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Cover Your Notes! Keeping Meeting Notes Confidential May Depend On Who Sent The Invitation

A business owner calls a meeting to discuss the tax consequences of a particular business transaction.  The business owner asks the business’s attorney to attend the meeting and to provide some guidance at the meeting.  The business owner also asks that the business’s outside accountant attend the meeting.  Several years later, the IRS seeks to review the outside accountant’s notes from the initial meeting to determine whether the business properly reported the transaction.  Is this protected under the attorney-client privilege?

The attorney-client privilege can be used to protect confidential communications made to the client’s lawyer for the purpose of obtaining legal services. It can also be applied to confidential communications between representatives of the client and the client’s lawyer. However, the extension of the attorney-client privilege to confidential communications made by representatives of the client raises an important question—exactly who qualifies as a client’s “representative” for purposes of the privilege’s protection?

Officers and employees of a corporation are obvious answers. But, what is less obvious is the extent to which outside accountants qualify as “representatives” of a client. Although many people, especially businesses, enjoy long-standing relationships with their respective accounting firms and naturally think of them as “representatives”,  in the context of the attorney-client privilege the answer is, surprisingly, far more convoluted.

For example, in a case out of the 7th Circuit, the court found that an accountant’s handwritten notes taken at a meeting at which a lawyer was present were not privileged.   The client was contemplating an unspecified business transaction and convened the meeting to discuss the transaction’s potential tax implications.  Interestingly, the accountant’s notes likely included statements made by the attorney at the meeting.  Several years later, the IRS sought to obtain the accountant’s notes in order to discover whether the business had reported the transaction properly.  The business objected on the basis of the attorney-client privilege.  The court noted that the privilege has been extended to communications to accountants providing assistance to an attorney.  However, because the client, rather than the lawyer, asked the accountant to attend the meeting, the court concluded that the accountant’s purpose at the meeting was confined to rendering accounting services.  Because the attorney-client privilege only applies to communications made for the purpose of furnishing or obtaining legal advice, the court refused to extend the privilege to the accountant’s notes.  In other words, the accountant was not a “representative” of the client for the purposes of the attorney-client privilege.

The take-away?  One should not automatically assume that outside accountants qualify as “representatives” of a client for the purposes of the attorney-client privilege.  Where the client asks a person, such as an outside accountant, to attend a meeting at which a lawyer will be present, the presence of the accountant might destroy the attorney-client privilege.  Likewise, a forwarded email or telephone conversation relaying a lawyer’s advice might be sufficient to destroy the privilege.  The best practice is for clients to consult with counsel before divulging any confidential communications between the client and lawyer. Remember, the answer is not always as clear as one might think.

1U.S. v. Brown, 478 F.2d 1038 (7th Cir. 1973).