United States: Somebody’s Watching: Chancery Court Rules That Communications Between Director And His Personal Counsel Via Company Email Address Are Not Privileged

Last Updated: December 11 2013
Article by Gregory Beaman and Gregory A. Markel

Most Read Contributor in United States, October 2018

On September 5, 2013, the Delaware Court of Chancery, on a matter of first impression, ruled that a director's emails with his personal attorney were not privileged because the director used his company email address to communicate with counsel and he was aware of the company's policy that all work emails were accessible by the company. See In re Info. Mgmt. Svcs., Inc. S'holder Litig., C.A. No. 8168-VCL, slip op. (Del. Ch. Ct. Sept. 5, 2013). The Court emphasized that its holding was limited to its facts and that in different factual settings the outcome might be different. Nonetheless, the Court's decision raises uncertainties, at least in Delaware, about preservation of privilege, which has important implications for directors and their counsel, particularly for directors who serve on special committees that have retained separate, independent counsel. As with all issues of privilege, it is best to err on the side of caution, and in light of the Court's decision in Info Management, directors and their independent counsel should be mindful of the following issues:

  • If a director is serving on a committee that has retained separate, independent counsel—e.g., a special committee of independent, disinterested directors formed to evaluate a conflict of interest transaction—the director should avoid using his company email address to communicate with counsel on matters intended to be privileged.
  • Directors serving on special committees should also consider using non-company email to communicate with committee counsel because, in the event of a dispute between the company and the committee members, communications made through work email may be deemed company property, depending in part on the company's internal policies.
  • Directors, by virtue of their position, are unlikely to be able to withhold communications over work email with their independent counsel on privilege grounds merely by arguing that they were not aware of the company's email monitoring policy.


Information Management Services, Inc. ("IMS" or "Company") is a private company owned by two families, the Lakes and the Burtons. Its board of directors is comprised of four members (two from each family) and its executive officers are William, Andrew, and Jean Lake. Jean and Andrew Lake also serve on IMS's board. In 2012, the Burtons filed a complaint against the Lakes, alleging that William breached his fiduciary duties as an officer of IMS by mismanaging the Company and that Jean and Andrew, as officers and directors, breached their fiduciary duties by allowing William to stay in control. "During discovery, IMS advised the [Burtons] that William and Andrew used their work email accounts both before and after the filing of the lawsuit to communicate with their personal attorneys and advisors." Op. at 5. After IMS refused to produce those emails on the basis of the Lakes' assertion of attorney-client privilege, the Burtons moved to compel production, arguing that attorney-client privilege did not apply because William and Andrew used their Company email accounts to communicate with their personal counsel. Id. IMS's policy manual cautions all employees: "You should assume files and Internet messages are open to access by IMS staff. After hours you may use IMS computers for personal use, but if you want the files kept private, please save them offline." Id. While IMS (according to the Lakes) did not actually engage in email monitoring, it was undisputed that the Lakes were aware of the policy. Id. at 5-6.


In ruling on the Burtons' motion to compel, the Court began with Delaware Rule of Evidence 502(a)(2), which sets forth the requirements for invoking the attorney-client privilege, including that the communication at issue must be intended to be "confidential." Id. at 7. The Court noted that "[a] party's subjective expectation of confidentiality must be objectively reasonable," and thus the Burtons' motion to compel presented a novel issue because "Delaware courts have not addressed whether an employee has a reasonable expectation of privacy in a work email account." Id. The Court held that whether an employee has a reasonable expectation of privacy in work email should be evaluated on a case-by-case basis, guided by the four-factor test identified in In re Asia Global Crossing, Ltd., 322 B.R. 247, 257 (Bankr. S.D.N.Y. 2005): "(1) does the corporation maintain a policy banning personal or other objectionable use, (2) does the company monitor the use of the employee's computer or e-mail, (3) do third parties have a right of access to the computer or e-mails, and (4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies." Id. at 9.

Factor 1: Policy on Personal Use. The Court first explained that courts lean in favor of production "when the employer has a clear policy banning or restricting personal use, where the employer informs employees that they have no right of personal privacy in work email communications, or where the employer advises employees that the employer monitors or reserves the right to monitor work email." Id. at 10-11. If, however, there is no clear policy or practice regarding personal use or email monitoring, the Court noted, then the first factor weighs against production. Id. at 12. According to the Court, the Company manual's warning that employees should assume their emails are accessible to IMS and that personal files should be saved offline "sufficiently put IMS employees on notice that their work emails were not private," thus weighing in favor of production. Id. at 13.

Factor 2: Email Monitoring Practice. The Court then looked to whether IMS, in practice, monitored emails. Id. While the Lakes submitted affidavits stating that IMS never monitored emails, the Court noted that William had acknowledged in certain emails that his work email was not private and that he used personal email for private matters. Id. at 15. The Court treated this factor as neutral due to the conflict between William's acknowledgment of the lack of privacy in his work email and IMS's lack of email monitoring. Id. at 16.

Factor 3: Ease of Third Party Access. "This is a straightforward case involving work email," explained the Court: "IMS, a third party to the communication, had the right to access William's and Andrew's emails when they communicated using their work accounts." Id. at 17. Because it found that neither William nor Andrew took significant, meaningful steps to prevent third party access to their emails with counsel (such as using their private email accounts rather than, as they did, using their Company accounts and putting "attorney-client privilege" in the subject line), the Court found that this factor weighed in favor of production.

Factor 4: Employee's Knowledge of Monitoring Policies. According to the Court, this factor weighs against production if the employee was unaware of the company's email monitoring policy and the company cannot prove that it notified the employee of that policy. Id. The Court noted, however, that knowledge of the company's policy is often imputed to officers and directors by virtue of their position. Id. at 19. Because "William and Andrew were two of the three most senior officers at IMS, and they [did] not deny knowing about the Company's policies," the Court held that this factor weighed in favor of production. Id.

Applying the Asia Global factors, the Court found that William and Andrew did not have a reasonable expectation of privacy in their IMS email accounts, and thus could not have reasonably expected that their communications with their separate counsel through those accounts would be kept confidential. The Court ordered the production of "the emails and attachments otherwise protected by the attorney-client privilege that William and Andrew exchanged with their personal attorneys and advisors using their work email accounts." Id. at 31.


While the Court held that the Lakes' use of Company email accounts to communicate with their personal counsel defeated privilege in this case, it cautioned that its holding should not be interpreted as a broad-based rule, especially in the context of shareholder derivative suits involving large public companies. Id. at 27. The Court emphasized that its analysis hinged on the fact that this case "involves a dispute between two families, each possessing 50% of the stock and enjoying equal representation on the Board." Id. "It is far from clear whether a court would analyze privilege similarly in a more traditional derivative action involving a stockholder plaintiff with a relatively nominal stake and a board comprising individuals without any affiliation with the suing stockholder." Id. This is because "[t]hose outside the corporation," such as public shareholders, "cannot routinely access work email accounts," and thus "[t]he corporation and its employees [or directors] should be on different and stronger ground when those outside the corporation seek to compel production of otherwise privileged documents that employees [or directors] have sent using work email." Id. at 28. Nonetheless, directors and their separate, independent counsel should view Info Management as creating uncertainty as to whether privilege will be preserved under other fact patterns. Therefore they should act with caution and err on the side of communicating through non-company email on privileged matters.

Originally published in the December edition of The American Lawyer.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions