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Keywords

plaintiffdefendantlitigationattorneylawyerdiscoverymotionburden of prooffiduciarymalpracticebankruptcycorporationfiduciary dutyattorney-client privilege

plaintiffdefendantattorneylawyerdiscoveryhearingtrialmotionburden of prooffiduciarymalpracticebankruptcylegal malpracticefiduciary dutyattorney-client privilegework-product doctrine

Related Cases

Koen Book Distributors, Inc. v. Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C., 212 F.R.D. 283

Facts

The plaintiffs, wholesalers and distributors of books, retained the defendant law firm for advice regarding a security interest from Crown Books Corporation. After Crown filed for bankruptcy, the law firm continued to represent the plaintiffs as creditors. The plaintiffs became dissatisfied with the firm's services and informed the firm on July 9, 2001, that they were considering a malpractice action against it, but continued to retain the firm until August 13, 2001. During this time, several lawyers in the firm consulted with another lawyer regarding ethical and legal issues arising from the potential malpractice action, generating internal documents that are the subject of the current motion.

After Crown filed for bankruptcy, the law firm continued to represent plaintiffs as creditors in the bankruptcy proceeding. Ultimately, plaintiffs became dissatisfied with the law firm's services and on July 9, 2001 informed the firm that they were considering a malpractice action against it. Nonetheless, they continued to retain the firm until August 13, 2001, when they terminated its services.

Issue

Whether the attorney-client privilege and work product doctrine protect documents from discovery when a law firm consults internally about a potential malpractice action initiated by its clients.

The issue before us is whether the privilege similarly shields documents from discovery by a client when one lawyer seeks legal advice from a fellow lawyer in their law firm concerning that client which has threatened to initiate a legal malpractice action against the lawyer or the firm.

Rule

The attorney-client privilege applies when the communication is made for the purpose of securing legal advice, and the privilege is not waived. The work product doctrine protects materials prepared in anticipation of litigation, but is not absolute and does not apply when the client seeks discovery of the lawyer's mental impressions.

In a civil matter counsel shall not be competent or permitted to testify to confidential communications made to him by his client, nor shall the client be compelled to disclose the same, unless in either case this privilege is waived upon the trial by the client.

Analysis

The court analyzed whether the defendant law firm had a conflict of interest when it was receiving information from and providing legal advice to its lawyers while simultaneously representing the plaintiffs. The court noted that the firm owed a fiduciary duty to the plaintiffs, which was paramount to its own interests. The firm could have sought to withdraw from representation or obtained the clients' consent to continue representation after full disclosure, but failed to do so. Therefore, the court found that the documents were discoverable due to the conflict of interest.

The firm argues that it was in an impossible position between July 9 and August 13 and should not have to forego the benefit of the attorney-client privilege or the work-product doctrine during this period. We recognize that the firm was enmeshed in an unenviable situation once the threat had been made with a hearing before the bankruptcy judge scheduled for July 23, only two weeks away. Nonetheless, the firm still owed a fiduciary duty to plaintiffs while they remained clients.

Conclusion

The court concluded that the defendant law firm did not meet its burden of proof regarding the attorney-client privilege or work product doctrine. As a result, all documents subject to the motion were deemed discoverable and must be produced.

Accordingly, all of the documents which are the subject of the pending motion are discoverable and must be produced.

Who won?

The plaintiffs prevailed in the case because the court determined that the defendant law firm could not withhold the documents based on attorney-client privilege or work product doctrine due to a conflict of interest.

The defendant law firm has not met its burden of proof on the issues of the attorney-client privilege or attorney work-product doctrine.

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