Executive compensation and employment attorneys deal with C-suite executives who are smart, knowledgeable about their own businesses and areas of expertise, and generally quite sophisticated. As a result, it is easy to assume that these same executives have extensive experience with lawyers and have no need of instruction on the nature and scope of the attorney-client privilege, and how that privilege must be carefully protected for the benefit of the executive client.
We have found that assumption to be unwarranted, and so routinely begin our discussions with a new executive client with a review of the most important principles underlying this important issue.
Why is it important?
Preserving the attorney-client privilege to the fullest extent possible permits, as it was explicitly designed to do, the free and open interchange of impressions, ideas and opinions between the executive and his or her attorney.
Very often, one important task of the executive employment lawyer is to make certain that the executive is contractually entitled to receive the compensation, benefits, retirement contributions and incentives (equity and otherwise) which he or she thinks has been promised by the employer. This requires a dialogue which should stay confidential between the executive and the executive’s counsel.
It is also a commonplace that “every contract is a litigation waiting to happen.” With that in mind, it will almost always be important that the discussions between attorney and client be protected, i.e., exempt from disclosure in that litigation.
So what are the general rules for the executive to keep in mind?
The executive can safely and confidentially convey to his or her attorney what the executive expects from the job — both in terms of compensation, advancement and duties — and receive the attorney’s candid feedback without concern that their discussions will become public or fall into the employer’s hands, so long as the executive does not break the privilege by sharing or exposing — intentionally or even inadvertently — the substance of these discussions to any third party. Since an attorney is not ethically permitted to disclose such information, it is said that the privilege “belongs” to the client and only the client can destroy the privilege by being careless about where the information is disseminated.
So, how to protect this information, and the privilege? Don’t share it with anyone. It is probably unrealistic to think that an executive will not share conversations with a spouse or domestic partner — a risk but usually an acceptable risk — but at the very least, that person must be told to keep the information strictly confidential. The executive should communicate with counsel by his or her own private email (such as a Gmail account) rather than the address of either the present or any future employer. It is surprising how many sophisticated executives still do not understand that the Company email is for work-related communications only, that the executive has no expectation of privacy if he or she uses a Company email, and that any such exposure of confidential attorney-client communications could result in a waiver of the privilege.
Also, an executive should not assume that Company counsel, whether in-house or outside counsel, is a safe repository of personal information from the executive. Those lawyers represent the Company, not the individual executive. Indeed, in some instances, the executive may receive a so-called “Upjohn” warning, usually in the course of a litigation or internal investigation, to inform the executive explicitly that the Company’s counsel represents only the Company and not the individual executive, meaning that the Company lawyer has no obligation to keep the executive’s personal confidences.
The “take-away”: when an executive has a confidence relating to the executive’s employment situation, the first call should be to the executive’s own executive employment and compensation attorney, who can and will advise on the issue.