Issue: Internal Law Firm Privilege

Significance: Clients pay law firms to serve them as advocates, not fight them as adversaries. Therefore, law firms should not rely on misguided claims of attorney-client privilege to hold back information from existing clients about the clients’ own matters.

Description: Law firms cannot place their own interests above those of their clients. If they could, law firms might turn their skills against clients whenever it suits them, as this case demonstrates. Creating a new privilege that allows law firms to hide information would allow lawyers to put their own interests first, thus hurting clients. Lawyers would be free to hide evidence of malpractice from their clients, undermining the fundamental bond of trust that grounds the lawyer-client relationship.

Since its creation, ACC has championed attorney-client privilege. But attorney-client privilege exists to strengthen the relationship between the real client and its law firm. Internal law firm privilege weakens that relationship, and introduces great uncertainty.

By creating fear and distrust between real clients and their outside law firms, an internal law firm privilege would make it less likely that clients will consult lawyers. That result directly contradicts the goal of the attorney-client privilege, which is to encourage legal advice, not thwart it.

Law firm lawyers owe their real clients profound loyalty, including full disclosure. Put another way, law firms simply never have the authority to hire themselves as clients, when there is any chance of a conflict with the real client. In-house lawyers are sophisticated and experienced, and fully capable of deciding for themselves whether a conflict exists, which makes full disclosure by law firms vital.

Frequently Asked Questions 

Q: Can law firms ever hire themselves?
A: Sometimes. When law firms are, for instance, negotiating a lease, or dealing with employee or labor issues of their own, they can create an attorney-client relationship between the firm’s in-house lawyer and the firm itself. But they can’t do that when they’ve already committed to representing a previous client.

Q: Why are the rules different for law firms versus other types of organizations? That is, why can other clients hire a law firm, but the law firm can’t hire itself?
A: Lawyers must put their real clients interests above their own. Other actors have not assumed the same duties to the actual client as law firms. Those duties to real clients make up the essence of what law firms sell, and is the reason clients hire them in the first place. Part of a lawyer’s responsibility involves accepting limits, in exchange for the financial and other rewards of working as a licensed attorney to help clients.

Q: Is the duty of loyalty an issue here? Is there anything else motivating ACC’s position?
A: The duty of loyalty is important. That’s part of the reason that law firms can’t hire themselves when doing so creates a potential conflict. They owe a loyalty duty to their real clients. But the issue goes beyond that. Privilege exists to help ensure that clients receive full and frank legal advice. Law firms, by claiming the privilege for themselves, turn that goal on its head. In essence, they harm the real client that the privilege is supposed to protect.

Internal Law Firm Privilege Advocacy
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