Your business client is served with a complaint. Whether you are representing a Fortune 500 corporation or a mom and pop store, and whether the allegation is wrongful termination or breach of contract, certain questions and issues must be considered during the engagement, investigation, and discovery phases of a matter, especially with respect to the company's employees. This article offers some practical suggestions and considerations for counsel representing companies in such matters.
Undertaking representation of individual employees
After service of a complaint, one of counsel's first tasks is to investigate the facts and prepare a strategy. If the complaint is filed against both the company and an employee, an initial decision needs to be made as to whether it is strategically and ethically appropriate to undertake representation of the employee and the company. This decision should be guided by Mass. R. Prof. C. 1.7, which cautions attorneys to avoid undertaking representation that triggers a concurrent conflict of interest. The rule states that a conflict exists where "(1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer." Id. It is critical to keep in mind that an attorney serving as counsel to a corporation "owe[s] a duty to act according to the interests of the corporation and not in the interests of a nonclient stockholder, director, officer, employee, or other representative of the corporation." Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 525 (1989).
Given the potential ethical issues, practitioners should be cautious to undertake representation of an employee if there is a likelihood that the employee's interests could diverge from the employer's. Further, the potential joint representation should be discussed with both the employer and the employee in detail, and a separate engagement should be memorialized in a written agreement with the employee. The engagement letter should outline counsel's representation of the employee and the concurrent representation of the employer, and may contain a provision allowing counsel to withdraw from representation of the employee and continue representation of the employer if a conflict arises during the course of the representation. Of course, withdrawing from representation of an employee in the midst of a litigation is not ideal, so it is prudent to consider these issues early on.
Keeping communications privileged
One challenge of representing a company is controlling the scope of the attorney-client privilege, and determining how to communicate with employees while preserving all available privileges.
Upjohn Co. v. United States established that communications between a company's counsel and a company's non-management employees may be privileged under particular circumstances. 449 U.S. 383 (1981). With respect to witness interviews, Upjohn held that the content is generally protected by the attorney-client privilege provided that the communications (1) are necessary for counsel's representation of the company, (2) concern matters within scope of the individual's employment with the company, and (3) are kept confidential. Id. at 384. Massachusetts appellate level courts have cited Upjohn, but have not expressly adopted it. That said, the concept of maintaining privilege in this context is well-grounded. See, e.g., Suffolk Const. Co. v. Div. of Capital Asset Mgmt., 449 Mass. 444, 456 (2007) ("The attorney-client privilege has deep roots in the common law and is firmly established as a critical component of the rule of law in our democratic society."); Nat'l Employment Serv. Corp. v. Liberty Mut. Ins. Co., 1994 WL 878920, at *1 (Mass. Super. Dec. 12, 1994). ("In an absence of Massachusetts precedent, this Court will follow the Supreme Court's interpretation of the attorney-client privilege in [Upjohn]").
A useful way that counsel can take precautions to preserve this privilege during the course of witness interviews is by furnishing what has become known as an "Upjohn warning." Neither Upjohn nor Massachusetts case law gives express instructions on the content of such a warning, but it is advisable to cover several basic concepts:
- The lawyer represents the company, and not the witness;
- The lawyer is interviewing the witness in order to provide legal advice to the company;
- The communication is protected by the attorney-client privilege, but the privilege belongs to the company, not the witness; and
- The communication must be kept confidential and not disclosed to third parties.
Depending on the circumstances of the case, counsel may want to provide the warning in writing, and ask the witness to sign it to acknowledge receipt. Alternatively, counsel could convey the Upjohn warning orally to a witness prior to an interview and memorialize its delivery in a contemporaneous memorandum.
Managing opposing counsel's contact with employees
It is a violation of Mass. R. Prof. C. 4.2 for counsel to contact parties who are represented by counsel. Of course, as discussed above, not every employee of a company is necessarily considered to be represented by counsel. This concept was further fleshed out in Messing, Rudavsky & Weliky, P.C. v. President and Fellows of Harvard College, 436 Mass. 347 (2002), and echoed in Mass. R. Prof. C. 4.2, Comment 7. Comment 7 instructs that attorneys are permitted to contact employees as long as those employees [1] do not "exercise managerial responsibility in the matter; [2] are not "alleged to have committed the wrongful acts at issue in the litigation," or [3] do not "have authority on behalf of the organization to make decisions about the course of the litigation."
Of note, the number of employees who are not considered "represented" under this analysis can be fairly significant. For example, if your client is a large employer and the opposing party is a former employee, there may be many witnesses, such as non-management co-workers of the opposing party, who do not fit into one of the outlined categories, and therefore, opposing counsel would be free to contact.
As such, it may be prudent to notify those employees who may be targets of discovery about their rights and obligations. As to the "non-represented" employees and also former employees (Mass. R. Prof. C. 4.2 imposes no limitations on a lawyer's contact with a company's former employees), the company's lawyer may advise them that they could be contacted by opposing counsel, and that it is their decision whether or not to speak with opposing counsel. The company's lawyer may also ask those employees to notify the company's counsel in the event they are contacted.
Represented employees should be clearly instructed not to interact with opposing counsel, and to contact the company's counsel immediately if they are contacted.
Explaining these rights should improve the chances that the company's lawyer will at least be aware of contact between the opposing party's lawyer and your client's current and former employees.
Depending on the nature of the case, practitioners may consider proactively contacting opposing counsel to advise which employees opposing counsel can and cannot contact pursuant to the case law and Mass. R. Prof. C. 4.2. Such a communication to opposing counsel might be especially useful in cases filed in federal court because Fed. R. Civ. P. 26 requires parties to furnish names, addresses, and telephone numbers of each individual likely to have discoverable information at the outset of the case through the initial disclosure process.
Representation of employees at deposition
Once the case moves into the discovery phase, opposing counsel may subpoena employees of the company, including current and former employees who are not considered "represented" under Mass. R. Prof. C. 4.2. After receiving a subpoena, a company's lawyer's first instinct is likely to reach out to the individual, prepare him/her for deposition, and serve as the individual's counsel during the depositions. However, practitioners should consider the same issues of conflicts of interest, joint representation, and application of attorney-client/work-product privileges as discussed above.
If counsel does not undertake a concurrent representation of the employee, the communications undertaken with the employee in preparation of a deposition are very likely still protected by the work-product privilege. With respect to deposition preparation specifically see, e.g., Owens-Hart v. Howard Univ., 2016 WL 447427, at *2 (D.D.C. Feb. 4, 2016) (holding that an employee of Howard University's communications with the university's counsel during deposition preparation are privileged). Even with these protections in place, a safe strategy is to limit discussions about the company's legal strategies, and keep conversations with non-represented employees primarily fact-based (i.e., What happened? What facts do you recall?), and procedural-based (i.e., advice on how to respond to questions in a deposition).
Specific to depositions, other issues for a company's lawyer to consider include avoiding giving personal advice to the deponent during the deposition; maintaining a focus on the interests of the lawyer's client (i.e., the company), and deciding when, and whether or not, to advise that an employee obtain his/her own personal counsel. Lawrence J. Fox, Defending a Deposition of Your Organizational Client's Employee: An Ethical Minefield Everyone Ignores, 44 S. Tex. L. Rev. 185, 188-89 (2002). The issues related to the representation of a company client's employees (or former employees) are numerous, and beyond the scope of this article, but the aforementioned law review article by Lawrence J. Fox contains thoughtful analysis on these matters.
Conclusion
The relationship between a company, its employees, and the company's counsel during a litigation can be more complex than meets the eye. However, if a company's lawyer considers these issues from the outset of a company's representation, the impact can be minimized.