corporate counsel concerning matters he participated in before becoming an
employee of the corporation held privileged).
[FN178] 449 U.S. at 394 n.3 (1981).
[FN179] The court in In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig.,
658 F.2d 1355, 1361 n.7 (9th Cir. 1981) (citation omitted) underscored this view:
Although Upjohn was specifically limited to current employees, the same rationale applies to the exemployees (and current employees) involved in this case. Former employees, as well as current
employees, may possess the relevant information needed by corporate counsel to advise the client
with respect to actual or potential difficulties. Again, the attorney-client privilege is served by the
certainty that conversations between the attorney and client will remain privileged after the employee
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leaves.
[FN180] One who is empowered to make recommendations about the subject, but who lacks final
decisionmaking authority, would be a person in the chain of command relevant to the subject matter
of the legal services. Similarly, one who is authorized to collect information regarding the transaction
in order to convey it to the attorney or to the decisionmaker would be in the relevant chain of
command.
[FN181] An employee or agent is responsible, narrowly, for the performance of his assigned daily
work, but also, more broadly, for cooperating in the overall conduct of the employer's business.
Under this broad view, responsibility for the activity that might lead to liability for the corporation
might include responsibility for reporting wrongdoing by a peer to his supervisor. Cf. Note, The
Corporate Attorney-Client Privilege in the Federal Courts, 22 Cath. Law. 138, 149-50 n.45 (1976).
[FN182] This is Wigmore's fourth requirement. See note 5 supra and part (b) of Judge Wyzanski's
third requirement in United Shoe quoted in note 5 supra.
[FN183] Accord 8 J. Wigmore, supra note 5,
2311, at 599-602.
[FN184] See, e.g., In re John Doe Corp., 675 F.2d 482 (2d Cir. 1982); Diversified Indus., Inc. v.
Meredith, 572 F.2d 606, 609 (8th Cir. 1978) (rehearing en banc); Radiant Burners, Inc. v. American
Gas Ass'n, 320 F.2d 314, 324 (7th Cir.), cert. denied, 375 U.S. 929 (1963); United States v. United
Shoe Mach. Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950); D.I. Chadbourne, Inc. v. Superior
Court, 60 Cal. 2d 723, 735, 388 P.2d 700, 710, 36 Cal. Rptr. 468, 476 (1964).
[FN185] See, e.g., In re Walsh, 623 F.2d 489, 495 (7th Cir. 1980) (presence of third parties breaches
confidentiality); United States v. Blackburn, 446 F.2d 1089, 1091 (5th Cir. 1971) (presence of trial
counsel and government attorneys as well as defendant's attorney breaches confidentiality), cert.
denied, 404 U.S. 1017 (1972); Leathers v. United States, 250 F.2d 159, 166 (9th Cir. 1957) (presence
of government agents as well as defendant's attorney breaches confidentiality); LaMoore v. United
States, 180 F.2d 49, 54 (9th Cir. 1950) (presence of U.S. Deputy Marshal breaches confidentiality);
Diamond v. City of Mobile, 86 F.R.D. 324, 328 n.7 (S.D. Ala. 1978) (attorney-client privilege not
available when person who is not a client is present during communication); 8 J. Wigmore, supra
note 5, 2311, at 601-02.
[FN186] See 8 J. Wigmore, supra note 5, 2311, at 599. Some courts have advocated this doctrine
in the corporate context as well. See United States v. American Tel. & Tel. Co., 642 F.2d 1285, 1299
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(D.C. Cir. 1980); SEC v. Gulf & W. Indus., 518 F. Supp. 675, 683 (D.D.C. 1981).
[FN187] 8 J. Wigmore, supra note 5, 2311, at 599-603. See also Diamond v. City of Mobile, 86
F.R.D. 324, 328 n.7 (S.D. Ala. 1978) ("The rule is clear that no attorney-client privilege arises when
there is at least one person during the communications who is not a client. There is no basis for the
privilege.").
[FN188] See, e.g., United States v. Pipkins, 528 F.2d 559, 562 (5th Cir. 1976) (dicta) (attorney's
agents); United States v. Alvarez, 519 F.2d 1036, 1047 (3d Cir. 1975) (expert witness employed to
conduct psychiatric consultations in preparation for trial); United States v. Kovel, 296 F.2d 918, 921
(2d Cir. 1961) (attorney's agent); 8 J. Wigmore, supra note 5, 2311, at 601-02; text accompanying
notes 23-24 and note 23 supra (client's agents).
[FN189] This exception is commonly found in the joint defense situation, see text accompanying
notes 214-22 and note 217 infra. See, e.g., United States v. McPartlin, 595 F.2d 1321, 1336 (7th
Cir.), cert. denied, 444 U.S. 833 (1979); Abraham Constr. Corp. v. Armco Steel Corp., 559 F.2d 250,
253 (5th Cir. 1977); In re LTV Secs. Litig., 89 F.R.D. 595 (N.D. Tex. 1981); 8 J. Wigmore, supra
note 5, 2312, at 603.
[FN190] See text accompanying notes 213-17 infra.
[FN191] 572 F.2d 596 (8th Cir. 1977), aff'd on rehearing, 572 F.2d 606 (1978) (en banc).
[FN192] 572 F.2d 606, 609 (8th Cir. 1978) (rehearing en banc); see SEC v. Gulf & W. Indus., 518 F.
Supp. 675, 681 (D.D.C. 1981); Union Planters Nat'l. Bank v. ABC Records, 82 F.R.D. 472, 475
(W.D. Tenn. 1979) (adopting the Diversified Industries confidentiality test). But see Natta v. Hogan,
392 F.2d 686, 693 (10th Cir. 1968) (the required confidentiality is breached and protection lost if the
content of the communication is disseminated beyond the control group); Virginia Elec. & Power
Co. v. Sun Shipbldg. & Dry Dock Co., 68 F.R.D. 397, 400-01 (E.D. Va. 1975) (same); Gorzegno v.
Maguire, 62 F.R.D. 617, 620-21 (S.D.N.Y. 1973). Natta, Virginia Electric, and Gorzegno, which
were all decided before Upjohn and rejected the control group test, do indicate a possible role for that
test even after Upjohn. For the reasons given in the text, however, a modified "need-to-know" test
better comports with the Upjohn decision.
[FN193] Situations will arise that require a supervisor to collate information in the hands of
subordinates in order to convey it to the corporation's attorney. In such circumstances, so long as the
communication to the superior is made to facilitate the rendering of legal services and the
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information contained therein is given to the lawyer shortly thereafter, the requirement of
confidentiality is satisfied. Eutectic Corp. v. Metco, Inc., 61 F.R.D. 35, 39 (E.D.N.Y. 1973)
(communication of confidential information within the corporate structure does not defeat the
privilege). The communication to the third party superior is a necessary element in the very
communication the corporate privilege is designed to foster, providing the attorney with complete
information, and is thus justified on functional grounds.
[FN194] Confidentiality may also be lost if a document representing or reporting the attorney-client
communication is placed in the general files of the corporation rather than in the lawyer's files. See
Cote v. Knickerbocker Ice Co., 160 Misc. 658, 290 N.Y.S. 483 (N.Y. Co. Mun. Ct. 1936). But see
Schaeffer v. Below, 278 F.2d 619, 628 (3d Cir. 1960) (confidentiality not waived when letters
between deceased stockholder and his attorney were kept in files of corporation). Placement in the
general files arguably manifests a lack of concern about dissemination.
[FN195] It must be noted that, to the extent that the corporation adopts a policy of sanctioning
miscreant employees on the basis of information supplied by those employees to the corporation's
attorney, some employees will be unwilling to divulge damaging information to the attorney, the
existence of the privilege notwithstanding. This reality challenges the Upjohn Court's assumption
that the privilege induces increased communication between corporate actors and the corporation's
attorney. See text accompanying notes 98-102 supra. Thus, at least in the context of the rules on
confidentiality, the Court's assumption with regard to the efficacy of the privilege is at odds with its
choice of a voluntary compliance approach to corporate law-abidance.
[FN196] Complete fidelity to Upjohn may require additional exceptions to the general rules on
nondisclosure and confidentiality. For example, an exception permitting disclosure to government
agencies may be necessary to accommodate the corporation's duty to disclose the results of
investigations in some contexts. See, e.g., SEC v. Joseph Schlitz Brewing Co., 452 F. Supp. 824
(E.D. Wis. 1978) (failure to disclose questionable payments constituted a material omission from
required reports). In Upjohn, the government pressed the point that the Upjohn Company breached
confidentiality and lost whatever protection it had when it disclosed to the IRS the facts it had
uncovered in its investigation. Respondent's Brief at 22-26. This argument was clearly rejected
(though sub silento) by the Upjohn Court. Given the nature of its treatment of the issue, however, the
Court did not address the implications of doctrines permitting third parties to use the Freedom of
Information Act to force disclosure of documents obtained by an agency from a corporation. See
Chrysler Corp. v. Brown, 441 U.S. 281 (1979); see also Dresser Indus., Inc. v. United States, 596
F.2d 1231 (5th Cir. 1979) (Justice Department is not bound by assurances of confidentiality given by
the SEC), cert. denied, 444 U.S. 1044 (1980). More importantly, the duty in some contexts of the
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corporation (and occasionally of the lawyer, independent of the corporation) to make disclosures
poses a challenge to some of the assumptions of the Upjohn Court. See text accompanying notes
232-41 infra.
[FN197] See text accompanying notes 229-48 infra.
[FN198] See text accompanying notes 130-32 and note 132 supra.
[FN199] See, e.g., Diversified Indus., Inc. v. Meredith, 572 F.2d 606, 611 (8th Cir. 1978) (rehearing
en banc); In re Grand Jury Proceedings, Detroit, Mich., Aug., 1977 (Jackier), 434 F. Supp. 648, 650
(E.D. Mich. 1977), aff'd per curiam, 570 F.2d 562 (6th Cir. 1978); American Mut. Liab. Ins. Co. v.
Superior Court, 38 Cal. App. 3d 579, 595, 113 Cal. Rptr. 561, 574 (1974); Stewart Equip. Co. v.
Gallo, 32 N.J. Super. 15, 17, 107 A.2d 527, 528 (1954). See generally Heininger, supra note 22, at
386; Kidston, Current Developments in Attorney-Client Privilege, 36 Bus. Law. 701, 706 (1981).
[FN200] See also American Mut. Liab. Ins. Co. v. Superior Court, 38 Cal. App. 3d 576, 595, 113
Cal. Rptr. 561, 573-74 (1974) (insured surgeon cannot waive insurer's privilege in suit by insured
against insurer); Stewart Equip. Co. v. Gallo, 32 N.J. Super. 15, 17, 107 A.2d 527, 528 (1954)
(evidence did not establish that the vice president and sales manager had authority to waive
corporation's attorney-client privilege).
[FN201] The individual who communicates with the corporation's attorney does not necessarily have
the authority to waive the privilege on behalf of the corporation. See, e.g., American Mut. Liab. Ins.
Co. v. Superior Court, 38 Cal. App. 3d 579, 595, 113 Cal. Rptr. 561, 574 (1974) ("the record does
not show that anyone with authority to act waived for [the corporation]"). Indeed, in most
circumstances, he would not have the authority to do so. In one respect, identification of those with
authority to waive the privilege resurrects the difficulties the Supreme Court sought to resolve when
it buried the control group test. The analytical problems are of little import when the individual
information-giver does not contest the waiver because he is disinterested in the controversy. Mere
identification of a source of authority within the corporation is sufficient in this situation to
legitimate the waiver. The situation is quite different, however, where the information-giver contests
the waiver.
[FN202] Situations in which both the corporation and individual corporate actors are jointly liable
will multiply as corporate law enforcement comes more and more to rely upon prosecuting
responsible executives. See Coffee, Corporate Crime and Punishment: A Non-Chicago View of the
Economics of Criminal Sanctions, 17 Am. Crim. L. Rev. 419 (1980).
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[FN203] It might be argued that since a corporation must depend on its employees and agents to
provide the information needed to obtain legal advice, it will necessarily want to protect their
communications with the corporate attorney and that therefore it will always assert the privilege.
Surely this will sometimes be the case. See, e.g., Handler v. SEC, 610 F.2d 656, 660 n.1 (9th Cir.
1979); Dresser Indus., Inc. v. United States, 596 F.2d 1231, 1234 (5th Cir. 1979), cert. denied, 444
U.S. 1044 (1980); SEC v. Lockheed Aircraft Corp., 404 F. Supp. 651, 652 (D.D.C. 1975).
Nonetheless, when the corporation's interests diverge from those of the individual, the corporation
may be unwilling to assert the privilege on behalf of the information-giver. See, e.g., United States v.
Bartlett, 449 F.2d 700, 704 (8th Cir. 1971), cert. denied, 405 U.S. 932 (1972); United States v. De
Lillo, 448 F. Supp. 840, 841 (E.D.N.Y. 1978); In re Grand Jury Proceedings, Detroit, Mich., Aug.
1977 (Jackier), 434 F. Supp. 648, 650 (E.D. Mich. 1977), aff'd per curiam, 570 F.2d 562 (6th Cir.
1978); see also Kidston, supra note 199, at 706.
[FN204] 434 F. Supp. 648 (E.D. Mich. 1977), aff'd per curiam, 570 F.2d 562 (6th Cir. 1978).
[FN205] Id. at 650. The justification for this position was stated as follows:
Such a rule should not inhibit obtaining legal advice. The vice president is free to get legal advice
about his problems at any time from any lawyer. Such a rule should tend to prevent inadvertent
conflicts of interest from developing because to create the privilege in someone other than the
company it must be made clear to the lawyer that the intended client (control group personnel) is
someone other than the company, and the lawyer at that time could choose whether to accept the
communication on such terms.
Id.
[FN206] Id.
[FN207] See In re Grand Jury Investigation, 599 F.2d 1224, 1236 (3d Cir. 1979); United States v.
Demauro, 581 F.2d 50, 54-55 (2d Cir. 1978); Diversified Indus., Inc. v. Meredith, 572 F.2d 606, 611
n.5 (8th Cir. 1978) (rehearing en banc); Jarvis, Inc. v. American Tel. & Tel. Co., 84 F.R.D. 286, 29092 (D. Colo. 1979); United States v. De Lillo, 448 F. Supp. 840, 841 (E.D.N.Y. 1978); see also
Kidston, supra note 199, at 706.
[FN208] See text accompanying notes 98-102 supra.
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[FN209] A corporation would be within its rights in firing an employee who refused to provide
information relevant to his corporate duties to the corporation's attorney. See note 97 supra.
[FN210] A doctrine of waiver which would permit only the corporation to waive the privilege would
be anomalous in light of Upjohn. It would force courts to confront, in contested situations, the
question of who can waive on behalf of the corporation. This would once again insinuate control
group analysis into the corporate attorney-client privilege debate, after the Court in Upjohn has
resoundingly rejected it. See 449 U.S. at 397. The approach suggested in the text avoids that
problem. In some cases, the waiver by the corporation is uncontested, in which case, so long as there
is a legitimate head of authority within the corporate structure to support it, it suffices. In the
remaining cases in which the waiver is contested, the privilege may be asserted by either the
corporation or the information-giver.
[FN211] The court in In re Grand Jury Subpoena Duces Tecum, 406 F. Supp. 381, 394 (S.D.N.Y.
1975), appeal dismissed, 534 F.2d 1031 (2d Cir. 1976), in rejecting the suggestion that one joint
defendant ought to be able to waive the protection of the privilege vis-a-vis a conversation both
defendants had with an attorney, highlighted the chilling effect of such a rule.
[T]o allow such disclosure would so further erode the privilege's protection as to reduce joint defense
to an improbable alternative. How well could a joint defense proceed in the light of such codefendant's knowledge that any of the others might trade resultant disclosures to third parties as the
price of his own exoneration or for the satisfaction of a personal animus?
Id.
[FN212] The information-giver always has unilateral power to "waive" the privilege with regard to
the information he himself gives to the attorney merely by repeating the information publicly.
Communications, not information, are protected by the privilege. See text accompanying notes 12829 supra. In this sense, the waiver rule is not "dual." However, the information-giver is not free,
absent waiver of the privilege by the corporation, to disclose the attorney's statements to him, or the
statements of other corporate actors to the attorney. This rule echoes the rule proposed by Wigmore,
supra note 5, 2329, at 639, for situations where parties share an interest in the communication with
the attorney: "[N]either should be able to obstruct the other in the disclosure of the latter's own
statements" (citation omitted).
The point has an impact on the rules on confidentiality. See text accompanying notes 182-97 supra.
Theoretically, a breach of the rules on confidentiality renders the privilege inapplicable; thereafter, it
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cannot be invoked to prevent disclosure of the communication. If this rule were applied literally,
however, the corporation could unilaterally "waive" the privilege, notwithstanding a technical
requirement that waiver could not occur absent concurrent waiver by the information-giver, simply
by disseminating the information in violation of the rules on confidentiality. Therefore, the same
reasons that support a requirement that the information-giver himself waive the privilege also
support a modification in the rules on confidentiality: If the corporation breaches the rules on
confidentiality, it may not invoke the privilege to prevent disclosure; however, unless the
information-giver himself participates in the breach of confidentiality, he may still assert the
privilege. Only by modifying the rules on confidentiality in this way can the information-holder be
given the protection which the Upjohn Court assumed is necessary to motivate him to communicate
with the corporation's attorney. See text accompanying notes 217-26 infra.
[FN213] It might be argued that an employee or agent in possession of information which the
corporation desires to provide its attorney, but in which the employee or agent also has an interest,
could protect the information from disclosure, even in the absence of a requirement that he himself
waive the privilege, by contracting with the corporation. In other words, the information would be
given in exchange for a promise by the corporation not to waive the privilege. There are numerous
problems with such an approach, however. First, such public recalcitrance is not likely to enhance
the employment prospects of the would-be negotiator. See note 97 supra. Second, such a contract
would be ineffective in the event of a breach by the corporation since the harm of disclosure could
not be undone, even presuming that the communicator would have a cause of action for breach
against the corporation. Finally, because of the factors just mentioned, the information- giver would
be better protected by giving incomplete or false information than by attempting to confront the
corporation at the bargaining table.
[FN214] See United States v. McPartlin, 595 F.2d 1321, 1336 (7th Cir.), cert. denied, 444 U.S. 833
(1979); Hunydee v. United States, 355 F.2d 183, 185 (9th Cir. 1965); Continental Oil Co. v. United
States, 330 F.2d 347, 350 (9th Cir. 1964) (applying the joint defense doctrine when one defendant
was a corporation); SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 512- 14 (D. Conn. 1976) (applying
the joint defense doctrine when both defendants were corporations); In re Grand Jury Subpoena
Dated Nov. 16, 1974, 406 F. Supp. 381, 387-89 (S.D.N.Y. 1975); 8 J. Wigmore, supra note 5,
2328, at 639; see generally Note, The Attorney-Client Privilege in Multiple Party Situations, 8
Colum. J.L. & Soc. Probs. 179 (1972) [hereinafter Note, Multiple Party]; Note, Waiver of AttorneyClient Privilege on Inter-Attorney Exchange of Information, 63 Yale L.J. 1030, 1035 (1954)
[hereinafter Note, Inter-Attorney Exchange] (advocating pooling of information without waiver of
the attorney-client privilege if the data exchanged are relevant to a common interest among the
clients).
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[FN215] 62 Va. (21 Gratt.) 822 (1871).
[FN216] Id. at 839.
[FN217] See Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 90 F.R.D. 21, 29 (N.D. Ill. 1980); Bingham v.
Walk, 128 Ind. 164, 171-72, 27 N.E. 483, 485 (1891). The precise meaning of the common purpose
requirement has been given varying interpretations in the case law addressing joint defense
situations, however. Some courts have given the term a strict construction, requiring a high degree of
similarity in the joint parties' defenses. See In re Grand Jury Subpoena Dated Nov. 16, 1974, 406 F.
Supp. 381, 389 (S.D.N.Y. 1975) ("the attorney-client privilege covers communications to a
prospective or actual co- defendant's attorney when those communications are engendered solely in
the interests of a joint defense effort" (emphasis added)). But see United States v. McPartlin, 595
F.2d 1321, 1336 (7th Cir.) (rejecting argument, based upon its reading of the case law, that "the codefendants' defenses must be in all respects compatible if the joint-defense privilege is to be
applicable."), cert. denied, 444 U.S. 833 (1979); Hunydee v. United States, 355 F.2d 183, 184-85
(9th Cir. 1965) (rejecting proposition that application of the joint defense doctrine is limited to
communications concerning trial strategy and defenses and applying doctrine to situation where the
"statements apprised the respective attorneys of [the codefendant's position] at that time and
influenced the course of their representation."); Leyner v. Leyner, 123 Iowa 185, 186-87, 98 N.W.
628, 629 (1904); Vance v. State, 190 Tenn. 521, 529-30, 230 S.W.2d 987, 990-91, cert. denied, 339
U.S. 988 (1950). At least one commentator has argued that the doctrine should apply as long as the
parties are not adversaries in litigation. Note, Culpable Employees, supra note 22, at 840-46.
[FN218] See, e.g., Smale v. United States, 3 F.2d 101, 102 (7th Cir. 1924); Note, Multiple Party,
supra note 214, at 187 ("No American case has allowed a privilege for a joint conference in a
situation unrelated to litigation." (citations omitted)), and 189 (case law leaves the issue unresolved).
[FN219] Continental Oil Co. v. United States, 330 F.2d 347, 350 (9th Cir. 1964), (quoting J.
Wigmore, supra note 5, 2294, at 558 (applying the joint defense doctrine to an exchange of
information between attorneys for a corporation and attorneys for employees)). See also Wilson P.
Abraham Constr. Corp. v. Armco Steel Corp., 559 F.2d 250, 253 (5th Cir.), cert. denied, 434 U.S.
1015 (1977); Hunydee v. United States, 355 F.2d 183, 185 (9th Cir. 1965) (applying the joint
defense doctrine to communication exchanged between attorneys representing different witnesses
testifying in a grand jury investigation); SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 513 (D. Conn.
1976) ("The privilege need not be limited to legal consultations between corporations in the litigation
situation, however. Corportions should be encouraged to seek legal advice in planning their affairs to
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avoid litigation as well as in pursuing it.").
[FN220] 8 J. Wigmore, supra note 5,
2328, at 639; see note 212 supra.
[FN221] See, e.g., In re Grand Jury Subpoena Dated Nov. 16, 1974, 406 F. Supp. 381, 394
(S.D.N.Y. 1975); American Mut. Liab. Ins. Co. v. Superior Court, 38 Cal. App. 3d 579, 595, 113
Cal. Rptr. 561, 573-74 (1974).
[FN222] See Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 90 F.R.D. 21, 29 (N.D. Ill. 1980); Chahoon v.
Commonwealth, 62 Va. (21 Gratt.) 822, 841 (1871); 8 J. Wigmore, supra note 5, 2328, at 639.
[FN223] See 8 J. Wigmore, supra note 5, 2312 at 603-04; Simon, supra note 22, at 986-87; Note,
Inter-Attorney Exchange, supra note 214, at 1037; Note, Culpable Employees, supra note 22, at 839
n.149.
[FN224] However, it is clear that "the privilege of one joint client cannot be destroyed at the behest
of the other where the two have merely had a 'falling out' in the sense of ill-feeling or divergence of
interests." In re Grand Jury Subpoena Dated Nov. 16, 1974, 406 F. Supp. 381, 394 (S.D.N.Y. 1975).
[FN225] See Note, Fixed Rules, supra note 2, at 485-86; cf. Schmerber v. California, 384 U.S. 757,
763-64 (1965) (fifth amendment is basis for a defendant's testimonial privileges). But see Magida ex
rel Vulcan Detinning Co. v. Continental Can Co., 12 F.R.D. 74, 76 (S.D.N.Y. 1951), aff'd, 231 F.2d
843 (2d Cir.), cert. denied, 351 U.S. 972 (1956).
[FN226] Cf. E.F. Hutton & Co. v. Brown, 305 F. Supp. 371, 400 (S.D. Tex. 1969) (attorney
representing both corporation and its vice president had obligation to inform both parties concerning
potential conflict of interest in joint representation); Sorkin, Multiple Representation Before Antitrust
Grand Juries in Criminal Law and the Corporate Counsel 276 (A. Abramosky ed. 1981). Indeed, a
failure to give such a warning is a breach of an attorney's professional ethics which might render her
civilly liable to the person so ill- advised. The ABA Code of Professional Responsibility requires a
lawyer to disclose conflicting interests to a client. Model Code of Professional Responsibility Canon
5, EC 5-14b to 5-19, DR 5-105 (1980).
[FN227] United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961).
[FN228] Id. at 923. Out of a similar concern for fairness, the privilege covers communications which
the layman thinks are made in confidence to an attorney. McCormick, Evidence 91, at 187 (2d ed.
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1972).
[FN229] The modern corporation has been described as follows:
To Adam Smith and his followers, private property was a unity involving possession. He assumed
that ownership and control were combined. Today, in the modern corporation, this unity has been
broken. Passive property,- specifically, shares of stock or bonds,-gives its possessors an interest in an
enterprise but gives them practically no control over it, and involve [sic] no responsibility. Active
property,-plant, good will, organization, and so forth which make up the actual enterprise,-is
controlled by individuals who, almost invariably, have only minor ownership interests in it.
A. Berle & G. Means, The Modern Corporation and Private Property 304 (rev. ed. 1967); see also id.
at 119-26.
[FN230] Rosenfeld, Between Rights and Consequences: A Philosophical Inquiry into the
Foundations of Legal Ethics in the Changing World of Securities Regulation, 49 Geo. Wash. L. Rev.
462, 492-93 (1981).
[FN231] See generally Block and Barton, Internal Corporate Investigations, supra note 106, at 33-42;
Brereton, Abrogation of the Corporate Privilege in Stockholder Suits, 15 Prac. Law. 24; O'Neal &
Thompson, Vulnerability of Professional-Client Privilege in Shareholder Litigation, 31 Bus. Law.
1775, 1779-82 (1976); Note, The Attorney-Client Privilege and the Corporation in Shareholder
Litigation, 50 S. Cal. L. Rev. 303 (1977). There are two types of shareholder suits, derivative actions
on behalf of the corporation and direct actions based upon the shareholder's right. In the former, the
corporation is a nominal defendant, but its interests (at least theoretically) are represented by the
plaintiff; the officers of the corporation typically oppose the plaintiff-shareholder. In direct actions,
the plaintiff-shareholder sues the corporation, which clearly is the defendant.
[FN232] 430 F.2d 1093 (5th Cir. 1970), cert. denied, 401 U.S. 974 (1971).
[FN233] See Osternick v. E.T. Barwick Industries, 82 F.R.D. 81 (N.D. Ga. 1979); Panter v. Marshall
Field & Co., 80 F.R.D. 718 (N.D. Ill. 1978); Cohen v. Uniroyal, Inc., 80 F.R.D. 480 (E.D. Pa. 1978);
In re Transocean Tender Offer Secs. Litig., 78 F.R.D. 692 (N.D. Ill. 1978); Valente v. Pepsico, Inc.,
68 F.R.D. 361 (D. Del. 1975); Bailey v. Meister Brau, Inc., 55 F.R.D. 211 (N.D. Ill. 1972); see also
In re LTV Secs. Litig., 89 F.R.D. 595 (N.D. Tex. 1981) (discussing what constitutes "good cause"
and finding that shareholders had not satisfied their burden).
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[FN234] 430 F.2d at 1103-04 (emphasis added).
[FN235] Id. at 1104.
[FN236] See note 233 supra.
[FN237] See Note, The Attorney-Client Privilege and the Corporation in Shareholder Litigation, 50
S. Cal. L. Rev. 303, 317-24 (1977).
[FN238] See text accompanying notes 86-103 supra.
[FN239] See, e.g., Securities Act of 1933, 15 U.S.C.
77a-77aa (1976 & Supp. III. 1979);
Securities Exchange Act of 1934, 15 U.S.C.
78a- 78kk (1976 & Supp. III. 1979) (corporation's
duty to disclose information that is material).
[FN240] See, e.g., SEC v. National Student Marketing Corp., [1971-1972 Transfer Binder] Fed. Sec.
L. Rep. (CCH) 93,360 (D.D.C. 1972) (the attorneys' responsibilities to their corporate client
required them to take steps to ensure that the information be disclosed to shareholders; SEC filed the
instant complaint because of failure to take such steps); see also, The Code of Professional
Responsibility and the Responsibility of Lawyers Engaged in Securities Law Practice-A Report by
the Committee on Counsel Responsibility and Liability, 30 Bus. Law. 1289 (1975).
[FN241] The Second Circuit recently held that a corporation waived the privilege by disclosing
information to an auditor and an underwriter to facilitate approval of a proposed securities offering.
In re John Doe Corp., 14 Sec. Reg. & L. Rep. (BNA) 721 (2d Cir. Mar. 23, 1982), cf., Permian Corp.
v. United States, 665 F.2d 1214 (D.C. Cir. 1981) (holding that a corporation which had disclosed
some privileged documents to the SEC in order to expedite approval of an exchange offer could not
block dissemination of the materials to a second government agency by invoking the privilege).
Rules on mandatory disclosure were especially contradictory of the privilege when the prevailing
rule was that voluntary disclosure of information to a regulatory agency waived the protection of the
privilege altogether. See, e.g., In re Weiss, 596 F.2d 1185, 1186 (4th Cir. 1979); SEC v. Dresser
Indus., Inc., 453 F. Supp. 573, 576 (D.D.C. 1978); In re Penn Cent. Commercial Paper Litig., 61
F.R.D. 453, 466-67 (S.D.N.Y. 1973). But see Brynes v. IDS Realty Trust [1979-1980] Fed. Sec. L.
Rep. (CCH) 97,308 (S.D.N.Y. 1980).
This rule now seems to have been repudiated by Upjohn. There, the government argued that
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Upjohn's disclosure to the SEC constituted waiver. Respondent's Brief at 21-26. By validating
Upjohn's claim of privilege, the Court implicitly rejected this contention.
[FN242] See, e.g., United States v. American Radiator & Standard Sanitary Corp., 433 F.2d 174,
204-05 (3d Cir. 1970), cert. denied, 401 U.S. 948 (1971); United States v. Carter, 311 F.2d 934, 942
(6th Cir.), cert. denied, 373 U.S. 915 (1963); Egan v. United States, 137 F.2d 369, 379 (8th Cir.),
cert. denied, 320 U.S. 788 (1943).
[FN243] See, e.g., United States v. Ridglea State Bank, 357 F.2d 495, 498-500 (5th Cir. 1966);
Standard Oil Co. v. United States, 307 F.2d 120, 128-29 (5th Cir. 1962).
[FN244] The Upjohn Company, for example, may have adopted an employees' code of ethics
declaring it to be contrary to company policy for an employee to give illegal payments to foreign
officials. In such circumstances, Upjohn might argue that it was not liable for payments made.
[FN245] See, e.g., United States v. Hilton Hotels Corp., 467 F.2d 1000, 1006-07 (9th Cir. 1972),
cert. denied, 409 U.S. 1125 (1973); United States v. Harry L. Young & Sons, Inc., 464 F.2d 1295,
1296-97 (10th Cir. 1972); United States v. Armour & Co., 168 F.2d 342, 343-44 (3d Cir. 1948).
[FN246] United States v. Wise, 370 U.S. 405 (1962) (corporate officer is subject to prosecution
under 1 of the Sherman Act, 15 U.S.C. 1 (1976), if he knowingly participates in effecting an
illegal contract, combination, or conspiracy). See, e.g., Clean Air Act, 42 U.S.C. 7413(c) (1976)
(requiring knowledge for a criminal conviction); Federal Water Pollution Control Act 1319(c)(1),
33 U.S.C. 1319(c)(1) (1976) (requiring willfulness or negligence as an element of proof in a
criminal conviction). See also United States v. Park, 421 U.S. 658, 673 (1975) ("The theory upon
which responsible corporate agents are held criminally accountable for 'causing' violations ... permits
a claim that a defendant was 'powerless' to prevent or correct the violation to 'be raised defensively at
a trial on the merits."') (quoting United States v. Wiesenfeld Warehouse Co., 376 U.S. 86, 91
(1964)); People v. Lieber, 146 Cal. App. 2d Supp. 910, 914-15, 304 P.2d 869, 872 (App. Dept.
Super. Ct. 1956); Commonwealth v. Beneficial Fin. Co., 360 Mass. 188, 275 N.E.2d 33, 83 (1971)
("In a large corporation, ... a high ranking corporate officer or agent may have no authority or
involvement in a particular sphere of corporate activity, whereas a lower ranking corporate executive
might have much broader power."), cert denied, 407 U.S. 910 (1972); People v. Trapp, 20 N.Y.2d
613, 617, 233 N.E.2d 110, 113, 286 N.Y.S.2d 11, 15 (1967) ("[A]n officer may not be convicted ...
unless he knew or should have known of and taken some steps to prevent" a violation of New York
State's Labor Law.); State v. Flake, 83 S.D. 655, 660, 165 N.W.2d 55, 58 (1969) ("[C]ourts generally
restrict the criminal responsibility of a corporate officer to those criminal acts he actually committed,
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authorized, or approved."); McCollum v. State, 165 Tex. Crim. 241, 305 S.W.2d 612 (Crim. App.
1957) (vice president not held criminally liable for the acts of his subordinates).
[FN247] See text accompanying notes 104-08 supra.
[FN248] See text accompanying notes 182-214 supra.
57 NYULR 443
(Cite as: 57 N.Y.U. L. Rev. 443)
69
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