CLOs Provide Thought Leadership on Privilege Erosion
Stasia Kelly, Executive Vice President & General Counsel, MCI Communications

Very little is more important to my CLO colleagues and me than the trust and strong relationship we share with our senior management and our boards.  Without it, we cannot function as an effective advocate or counselor to our clients.  I’ve heard too many CLOs relate chilling stories about privilege erosion, and I know for a fact that it’s impacting the way in-house lawyers practice as well as the likelihood that clients will seek out in-house counsel when sensitive matters arise.
Privilege erosion is on the rise in a wide range of contexts, including auditor ‘requests’ for information, in prosecutorial settings, in the courts and in third party discovery.  While some in government may say that prosecutorial tactics and charging factor analyses do not result in any appreciable change in demand for waiver of attorney-client privilege, the real life experiences in our daily practices say different.  Erosion of the privilege is damaging corporate compliance initiatives and delaying or preventing the effective delivery of vital legal services.

I recently hosted an ACC CLO ThinkTank session that brought together several Fortune 500 CLOs to discuss experiences and the ‘word on the street’ with regard to privilege erosion, and to develop ideas on possible actions to address these growing challenges. Joining me for this session were: Tom Dale (Rolls-Royce North America), Reggie Hedgebeth (Circuit City Stores, Incorporated), Muzette Hill (Ford Motor Credit Corporation), Ann Kappler (Fannie Mae), Linda Madrid (CarrAmerica Realty Corporation), Dean Manson (Hughes Network Systems), and Logan Robinson (Delphi Corporation).  

Some key takeaways from our session on included:

• There is a need for education on privilege—both in the in-house context for clients and lawyers, and also with regard to outside constituencies.
• A disconnect exists between what leaders at the DOJ (and other enforcement officials) perceive is occurring with regard to waiver requests and what corporations are experiencing.
• Governmental practices resulting in erosion of privilege are changing the way in-house lawyers practice, including driving lawyers to resort to inefficient methods of communication and forcing clients to forego desired counseling; the result is a chill on the communications and perverse disincentives for lawyers to provide quick, remedial responses and well-thought out, longer term compliance initiatives.
• The concept of limited waiver creates a predicament, putting us on a slippery-slope toward the day when corporations will have to say yes to any government request for privileged documents so long as they are accompanied by an enforceable confidentiality agreement.
• Questions regarding privilege and the need for privileged documents in the audit context are becoming increasingly common and changing the ways in-house lawyers interact with auditors and even internal controls managers.

Our ThinkTank participants also identified a number of ideas for action items going forward.  Many of these ideas were shared with ACC’s Advocacy Committee and are informing future advocacy initiatives on behalf of the in-house bar.  View the Executive Report from this ACC CLO ThinkTank session.

Future issues of ACC Executive Bulletin will feature summaries from other ACC CLO ThinkTank sessions on such topics as in-house response to emerging prosecutorial tactics, private company CLO concerns and compensation.
 
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