Last week, another appellate court heard another Kenneth Starr challenge to the attorney-client privilege -- this me as it applies to Deputy White House Counsel Bruce Lindsey. The independent counsel ought to win this bout, but not as overwhelmingly as he wishes.

Starr contends there is no governmental privilege in the context of a federal grand jury seeking communications from a federal office or agency. It is, he says, comparable to a client asking his left hand to transfer communications to his right hand. But a closer look at the privilege, as it works in the context of both the government and the corporation, shows that sometimes the left hand needs to be shielded from the right hand. Therefore, Starr's victory in the U.S. Court of Appeals for the D.C. Circuit should come not on an absolute denial of the privilege but on balance.

As everyone must know by now, Bruce Lindsey, when called before a grand jury investigating the Monica Lewinsky affair, refused to answer questions about communications between himself and President Bill Clinton. Lindsey claimed, among other things, that the communications were protected by the attorney client privilege.

While granting the independent counsel's motion to compel Lindsey's testimony, U.S. District Judge Norma Holloway Johnson rejected Starr's legal theory. Instead, she ruled that the attorney-client privilege can be overridden in the context of a governmental client when there has been a demonstrated need for relevant evidence not otherwise reasonably available. In re Grand Jury Proceedings, 1998 U.S. Dist. LEXUS 7736 (D.D.C. May 27,1998).

PAST ATTACKS

The first was the fact that actions of White House personnel cannot expose the White House as an entity to criminal liability. Unlike the government, a corporation is subject to both civil and criminal liability for the actions of its agents, and therefore the corporation through its attorneys has a "compelling interest in ferreting out any misconduct by employees.

The second reason was the statutory duty of executive branch employees to report criminal wrongdoing by other employees to the attorney general. 28 U.S.C. sec. 535(b)(1994). The 8th Circuit 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 court 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 8th Circuit insisted that its limited elimination would not make the protection of the privilege any more unpredictable than it already is.

In support of its claim, the 8th Circuit 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; the right of the bankruptcy trustee to waive a client's privilege claims; the right of the attorney to disclose confidential communications to justify fees that the client has contested; 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 court concluded that a limited loss of the privilege in the grand jury setting was relatively inconsequential.

But the 8th Circuit's analysis is questionable. All the examples offered to demonstrate the unpredictable nature of the privilege are instances in which the client initiates the event. The client must choose to challenge the attorney's services before the attorney may defend herself. The client must chose to file for bankruptcy before a trustee has the power to waive privilege claims. The client must chose to contest the lawyer's billings before evidence is offered to justify each bill. And the client must choose to consult the attorney for the purpose of perpetrating a crime or fraud before the privilege is destroyed.

Judge Johnson properly rejected the 8th Circuit's position for one that recognized the privilege, but permitted it to be overridden if good cause could be demonstrated. There is ample precedence for this middle position in the case law that has developed around the "fiduciary duty" exception, first recognized by the 5th Circuit in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970), cert. denied, 401 U.S. 974 (1971).

Federal courts have seldom addressed the application of the attorney-client privilege to government agencies. The particular use of the privilege by one government agency against another has been tackled only by the 8th Circuit, and the general application of the privilege to the government has been assumed without analysis. By contrast, there is an abundance of case law on the corporate privilege. Because there are significant parallels in structure and function between the governmental and corporate entities, therefore, specific applications of the government privilege in terms of its nature, scope, waiver, definition of who personifies the client, and determination of who is qualified to render or assist in rendering legal advice have been strongly influenced by corporate decisions.

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 (i.e., fictions) that have no existence outside the law. Neither can speak or act except through its lawful representatives, yet both have been given the privilege to encourage candor in communications with legal counsel. Conversely, the people through whom the corporate and governmental entities speak are given no personal protection by the entity's privilege-they speak at their own risk, subjects 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 to the shareholders and citizens, respectively.

A SERIOUS QUESTION

Since the corporate and governmental privileges give their protection to an entity that can't speak, and deny it to the agent speak for them, a serious question is raised about the wisdom extending a protection that is designed to encourage communication . It is notable therefore that in a recent study of Fortune Five 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 employees because they believe that their interests corporation's interests are the same, and that the corporation use its privilege to protect them.

Assuming the application of the privilege to govern entities, and the relevance of the corporate experience to the governmental privilege, the balancing approach taken by Johnson, not the absolute denial by the 8th Circuit, is more consistent with the "fiduciary duty" exception created in Garner.

In the Garner case, corporate executives were being sue personally for actions that had injured the corporation, and thereby the value of the shareholders' interests. Garner gave the holders the right to examine the corporation's confidential attorney-client communications if "good cause" was shown. was defined by many factors, including the number of shareholders seeking access, the percentage of stock that those shareholders represented, the legitimacy and gravity of their whether the alleged wrongful actions were criminal in and the necessity or desirability of the shareholders' having information.

Like the corporate executives in Garner, public employe elected officials are responsible for making the entity function- and therefore seeking legal advice where necessary and upon it. Like corporate executives, government officials allowed to consult with attorneys in confidence and act expeditiously without constant interference by the "owners' -i.e., citizens. Thus the explanation in Garner for both having a attorney-client privilege and recognizing an exception to it holds compelling truths for the application of the governmental as well:

THE GOVERNMENT'S NEED

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 even by an absolute governmental privilege. What she did not explore, however, is the gravity of the government's need for confidentiality.

This is unfortunate because, in one respect, the need for the privilege in government may be greater than in the corporation. Public employees, unlike corporate executives, cannot be held personally liable for their negligent mismanagement of the entity's funds. In the corporate setting, this potential liability encourages executives to seek legal advice, regardless of whether the privilege protects them, whereas in the governmental context, the absence of personal financial responsibility eliminates one more pressure to consult with attorneys, even when such consultation would be the wise thing to do.

An additional consideration for the D.C. Circuit in deciding whether to recognize a qualified governmental privilege should be the need for judicial restraints on the relatively unbridled use of prosecutorial power by the independent counsel. In the very recent past, we have seen 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 control on independent counsel, who may have too much time, money, and perhaps political inspiration to always exercise the enormous powers of their office with wisdom and caution.

Nonetheless, since the grand jury and special prosecutor do represent the broad interests of the public in their efforts to investigate and prosecute criminal conduct, their needs should also be given careful consideration. Judge Johnson found a compelling need on the part of the grand jury for the testimony and papers of Bruce 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.

Starr has pursued his role as special prosecutor with zeal. In his effort to leave no stone, or paper, unturned, he has challenged many established principles relative to the attorney-client privilege, and he has often won. But this challenge is not one where he should claim total victory.

The people have the right to expect their government to function professionally and efficiently. Consistent with that expectation, principles of confidentiality should be fashioned with a concern for more than Starr and his singular prosecution. Effective management of government requires that the need for confidentiality be recognized, and that exceptions be granted only upon a case-by-case demonstration of good cause.