The Situation: A Texas trial court held that certain documents referenced in a report authored by a non-lawyer consultant hired by the University of Texas System (the "System") were privileged because the consultant acted as a "lawyer's representative" as provided in Rule 503 of the Texas Rules of Evidence ("TRE 503"). The court of appeals reached the opposite conclusion and reversed, and the Supreme Court of Texas granted the System's petition for review.
The Result: In a 6–2 decision, the Court held that the non-lawyer consultant was acting as a "lawyer's representative" under Texas law and therefore privilege attached to the documents at issue. Further, while publication of the report on the University of Texas at Austin ("UT Austin") website did not "constitute a wholesale waiver of the privilege," privilege might have been waived as to any documents about which the report revealed a "substantial part." The Court remanded to the trial court for further proceedings on that issue.
Looking Ahead: As noted, the Texas Supreme Court remanded the question of whether the published final report waived privilege as to specific documents. Beyond those specific determinations, this opinion clarifies the standard for determining when a non-lawyer is acting as a "lawyer's representative" for purposes of TRE 503, and provides helpful guidance for protecting the privilege when conducting investigations under Texas law
In a case with potential ramifications for internal investigations involving Texas businesses, the Supreme Court of Texas held that a non-lawyer consultant hired by the System to investigate the admissions processes at UT Austin qualified as a "lawyer's representative" under TRE 503 and, therefore, that certain related communications and documents were protected by the attorney-client privilege under Texas law. See The University of Texas System v. The Franklin Center for Government and Public Integrity, No. 21-0534 (June 30, 2023). The Court cautioned, however, that privilege may have been waived as to particular documents to the extent the consultant's publicly available final report disclosed "any significant part" of them.
Turning first to whether a privilege existed, the Court "focus[ed] on the formation of the relationship and the purpose of [the consultant's] engagement at the time of employment." After examining "[t]he terms of the engagement agreement and the surrounding circumstances," the Court noted that the engagement letter placed the investigation under the direction of the System's general counsel, to whom the consultant also was to report. But as the dissent in the case pointed out, the engagement letter failed to state that the investigation's purpose was to facilitate the provision of legal advice and instead directed the consultant to "determine if the conduct of U.T. officials is beyond reproach," which the dissent found too ambiguous to support privilege. The majority nonetheless concluded that this phrase and other circumstances demonstrated that the investigation involved compliance with legal and regulatory requirements and thus ultimately related to provision of legal advice. The Court expressly rejected the premise that an engagement agreement must contain "magic words" regarding providing "legal advice" for the attorney-client privilege to attach under Texas law.
Moving to waiver, the Court rejected arguments that public disclosure of the final report—which Texas law required—by itself "strip[ped] all underlying communications of their 'confidential' status or amount[ed] to a wholesale waiver of the privilege." But because the final report frequently quoted or paraphrased otherwise privileged documents, including the consultant's witness interview notes, the Court concluded that privilege could have been waived as to those specific items if the final report disclosed "any significant part" of them. Because this issue had not been adequately developed below, however, the Court remanded this issue to the trial court.
While reaffirming the applicability of privilege to non-lawyer consultants' work when that work is done to facilitate legal advice, this case underscores the risks of imprecision when structuring and documenting these engagements under Texas law. After all, a Texas court of appeals and two Texas Supreme Court justices concluded from this record that no privilege attached to the consultant's work, which could have exposed everything the consultant reviewed or prepared to discovery. Therefore, while it's helpful that the Court eschewed "magic words" and other formalistic approaches to assessing privilege under Texas law, prudent practitioners should heed the dissent's objections to the engagement's ambiguity. Among other things, this includes:
- Stating in the engagement letter that the engagement's purpose is to provide, or to support the provision of, legal services for a particular purpose;
- Stating in the engagement letter that the company's legal department or outside counsel will direct and oversee the consultant's work; and
- Having the company's legal department or outside counsel engage the consultant, when possible.
To be sure, the Court's consideration of "the engagement agreement and the surrounding circumstances" means that even a carefully crafted agreement could be undermined by inconsistent circumstances. But properly structuring the relationship at the outset, and following that structure throughout the engagement, including requiring the consultant to report directly to the legal department or outside counsel, should minimize that risk.
Care should also be taken with direct quotes or extensive paraphrasing of otherwise privileged materials in reports or presentations from the engagement, if shared publicly, or with anyone outside the privilege, including the government. While the Court limited the risk of waiver to the particular materials quoted or paraphrased, it left open the possibility that the System will win the privilege-applicability battle but lose the waiver war as to those materials
Four Key Takeaways
- While the decision was not unanimous, the justices nevertheless agreed on the appropriate standard for determining whether a person is acting as a "lawyer's representative" under Texas law: namely, that "assisting in the rendition of professional legal services must be a significant purpose for which the representative was hired in the first instance." The dissent disagreed with how the Court applied that standard to the facts of this case, and would have reached the opposite result.
- As is often the case, in determining whether the relationship between the System and the non-lawyer consultant was protected by privilege under Texas law, the Court focused on the "formation of the relationship and the purpose of [the non-lawyer consultant's] engagement at the time of employment." To do so, the Court found that the "terms of the engagement agreement and surrounding circumstances guide [the] inquiry."
- While the Court rejected the premise that an engagement agreement must contain "magic words" for the attorney-client privilege to attach under Texas law, we continue to stress that including in an engagement letter language regarding the scope and purpose of the investigation (i.e., to facilitate the provision of legal advice), as well as structuring the relationships to protect privilege (and following that structure throughout the engagement), should minimize the risk of a court determining that privilege does not attach under Texas law (as the dissent concluded in this case).
- It is also important to keep in mind that a number of courts in other jurisdictions apply a more restrictive test in determining whether a person retained by a lawyer to assist the lawyer in advising a client is within the scope of the attorney-client privilege. The Texas decision therefore may have limited effect outside Texas, especially under federal law and the laws in states that do not have an equivalent to TRE 503.
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