Canada: Preserving Solicitor-Client Privilege When Engaging A Public Relations Firm

When confronted with significant litigation or a major event such as a product recall, regulatory investigation or takeover, a company may engage a public relations or communications ("PR") firm to assist it in communicating with its stakeholders.

Those engaging the PR firm should consider whether and to what extent the PR firm will become involved in the communications between the company and its internal and external counsel, whether privileged communications will be shared with the PR firm, and whether doing so will waive privilege in those communications.

WHAT IS SOLICITOR-CLIENT PRIVILEGE?

Solicitor-client privilege protects confidential communications between client and lawyer made for the purpose of seeking legal advice. It exists to facilitate full and frank communication between lawyer and client, thereby promoting access to justice. Privileged communications, with few exceptions, are legally protected from disclosure to any third party, and are inadmissible in court, even if those communications are relevant to an issue in the dispute.

The intention to maintain confidentiality is fundamental to privilege. Where privileged communications are disclosed to a third party with the client's knowledge and consent, courts will often infer or deem that the intention to maintain confidentiality is no longer present, and therefore that privilege in those communications has been waived.

PRIVILEGE AND PR FIRMS – DECISIONS IN CANADA AND THE U.S.

Broadly speaking, in recent years Canadian courts have grown receptive to a more limited approach to waiver in circumstances where the party claiming privilege can demonstrate that the disclosure to a third party was necessary to obtain legal advice and that the intention to maintain confidentiality was preserved.

We are aware of one case where a Canadian court has considered how limited waiver might apply to disclosure of communications to a PR firm. In Canadian Pacific Ltd. v. Canada (Competition Act, Director of Investigation and Research), [1995] O.J. No. 4148 (Gen. Div.) ("Canadian Pacific"), the Director sought to obtain documents over which Canadian Pacific Limited ("CP") claimed solicitor-client privilege. The Director claimed the privilege had been waived when these documents were shared with CP's merchant banking and PR advisors.

Justice Farley stated that privilege could only be upheld where the third party was "playing an indispensable role which cannot be performed reasonably by the client in the client's affairs and for this role to be carried out, the party must be part of the process in seeking and obtaining the legal advice." The onus is on the party asserting privilege to demonstrate why the person to whom the information was disclosed had a "need to know" it in order for the client to obtain legal advice. The third party need not be restricted to serving as an agent or a conduit for the legal advice provided to the client, but may also participate in the process by adding expertise and specialized insight. This appears to leave the door open to upholding a privilege claim, despite disclosure of the communications to a PR firm, where the party claiming privilege can demonstrate that disclosure to the PR firm enabled it to get the legal advice it sought.

In two recent cases, courts in the U.S. have also taken a functional view of the PR firm's role in advising the client, and have upheld the claim of privilege on the basis that the PR firm had played a necessary and integral role in providing legal advice to the client, either by assisting counsel to develop and execute strategy, or by helping counsel to understand the client's circumstances so as to better provide legal services.

In In Re Copper Market Antitrust Litigation, Viacom Inc. v. Sumitomo Corp., 200 F.R.D. 213 (S.D.N.Y., 2001) ("Copper Market"), the Japanese defendant company was caught in a high profile copper trading scandal, involving regulatory and civil litigation. It hired a PR firm because it lacked experience dealing with Western media. The PR firm personnel acted as the company's spokespersons, conferred frequently with the company's litigation counsel, and prepared drafts of press releases that incorporated counsel's advice. Together with counsel, it also coordinated the legal ramifications of public statements and the PR impact of legal strategy. An opposing party served a subpoena on the PR firm seeking all documents relating to its work for the company. The PR firm resisted disclosure, and the company claimed privilege over the documents.

Judge Swain expressly rejected a test for waiver of privilege over communications shared with third-party consultants that would only preserve privilege in situations where the consultant acted as a "translator" or conduit between the lawyer and the client. Upholding the privilege claim, she reasoned that in this case the PR firm was the "functional equivalent" of an employee of the client, and therefore there could be no waiver of solicitor-client privilege by providing privileged information to the PR firm. In essence, Judge Swain found that the PR firm was integral to the delivery of legal services because it performed functions the client could not itself perform. However, Judge Swain does not explain why she found the PR firm's role to be essential to the delivery of legal advice. As such, only one of the two elements that Justice Farley deemed necessary in the Canadian Pacific case was expressly adopted in this decision.

In In Re Grand Jury Subpoenas dated March 24, 2003, 265 F.Supp. 2d 321 (S.D.N.Y., 2003) ("Martha Stewart"), the court also upheld claims of privilege in circumstances in which a PR firm provided services to the client's counsel.

The decision in Martha Stewart arose during the government's grand jury investigation, after a PR firm employee witness and the PR firm declined to testify and produce subpoenaed documents. The government moved to compel compliance with its subpoenas. The PR firm had participated in communications involving the target and her lawyers, and had also engaged in communications, written and verbal, with the target in which the lawyers were not present. The court upheld the claim of privilege over the communications among the target, her lawyers and the PR firm; however, the PR firm witness was ordered to testify regarding her communications with the target alone.

Judge Kaplan held that where the PR firm is retained by counsel in order to provide advice as an essential element of carrying out a legal strategy, disclosure by either counsel or client to the PR firm of privileged information will not waive solicitor-client privilege. He accepted that a PR and media strategy may be an integral part of giving legal advice, and referred to the need for a PR strategy to "achieve a fair and just result in pending or threatened litigation." The judge was persuaded that the ability of counsel to perform some of its most fundamental functions, such as advising the client of the legal risks of speaking publicly and of the likely legal impact of possible alternative expressions, seeking to avoid or narrow charges against the client and zealously seeking acquittal or vindication, would be undermined seriously if lawyers could not engage in frank discussions of facts or strategies with PR consultants.

MEASURES TO SAFEGUARD PRIVILEGE

All of Canadian Pacific, Copper Market and Martha Stewart confirm that counsel must be involved in directing the relationship and the communications involved, in the sense that the PR firm must receive advice from or be directed by counsel in order to carry out its duties towards the client. Martha Stewart indicates that privilege will not arise in communications where the PR firm and client communicate first before communicating with counsel. Canadian Pacific and Martha Stewart indicate that the onus will be on the party asserting privilege to explain why disclosure to the PR firm was an integral part of the process of receiving legal advice.

Whether the company or the external law firm retains the PR firm, the retainer agreement should contain certain specific provisions to minimize the risk of waiver of privilege:

  • the retainer should clearly state the intention and obligation to preserve confidentiality, and that the client does not intend to waive privilege by entering into the retainer;
  • the retainer should state that the PR firm is retained specifically for purposes of managing the interaction of communication and legal issues arising from pending litigation;
  • the retainer should refer to the expertise of the PR firm and identify the deliverables, expertise and advice to be provided and, where possible, what is to be delivered to the law firm to enable it to provide legal advice; and
  • the retainer should require the PR firm to return all documents provided to it on request and/or at the end of the retainer.

Parties to such retainer agreements may also wish to implement the following additional safeguards:

  • limit legal advice shared with the PR firm to only that which is strictly necessary for the PR firm to carry out its function;
  • identify those at the PR firm who will participate in the mandate, and limit the mandate to those persons;
  • identify who will be the point(s) of contact at the PR firm, and limit contact and delivery of privileged communications to such person(s); " counsel and the company keep a record of what documents have been provided to the PR firm;
  • all persons adopt measures to limit and prevent recirculation of e-mails and documents containing privileged information;
  • ensure that all documents intended to be kept confidential and/or privileged are clearly marked as such; and
  • all persons segregate privileged and non-privileged documents.

About Ogilvy Renault

Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at www.ogilvyrenault.com.

Ogilvy Renault is the International Legal Alliance's Canadian Gold Award winner for 2008 in M&A and Corporate Finance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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