Two recent cases suggest that the attorney-client privilege in California is narrowing from its traditional robust scope. In LA County Board of Supervisors v. Superior Court (ACLU), the California Supreme Court held that law firm invoices are not categorically privileged, and may be subject to disclosure depending on the content of the invoices, and the active status of the underlying matters. In Wadler v. Bio-Rad Laboratories, a Magistrate Judge in the Northern District of California held, among other things, that the Sarbanes-Oxley Act preempts California’s rules regarding attorney-client privilege.
Neither of these cases, in and of itself, redefines the scope of California’s attorney-client privilege. Either case could be limited to its own facts or procedure, which are quite distinct situations. But taken together these cases suggest that California lawyers and firms need to be aware of the significant potential limitations on the attorney-client privilege, and how it may continue to evolve:
- Law Firm invoices are not automatically privileged. It is a not a departure from established rules and cases to say that communications are not automatically protected from disclosure based on the attorney-client privilege. The privilege is not a blanket protection that captures everything that lawyers send to their clients. The fact that law firm invoices are not themselves categorically protected shines a new light on the limitations of privilege, however. Most lawyers and law firms do not anticipate that the information in their invoices to clients could be subject to disclosure, and they act accordingly. Based on the ACLU case, it is a good idea to evaluate what information you convey on invoices and whether it would be privileged. Don’t draft client invoices with the expectation that they are categorically privileged.
- Not everything in a law firm invoice is privileged. It stands to reason that not everything on a law firm invoice is privileged. It is hard to see, for example, how the ZIP code for your office is privileged. It’s also not clear why the amount you pay for copies would be privileged, for example. But information about what you are copying would tend to suggest your legal strategy and tactics, your case staffing, and even your cost limitations, all of which likely would be, or at least arguably, should be, privileged. The Court in ACLU asserted that the privilege still would protect information that “lies in the heartland of the attorney-client privilege,” whatever that means. But gone are the days when lawyers could bill clients with a generic reference like “For legal services rendered.” Today, by client demand, invoices tend to be extremely detailed. Don’t draft client invoices with the expectation that each of those details will be privileged.
- The scope of privilege may change when the active status changes. Perhaps the most potentially troubling aspect of the ACLU case is the concept that the privilege for law firm invoices can change, depending on whether the matter is active, dormant, or closed. The scope of this concept is not yet clear, but the problems it could create are evident. Assume that your firm defends a series of class actions of a particular type, say wage-and-hour cases, for a particular client. Based on the ACLU case, could a litigation opponent successfully request your invoices for past, closed cases? Those invoices to clients, even though for closed matters, likely lay out your strategy and tactics for defending that particular type of case for that particular client, or type of client, in great detail. It is not difficult to imagine a scenario where the concepts of the ACLU case become a tool to subvert the protections of the privilege, through closed cases, even for the “heartland” information.
- Privileges will be evaluated case-by-case. Both the ACLU and Bio-Rad cases function as good reminders that privilege determinations are quite situation-specific, and will be evaluated that way. Lawyers and law firms should not assume that any category of communication will be per se protected by the privilege.
- California’s rules may not govern the privilege analysis. The Bio-Rad case illustrates the important point that the scope of the attorney-client privilege may not be determined under California rules or California law. Federal privilege may apply, or the particular privilege considerations of the federal statute at issue, like the whistleblower statute in Bio-Rad, and generally may be less robust.