Corporate Executive’s Statements to His/Her Attorney May Not Remain Confidential

Most people understand that when they have a private conversations with their lawyers about an existing or potential case, whether criminal or civil, those conversations are supposed to remain confidential. This is referred to as the attorney-client privilege, and it means that no one can compel the attorney or the client to disclose what was discussed between them.

However, in the context of a pending case or investigation involving a corporation and its executives or employees, it may not be clear who exactly the attorney represents. For instance, in a recent federal criminal case, the government was investigating a company and its chief financial officer for conspiracy and securities fraud. The company hired a lawyer to assist with an internal investigation and an audit. That lawyer interviewed the CFO who gave that lawyer important information critical to his own case. The CFO believed that the lawyer was his lawyer and all communication between the two was confidential and private. This particular attorney had even represented the CFO in the past in civil cases, which further led the CFO to believe that he was having confidential discussions with his personal lawyer.

Subsequent to those conversations with the CFO, the lawyer disclosed information from those conversations to other lawyers and accountants assisting in the internal investigation of the company and ultimately to the government. The government then intended to use that information against the CFO.

The CFO then hired his own criminal defense attorney. He argued that none of the information obtained by the government by the initial lawyer should be used against the CFO. To do so would violate the attorney-client privilege. However, the government argued that the CFO should have known that the information he provided to the lawyer would be shared with the accountants, auditors and others as part of the company’s internal investigation. As a result, the CFO should have known that the lawyer was not his personal lawyer but a lawyer whose client was the company. And if the attorney’s client was the company rather than the CFO personally, information provided by the CFO could be shared with others related to the company.

This issue has not been finally decided, and it may depend on what exactly the attorney told the CFO prior to their discussions regarding exactly whom the lawyer represented and what would be done with the information. In any case, where a company and an executive or employee of the company are facing criminal charges or an investigation, it is important to know the exact nature of the relationship with the attorney and what he/she intends to do with the information before making any statements. If the attorney-client relationship is later determined not to exist because the client is the company and not the individual, then any statements made to the attorney may be used against the individual.

Contact Information