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*Originally posted on the Boston Bar Association Blog

In some jurisdictions, the privilege attaches to communications with a person that the client reasonably believes is a lawyer, even if the person turns out to be an impostor. See Restatement (Third) of the Law Governing Lawyers, § 72(1) , comment e. Gucci claimed that it reasonably believed its general counsel was a lawyer, but the Magistrate rejected the claim because Gucci had never investigated the general counsel’s credentials.

Earlier cases applying the reasonable belief standard do not expressly require the client to conduct an independent investigation of the lawyer’s credentials. Under the standards applied in those cases, Gucci’s belief that its general counsel was a lawyer may have been passed muster: the general counsel held himself out as a lawyer, had a law degree, had passed the California bar, and was apparently able to perform his legal functions to Gucci’s satisfaction for six years. Those cases, however, dealt with individuals seeking legal advice. A later case cited by the Magistrate suggests that an organization hiring in-house counsel must perform due diligence regarding the prospective employee’s qualifications to practice law. Fin’l Tech. Int. v. Smith, 2000 WL 1855131 (S.D.N.Y. 2000). The Magistrate may also have been influenced by how easy it was to ascertain the general counsel’s status. California, like many states, maintains an on-line directory of attorneys admitted to the California bar. A quick search of the California’s State Bar’s website would have shown that the general counsel was on inactive status.

The moral seems to be that an organization should at a minimum do a Google search before hiring in-house counsel. In the meantime, Gucci has six years of communications it thought were privileged to sort through. Its discovery battle with Guess?, however, is not over. The Magistrate ruled that Gucci could still argue that the general counsel’s e-mails were protected by the work product privilege.

This blog entry was originally posted on Legal OnRamp.  Goulston & Storrs attorneys provide blogs, discussion forums, collaboration, and pertinent news and related key cases regarding attorney-client privilege and work product protection information for Legal OnRamp.

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We invite you to view Suma's video. 

Whether this decision will remain confined to the tax work papers for which the majority showed less than full regard, or will, in the dire pronouncements of the dissent, usher in a entirely new work product doctrine profoundly hostile to company financial documents, remains uncertain -- perhaps the Supreme Court will accept the dissent's invitation to intervene, perhaps we will have to wait for the First Circuit to apply Textron in the next case.

But here's what we do know: in house counsel will want to take heed that "dual purpose" company documents -- documents prepared to allow the company to assess and evaluate potential litigation and to make business decisions influenced by the prospects of litigation -- may no longer enjoy work product protection in the First Circuit. The obvious point of uncertainty will be those financial statements prepared by companies to enable them to set the appropriate reserves for contingent liabilities, but not necessarily prepared “for use” in litigation. Potentially any and all written musings by corporate counsel on litigation for purposes of disclosing risk may be susceptible to the searching inquiry of an adversary if the court concludes, as did the Textron court with respect to tax work papers, that such musings were not prepared primarily for use at trial. This is because, in the extreme view, what the First Circuit did in Textron was jettison the long settled "because of" work product standard (a document was entitled to work product protection as long as it was prepared because of the prospect of litigation, regardless of its other purposes) in favor of a much narrower "primary purpose" or "prepared for" standard, which would require the document to have as its dominant purpose its use in potential litigation.

While it's certainly far from clear that the First Circuit is ready to embrace this view (it does not even purport to articulate a rule change), the dissent puts us loudly on notice. It declares: "Corporate attorneys preparing such analyses should now be aware that their work product is not protected in this circuit." For its part, the majority states: "to sum up, the work product privilege is aimed at protecting work done for litigation, not in preparing financial statements."

The safest course, therefore, will be to heed the dissent's advice until the significance of the Textron 1 / 2 United States v. Textron: The Uncertain Status of the Work Product Doctrine in the First Circuit decision is clarified. In house counsel would be wise to keep the legal analysis in support of a financial statements to a bare minimum, and to keep it out of writing if possible. This will require a clear and perhaps renewed understanding of accounting standards and public disclosure requirements, as well as redefined expectations among company auditors. It may not be that in house counsel's work product is truly "not protected in this circuit," but prudence dictates that counsel act like it isn't until the Supreme Court or the First Circuit says differently.

The lowest-risk/highest-reward “green” strategy for restaurants is to minimize energy consumption. Restaurants are notoriously energy-, water- and waste-inefficient. According to PG&E, 80% of the $10 billion annual energy bill for the commercial food service sector is expended by inefficient food cooking, holding and storage equipment. So, cutting energy use translates directly to the bottom line by reducing utility costs.

So where do you start?

First, look into the federal ENERGY STAR ® program. Go to http://www.energystar.gov/index.cfm?c=small_business.sb_restaurants for specific advice on benchmarking (auditing) your existing energy use, and developing plans to reduce such use.

Second, regulated electric and gas utilities in most of the larger states, such as California, New York and Massachusetts, are now required to offer programs to promote energy efficiency by their customers including programs tailored to the food service industry. These often include significant cash rebates or loans for restaurants to install equipment that improves energy efficiency. Look at http://www.dsireusa.org/Index.cfm?RE=0&EE=1 and contact your utility.

Want more? Resources include…

National Restaurant Association: http://conserve.restaurant.org/index.cfm

Green Restaurant Association:  http://www.dinegreen.com/

Green Seal:  http://greenseal.org/certification/standards/GS-46_Restaurants_and_Food_Service_Standard.pdf 

Have questions or want to comment?

Please contact Phil Herman.