ABA Journal reports on a Georgia case that addresses one of the most "perplexing" ethical issues involving the increasing use of in-house counsel to advise law firms about ethics duties and regulatory requirements: whether communications between a firm's lawyers and its in-house counsel are protected by attorney-client privilege and work product doctrine in disputes between the firm and a client. In the case, a law firm contacted its in-house counsel immediately following a contentious conference call with that led it to conclude that the client might be contemplating a malpractice suit against the firm. There is a dispute about whether the law firm advised the client at that point that it needed new counsel. The client did in fact sue the firm six months later, but denies that it was contemplating a lawsuit at the time the firm consulted its in-house counsel. The firm is seeking to protect its communications with the in-house counsel from discovery, including a 33-page memo describing the conference call that lawyers at the firm wrote the day after it occurred.
The case is St. Simons Waterfront v. Hunter, Maclean, Exley & Dunn, now before the Georgia Supreme Court.
The ABA has not taken a position on the firm's arguments, but says in an amicus brief (PDF) that as a general matter it urges that lawyers’ communications when seeking legal advice from their in-house counsel should be broadly protected because of the benefits to their clients and the legal system, and to lawyers and their firms.
Randy Johnston, a malpractice lawyer, has a bright line approach. He told ABA Journal:
Law firms should have the right to internal defense and to work product, but the law firm must immediately inform the client when there is a conflict. Failure to tell the client eviscerates the privilege. Period.