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Is Your General Counsel a Lawyer?

July 2010
Practice: Professional Liability
People: Timothy J. Dacey

What happens if a corporation’s general counsel isn’t a lawyer? The results can be painful, as Gucci found out in the middle of a contentious lawsuit. Gucci America, Inc. sued Guess?, Inc. for trademark infringement. During discovery, Gucci withheld e-mail communications with its general counsel, claiming that they were protected by the attorney-client privilege. Guess demanded that the e-mails be produced, citing the general counsel’s deposition testimony that he was an “inactive” member of the California bar. A Magistrate Judge ruled that the communications were not privileged because, under California law, a lawyer on inactive status was not eligible to practice law. Gucci America,Inc. v. Guess?, Inc., 2010 U.S.Dist. LEXIS 65871 (S.D.N.Y June 29, 2010).

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.

This information should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.

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