United States: Big News From The Big Easy: The Fifth Circuit Protects The Privilege For Communications Between In-House Counsel And Their Business Colleagues

Last Updated: June 11 2014
Article by James Beck

Here's a guest post we received from Reed Smith's Andrew Stillufsen about a discovery topic that afflicts drug/device defendants, as well as those representing any large corporate entity - the applicability of the attorney/client privilege to communications authored by in-house counsel.  Andy describes a recent successful outcome in a case involving a large oil company, but for the underlying subject matter, the dispute could just as easily have arisen in drug/device litigation.  As always, all the credit and/or blame for this post goes to the guest poster.

In-house counsel everywhere, and those who rely on their advice, breathed a sigh of relief last month when the Fifth Circuit overturned a district court decision and found that a memo drafted by in-house counsel at the request of a business colleague in connection with a contract negotiation was in fact protected by the attorney-client privilege.  This case serves not only as a validation of the role of in-house counsel in corporate transactions, but also is an important reminder of the importance of establishing the elements of the privilege on the face of a document, and thus be able to withstand even the most demanding court review.

In Exxon-Mobil Corp. v. Hill, ___ F.3d ___, 2014 WL 1796646 (5th Cir. May 6, 2014),  the court was presented with a question that many courts grapple with every day:  is a document drafted by an in-house lawyer a confidential communication for the purpose of providing legal advice, or merely a business communication that happened to be drafted by a lawyer?  Since the answer was not apparent on the face of the document, the court was forced to take a deep dive into the context of the drafting of the memo, and fortunately found that, given this context, it was in fact privileged.

The document at issue, called the Stein Memo after its author, was created in a fairly typical manner.  In the late 1980s Exxon was negotiating with another company over a contract to  clean its oilfields and store the cleaned materials, which included substances contaminated by naturally occurring radioactive materials ("NORM").  A business person involved in the negotiations asked in-house counsel Stein for advice regarding how to respond to a request from the other company for some relevant test results.  Stein's advice, including which test results to disclose and proposed language to accompany the test results, was memorialized by her in the Stein Memo. 

Fast forward over twenty years to discovery in new NORM-related litigation.  In 2008 Exxon inadvertently produced the Stein Memo to plaintiffs.  Exxon acted swiftly once it discovered that the memo had been produced, and thought it successfully clawed back the memo.  However, plaintiffs' counsel secretly kept a copy of it, and later distributed the memo to other plaintiffs' counsel involved in the NORM litigation.  After a somewhat tortured procedural history, which included a mixed record of asserting privilege over  the Stein Memo in various Louisiana state court suits,  the issue was finally ripe for decision by the federal district court after the Stein Memo was attached to a plaintiff's expert report filed in that court.

This case was before Judge Fallon in the Eastern District of Louisiana, who previously authored an influential decision that was harmful to the application of the attorney-client privilege to communications by in-house counsel in the pharmaceutical industry.  See In re Vioxx Prod. Liability Litig., 501 F. Supp.2d 789 (E.D. La. 2007).  In this case, the court rejected the theory, called "pervasive regulation" , that, given in-house counsel's central position − by necessity − in the flow of communications at the company, nearly every document touched by in-house counsel touched was therefore privileged.  Id. at  800-02.

The key question to be answered by the district court − as is nearly always the case for any court presented with a communication to or from in-house counsel − was whether the proponent of the privilege could clearly show that "the primary or predominate purpose of the attorney-client consultation is to seek legal advice or assistance."   Exxon Mobil Corp. v. Hill, 2013 WL 3293496, at *6 (E.D. La. June 28, 2013) (citing Paul R. Rice, 1 Attorney-Client Privilege in the United States, §7:1 (2d ed.)).   The court held that Exxon had "not met its burden of demonstrating that...Stein [was consulted] for legal advice, rather than business advice."    Id. at *7.  It did not find "sufficiently persuasive"  affidavits submitted by both Stein and the business person who originally sought Stein's advice, which asserted that they had met for the purpose of obtaining legal advice, and that they both considered the Stein Memo to be a confidential attorney-client communication.  Id.   Despite the fact that the Stein Memo was plainly written by an identified in-house attorney, and was addressed only to other Exxon employees, the court found highly persuasive that "from the face of the document [it appears] that the primary purpose of Stein's advice...was to help secure more favorable contract terms...."    Id.   Therefore, according to Judge Fallon, the primary purpose of the Stein Memo was not for the provision of legal advice, and it was not protected by the attorney-client privilege.

However, when the Fifth Circuit looked at the same evidence, it found that "[c]ontext here is key" and reached the opposite result.  Hill, ___ F.3d ___, 2014 WL 1796646, at *2.  After reviewing the record, the court found that "[t]he Stein Memo reflects the advice by in-house counsel concerning disclosure of certain key data during contract negotiations" that involved a number of legal issues and "were assisted by legal counsel" on both sides.  Id.  Critical to its analysis was that "[d]isclosure of material facts is a universal concern in contract law" and therefore "it is no surprise that Exxon would seek advice from its attorney as to how to respond."  Id. at *3.  In other words, Exxon "approach[ed] its in-house counsel for just the sort of lawyerly thing one would expect of an in-house lawyer:  advice on transactional matters."    Id. (emphasis added).  Therefore, "[e]specially when viewed in context, the Stein Memo cannot be mistaken for anything other than legal advice" and so was protected by the attorney-client privilege.  Id. 

Critically, in finding the Stein Memo privileged, the Fifth Circuit validated the role of in-house counsel in providing advice on corporate transactions.  However, another lesson should be drawn from this case.  As described in these decisions, both courts needed to look beyond the face of the document to determine whether or not it was in fact privileged.  As the proponent of the privilege, Exxon bore the burden of clearly showing that it was created for the primary purpose of providing legal advice.  Fortunately, even though the Stein Memo was drafted more than twenty five years ago, Exxon was able to locate the key witnesses and produce their affidavits in order to meet its burden.  It also was before a sympathetic appellate court that clearly understood the role of in-house counsel in the negotiation of corporate transactions.  Under different circumstances, and before a different court with a differing point of view (like the district court here), Exxon may not have achieved such a beneficial result.  This all serves to underscore the need to clearly establish all the elements of the attorney-client privilege on the face of a communication – including, critically, that its primary purpose is for the provision of legal advice – in order to provide the document with the best chance of the privilege being upheld under even the harshest scrutiny.  In-house counsel should take care to reference these important facts, where possible, in the document containing the advice.  ("I have considered your request for legal advice concerning....").

The fact that the Stein Memo is still easily found online as of the writing of this article emphasizes this need even further, as once a privileged genie is out of the bottle, it can be very difficult to put him back in.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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.

James Beck
In association with
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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