by Paul R. Rice(1)
White House Counsel, Bruce Lindsey, when called before a grand jury convened by Independent Counsel Kenneth Starr, refused, to answer questions about communications between himself and President Clinton. He claimed, among other things, that the communications were protected from disclosure by the attorney-client privilege.
Mr. Starr asked Chief Judge Norma Holloway Johnson of the District Court of the District of Columbia to compel Mr. Lindsey to answer his questions. Starr argued that no privilege exists in the context of a federal grand jury investigation when information is sought from a government agency. While granting Starr's motion to compel, Judge Johnson rejected Starr's legal theory that no privilege exists. Instead, she ruled that the attorney-client privilege, which is normally absolute, can be overridden in the context of a governmental client when there has been a demonstrated need for relevant evidence that is not otherwise reasonably available from alternative sources. In re Grand Jury Proceedings, 1998 U.S. Dist. LEXIS 7736 (D. D.C. May 27, 1998).
This is not Starr's first successful attack on the government's attorney-client privilege. Within the past year, during the course of his investigation of the private conduct of President and Hillary Clinton in the Whitewater matter, he convinced the Eighth Circuit Court of Appeals that the government cannot assert the attorney-client privilege in response to a grand jury subpoena. In re Grand Jury Subpoena, 112 F.3d 910 (8th Cir., cert. denied 117 S.Ct. 2482 (1998). Though recognizing parallels between the governmental and corporate privileges, and acknowledging that corporate law of attorney-client privilege has often informed judicial decisions on the appropriate application of the government's privilege, the Eighth Circuit concluded for two reasons that corporate decisions in this area should not control the government agency question.
The first was the fact that actions of White House personnel cannot expose the White House as an entity to criminal liability. Since, unlike the government, the corporation is subject to both civil and criminal liability for the actions of its agents, the corporation through its attorneys, has a "compelling interest in ferreting out any misconduct by employees." The second reason given by the Court was the statutory duty of executive branch employees to report criminal wrongdoing by other employees to the Attorney General. 28 U.S.C. § 535(b) (1994). The Court held that "to allow any part of the federal government to use its in-house attorneys as a shield against the production of information relevant to a federal criminal investigation would represent a gross misuse of public assets."
The Eighth Circuit dismissed the suggestion that its decision was rendering the attorney-client privilege uncertain, and therefore, ineffective. While acknowledging that the Supreme Court had warned that "an uncertain 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," the Court insisted that its limited elimination of the privilege would not make the protection of the privilege any more unpredictable to the client than it already is.
In support of its claim the Court cited a number of existing exceptions to the privilege: the self-defense rule that allows attorneys to reveal confidential communications to defend themselves against charges of ineffective assistance; if the client files for bankruptcy, the right of a bankruptcy trustee to waive the client's privilege claims; when the client contests the fees of the attorney, the attorney can disclose the confidential communications necessary to justify the fees that have been charged; and the crime/fraud exception, which eliminates the privilege when the client consults the attorney for the purpose of perpetrating or perpetuating a crime or fraud.
From these examples the Eighth Circuit concluded that the limited loss of the privilege that it was recognizing in the grand jury setting was relatively inconsequential. This analysis is questionable, however, because all of the examples offered by the court to demonstrate the unpredictable character of the privilege were instances where the client initiated the event. The client must choose to challenge the services of an attorney before the attorney must defend herself. The client must chose to file for bankruptcy before a trustee is appointed who has the power to waive privilege claims. The client must chose to contest the lawyers billings before evidence is offered to justify each bill. Similarly, the client must choose to consult the attorney for the purpose of perpetrating a crime or fraud before the privilege is destroyed and all communications in furtherance of that criminal end must be disclosed.
District Judge Johnson rejected the Eighth Circuit's position for one that recognized the privilege, but permitted it to be overridden by the prosecution if good cause could be demonstrated. While President Clinton appeals this ruling, contending that the privilege should be absolute (no balancing) for predictability purposes, Mr Starr continues to argue that this victory in the lower court should have been premised on the total absence of the privilege. Mr. Starr's theory is that when the grand jury is seeking communications from a government office or agency, it is comparable to the same client asking the left hand to transfer communications to the right hand.
While Mr. Starr should continue to win the battle over access to Mr.
Lindsey's papers and testimony, his victory should be "on balance" rather
than "on absolutes." There is ample precedence for this middle position
in the case law that has developed around "fiduciary duty" exception that
was first recognized by the Fifth Circuit in Garner v. Wolfinbarger,
430 F.2d 1093 (5th Cir. 1970), cert. denied, 401 U.S. 974 (1971).
Corporate Law Has Given Direction to the Application of the Government Privilege: It Should Continue To Do So
Federal courts have seldom addressed the issue of the application of the attorney-client privilege to government agencies. In the specific context of one government agency against another, and particularly a grand jury against a government agency, the issue has been addressed only in the Eighth Circuit's decision in In re Grand Jury Subpoena Duces Tecum. The general application of the privilege to the government has been assumed without analysis. However, specific applications of the government privilege in terms of its nature, scope, definition of who personifies the client (i.e., who is an agent), determination of who is qualified to render or assist in rendering legal advice, and the myriad question of waiver have been strongly influenced by corporate decisions because there is an abundance of case law and significant parallels in structure and function between the governmental and corporate entities.
The corporation is owned by the shareholders. Similarly, the government is "of the people, by the people and for the people." Both the corporation and the government are legal entities--fictions--that have no existence outside the law. Neither a corporation nor a government can speak or act except through its lawful representatives (yet both entities have been given the privilege protection to encourage their candor in communications with legal counsel). Conversely, the only people through whom the corporate and governmental entities can speak are given no personal protection by the entity's attorney-client privilege--they speak at their own risks, subject to the entity's willingness to use its privilege to protect them. Finally, those who speak and act for the corporation and the government owe a fiduciary duty (a duty to act for another's benefit) to the shareholders and citizens, respectively.
Since the corporate and governmental privileges give their protection to an entity that can't speak, and deny it to the agents who speak for them, a serious question is raised about the wisdom of extending at all a privilege protection that is designed to encourage communications. While that difficult question is beyond the scope of this article, it is notable that in a recent study of attitudes toward the privilege in Fortune 500 companies, the Evidence Project of the American University Washington College of Law discovered that the corporate privilege seems to indirectly encourage openness and candor on the part of corporate employees because the employees believe that their interests and the corporation's interests are the same, and that the corporation will use its privilege to protect them.
Assuming the application of the attorney-client privilege to governmental
entities, and the relevance of the corporate experience to rules defining
the government's privilege, the approach taken by Judge Johnson (balancing),
not the approach of the Eighth Circuit (denial of privilege), is more consistent
with an established fiduciary duty exception created in Garner.
The Controlling Exception to the Privilege: Balancing of Interests
Garner was a shareholder derivative action. Corporate executives were personally being sued for their actions that injured the corporation, and thereby the value of the shareholders interests. In this action the shareholders were given the right to examine confidential attorney-client communications of the corporation if "good cause" were shown. Cause was defined by a large number of factors, including the number of shareholders seeking access, the percentage of stock that those shareholders represented, the legitimacy and gravity of their claim, whether the wrongful actions were criminal in nature, and the necessity or desirability of the shareholders' having the information. This precedence has significant parallels in the government context, particularly when information is being sought in the investigation and prosecution of criminal activity of government officials.
In striking parallel with corporations and shareholders, citizens "own" the government, and public employees and elected officials are responsible for making it function--seeking legal advice were necessary and acting upon it. Like corporate officials, those government officials must be permitted to consult with attorneys in confidence and act expeditiously without constant interference by "owners." The court's explanation in Garner for both having a corporate attorney-client privilege and recognizing an exception to it, holds compelling truths for the application of the government privilege as well:
Corporate management must manage. It has the duty to do so and requires the tools to do so. Part of the managerial task is to seek legal counsel when desirable, and, obviously management prefers that it confer with counsel without the risk of having the communications revealed at the instance of one or more dissatisfied stockholders. The managerial preference is a rational one, because it is difficult to envision the management of any sizeable corporation pleasing all of its stockholders all of the time, and management desires protection from those who might second guess or even harass in matters purely of judgment.
But in assessing management's assertions of injury to the corporation it must be borne in mind that management does not manage for itself and that the beneficiaries of its action are the stockholders. . . . There may be reasonable differences over the manner of characterizing in legal terminology the duties of management, and over the extent to which corporate management is less of a fiduciary than the common law trustee. . . . But when all is said and done management is not managing for itself.
The representative and the represented have a mutuality of interest in the representative's freely seeking advice when needed and putting it to use when received. This is not to say that management does not have allowable judgment in putting advice to use. But management judgement must stand on its merits, not behind an ironclad veil of secrecy which under all circumstances preserves it from being questioned by those for whom it is, at least in part, exercised.
From the shareholder derivative action in Garner, the "fiduciary duty" exception has been applied in many contexts other than derivative actions, even outside the corporate context. See generally Rice, Attorney-Client Privilege in the United States, § 8:17-24 (Lawyers Cooperative).
Judge Johnson's resolution of the government privilege question involved a Garner type balancing of interests. Considering the gravity of who was making the request (the grand jury through the special prosecutor), she balanced the need for the evidence in the grand jury investigation against the public benefit in maintaining confidentiality.
In deciding whether the privilege should be absolute or qualified, Judge Johnson found that making the privilege qualified would not unduly chill candor from either government employees or government attorneys because neither is personally protected by the government's privilege, and that this lack of personal protection will not change if the government's privilege is not considered absolute. She did not explore, however, the gravity of the government's need for confidentiality. This was simply assumed to be sufficiently great to be concerned about chilling the communications that the privilege was designed to encourage.
This is unfortunate because, in one respect, the need for the privilege in the governmental context may be greater than it is in the corporate setting. That is the fact that governmental employees, unlike corporate executives, cannot be held liable for their negligent mismanagement of public funds. In the corporate context, this potential liability pressures corporate executives to seek legal advice, regardless of whether the privilege personally protects them. In the context of a government agency, the lack of personal protection for the management level employees prevents the privilege from supplying an incentive to consult with attorneys, and the absence of personal financial responsibility eliminates a pressure that complements the inherent limitations of the entity privilege.
An additional consideration in the decision whether to recognize a qualified attorney-client privilege vis-a-vis the grand jury investigation should be the need for judicial restraints on the relatively unbridled use of prosecutorial power by the special prosecutor. In the very recent past we have seen Mr. Starr subpoena records of book purchases, force parents to testify against children, harass individuals with multiple subpoenas, subpoena witnesses who were thought to have done little more than say derogatory things about the prosecutor and his staff, and pursue the records and testimony of attorneys. The balancing approach adopted by Judge Johnson would impose a much needed prior restraint on special prosecutors who are generally accountable to no one and who have been shown to have too much time, money, and perhaps political inspiration to exercise the enormous powers of the office with wisdom and restraint.
Since the grand jury and special prosecutor represent the broad interests of the public in their efforts to investigate and prosecute criminal conduct, their needs should be given special consideration. Therefore, Judge Johnson found a compelling need on the part of the grand jury for the testimony and papers of Mr. Lindsey because they "likely contain important evidence" and that evidence "is not available with due diligence elsewhere." This approach to the resolution of the government's privilege claim should be upheld by the D.C. Circuit Court of Appeals.
Mr. Starr has pursued his role as special prosecutor with zeal. In his effort to leave no stone, or paper, unturned in his investigation, he has challenged many established principles relative to the attorney-client privilege. This challenge is not one he should win. The people have the right to expect the government to function professionally and efficiently. Consistent with that expectation, principles of confidentiality should be fashioned with a concern for more than Mr. Starr and his single-minded prosecution. Effective management of governmental affairs requires that the need for confidentiality be recognized, and that exceptions be granted only upon a case-by-case demonstration of need or good cause.
1. Mr. Rice is a professor of law at the American University Washington College of Law and the author of two treatises on the attorney-client privilege, Attorney-Client Privilege in the United States (Lawyers Cooperative 1993) and Attorney-Client Privilege: State Law (Rice Publishing 1998). http://www.wcl.american.edu/pub/faculty/rice/acprivilege/