In my previous column I suggested that a corporation's disclosures of confidential communications to outside auditors will likely be seen by courts as destroying the confidentiality of those communications, and thereby destroying the attorney-client privilege protection. However, in certain circumstances, courts have found the privilege applicable even when originally-confidential communications had been disclosed to others.
 

In the most common of these situations, the information was disclosed to a party with whom the corporation was sharing legal resources or arguments. For example, one attorney could be representing, and (with their prior consent) sharing communications of, two or more clients ("joint clients") in the same matter. In addition, under a "joint defense agreement," multiple clients and their separate attorneys combine to share otherwise-confidential communications to defend or prosecute common position in actual or anticipated litigation.
 

Alternatively, multiple clients with a common legal interest could share legal resources outside a litigation context (for example, persons jointly developing a patent). This arrangement is risky because for the privilege to be upheld courts have imposed a requirement that the clients have identical legal (as opposed to business) interests. Separate clients rarely have "identical" legal interests, and outside a litigation framework it is difficult to accurately anticipate how similar a particular judge will require the clients' separate interests to be. See generally, P.R. Rice, Attorney-Client Privilege in the United States, Sec. 4:30-4:38 (West Group 2nd ed. 1999) (hereafter Treatise)
 

The issue of broken confidentiality also arises with regard to former employees of a corporation. In the corporate setting the client is the fictitious legal entity, not the shareholders or the individual employees who personify the corporation for purpose of privileged communications. Nevertheless, the law permits all employees to have access to confidential communications that involve subjects that are within the scope of their corporate responsibilities. When those employees leave, they take with them their knowledge of those communications, if not physical or electronic copies of the communications themselves.
 

When employees are lured away by competitors, the content of those communications is often shared, either directly or indirectly, with the new employer, thereby destroying their confidentiality. Nevertheless, courts have maintained the privileged status of those communications by refusing to acknowledge this destruction; they choose instead to treat the disclosure as a failed waiver of the privilege by individuals who did not have the authority to do so. Allen v. Burns Fry, Ltd., 1987 WL 12199 (N.D. Ill. 1987).
 

When actions are instituted by corporations against former officers and directors, the defenses they often raise can only be proven through many of the confidential communications to which they were privy when they were in the plaintiff's employ. Since those individual officers and directors were not themselves clients of the corporate counsel when they spoke with her, or when they received copies of communications of other employees who were speaking with the corporate counsel, they might never have controlled the privilege protection. Certainly, as former employees they no longer have the right to waive it on behalf of the corporation.
 

Nevertheless, a few courts have begun to give ex-officers access to the communications in subsequent litigation against them because those ex-officers were privy to the communications before their discharge. See, e.g., Financial, Inc. v. Krieger, 2000 WL 10446, *2 n.2 (E.D. Pa. Jan. 5, 2000) If the ex-officers were permitted only to examine corporate communications, granting this right to inspect would be reasonable since those individuals have already been privy to them.
 

Unfortunately, however, examination is only the first step. If the communications prove to be vital to their defense, surely examination will lead to use, and use in court will result in the complete destruction of confidentiality. Therefore, in substance, this new practice is extending to ex-officers control over the corporation's privilege.
 

In the corporate setting, courts have given access to confidential attorney-client communications to shareholders who can demonstrate "good cause" through the bona fides of their claim, the percentage of shareholders represented, and the legitimacy of their need for the information. Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970). This has occurred most frequently in shareholder derivative actions, but has been vastly expanded in the past decade to all situations where a fiduciary duty is owed to another. See generally, Treatise, Sec. 8:22.
 

This right to examine the communications between the fiduciary and the attorney destroys the confidentiality vis-a-vis the shareholders, and may result in a much broader dissemination if the communications are admitted as evidence at a subsequent trial. Yet the privilege is permitted to survive this assault and can be asserted by the corporation to prevent further disclosure (or introduction of the communications into evidence if they are otherwise obtained), when the communications are sought by third parties in subsequent litigation.
 

Courts have also ignored the loss of confidentiality when a client has inadvertently disclosed confidential communications in the pretrial discovery process. If reasonable efforts were taken to avoid such disclosures, the error was found quickly, and immediate actions were taken to retrieve the errant communications, courts have uniformly excused the breach, compelled the return of the "confidential" communications and ordered everyone to act as if nothing had happened. Treatise, Sec. 9:70. Under this "oops rule" the loss of confidentiality is ignored because it was not due to the serious fault of the privilege holder. Similar results are directly approved by courts in protective orders that allow massive document exchanges prior to the assertion of privilege claims. See, e.g., Bonasera v. First Allmerica Financial Life Ins. Co., 1999 Mass. Super. LEXIS 530 (Dec. 28, 1999).
 

These few examples of courts ignoring the loss of confidentiality raise fundamental questions about the confidentiality requirement itself. What is the logic behind the requirement? Why is it appropriate for it to be applied so inconsistently? Does the inconsistent application suggest that courts are troubled by the logic and consequences of the requirement? There is little logic, and that probably explains the inconsistencies. P. R. Rice, ATTORNEY-CLIENT PRIVILEGE: The Eroding Concept of Confidentiality Should Be Abolished, 47 Duke Law Review 101 (1998).
 

The requirement of confidentiality imposes heavy costs on the litigation process. For each document for which the privilege is claimed the proponent must prove that confidentiality was anticipated, accomplished and preserved. This requires the identification of each person made privy to the communication, and the establishment of his qualifications to be a recipient. That process in turn involves the identification of every initial and interlineation on every copy of every communication withheld. This process is responsible for the vast majority of litigation costs associated with attorney-client privilege claims. Despite the heavy burden that the confidentiality requirement imposes, courts have never explained why secrecy has been considered essential to the privilege's creation and preservation. Without explanation, they simply echo Professor Wigmore's unsubstantiated conclusion that "communications must originate in a confidence that they will not be disclosed."-- an ipse dixit that translates into hundreds of millions of dollars of litigation costs annually.
 

If a corporate client wishes, or is required under a government contract, to expose sensitive documents to auditors, this breach of confidentiality is no more a cause for losing the privilege protection than the myriad breaches that are so widely, albeit inconsistently, excused.