Dealing with Fiduciary Issues Under ERISA Nature of the rules – General prudence issues – Prohibited transactions Possibility of personal liability Context – Department of Labor audits; voluntary internal audits – Other varying contexts (general, M&A, financial products, etc.) Form 5500 - signed under penalty of perjury Privilege – In general – Fiduciary exception 20
Privilege Significance of identifying the client Who’s at what meeting? • Practical issues • Non-privilege perception ramifications Context – Executive compensation • In general • “Executive sessions” – Fiduciary matters • In general • Possible distinctions between the scope of the relationship and the scope of the privilege? • Additional practical considerations dealing with regulators 21
Audit Response Letters Who is the client? Privilege-related considerations 22
Ethics, Privilege and Investigations The “Rasputin” Investigation David G. Keyko 2 3
1. Is it true that the Russian February Revolution overthrowing the Tsar did not take place in February? A. Yes B. No 2 4
Answer • Yes, it occurred in March on the Gregorian calendar (it was in February on the Julian calendar). 2 5
2. Is Cheka the Soviet car manufacturer that made the Lada? A. Yes B. No 2 6
Answer • No. It was the Soviet Secret police force created by Lenin by decree on December 20, 1917 shortly after he came to power as a result of the October Revolution (which took place in November). The Lada was made by AvtoVAZ. 2 7
Play Prologue and Scene 1 28
3. Is there any type of privilege that might shield Alexei and Anastasia’s report? A. Yes B. No 2 9
Answer • Yes, possibly the self-critical analysis privilege, but not the attorney-client privilege. 3 0
4. Does Boris have a duty to tell Moskva or Kremlin to institute a litigation hold? A. Yes B. No 3 1
Answer • No, there is no current threat of litigation. The information that Alexei and Anastasia collected points to potential concerns, but without further investigation it is not clear what will happen. 3 2
5. Is it clear that Moskva personnel and Kremlin lawyers may review Grigory's privileged communications to his lawyer that were on his office computer? A. Yes B. No 3 3
Answer • No. The law varies by jurisdiction and depends on how clear Moskva has made it that all the information on Moskva's computer system belongs to Moskva. 3 4
6. Can a proper claim be made that Boris's communications with Leon, the PR person, are protected by the attorney-client privilege? A. Yes B. No 3 5
Answer • Yes. Courts have recognized that involvement of PR personnel is necessary for the prosecution and defense of high profile matters. Care, however, is still needed. 3 6
7. Can a claim of attorney-client privilege be made to protect Kremlin’s lawyers’ communications with Moskva personnel for purposes of rendering legal advice? A. Yes B. No 3 7
Answer • Yes. Kremlin's lawyers, however, should make clear that in this instance they are representing both Kremlin and Moskva. Moreover, the sharing of privileged information on a need-to-know basis within the corporate family should not result in the loss of privilege so long as the interests of the corporate family members are aligned. 3 8
8. Boris should not investigate Moskva and advise both Kremlin and Moskva because there is evidence that Kremlin’s and Moskva’s interests may be different? A. Yes B. No 3 9
Answer • No, there is no indication that Moskva's corporate interest in getting to the bottom of the bribery issue is any different than Kremlin's even though the early indications are that any bribes appear to have been made only to Moskva personnel and not Kremlin employees. 4 0
9. Is it clear that Boris's communications with Lavrentiy at NKVD, a consultant Kremlin uses, will be covered by the attorney-client privilege? A. Yes B. No 4 1
Answer • No. Under the Kovel doctrine, Lavrentiy’s participation will waive privilege unless he is acting as a "translator" for the lawyers so that they can render legal advice. 4 2
10. Does Boris have a duty to make disclosure to prosecutors if he concludes it is likely that bribes were paid? A. Yes B. No 4 3
Answer • No. An attorney's duty of confidentiality under Rule 1.6 contains only very narrow exceptions under which an attorney, without client permission, may disclose confidential client information to a prosecutor. Generally, disclosure about a client’s involvement in a completed crime is not one of the exceptions. 4 4
11. Did Boris have a duty to give Alexei and Anastasia a civil "Miranda" warning before interviewing them about their investigation? A. Yes B. No 4 5
Answer • No. There is no indication at this point that Alexei and Anastasia have interests that are at odds with those of Moskva or Kremlin or that they might believe that they are being represented by Boris. That is not to say that an explanation might not be a good idea. 4 6
12. Can Alexei and Alexandra assert a reliance on counsel defense if, in fact, the government alleges they were obligated to report to the Kremlin board? A. Yes B. No 4 7
Answer • No. The privilege for that advice belongs to Moskva. Unless Moskva waives the privilege, Alexei and Alexandra cannot assert that defense. 4 8
13. Will communications with Alexandra Hesse be covered by attorney-client privilege even though she is not an employee of Moskva? A. Yes B. No 4 9
Answer • Yes. While she is a consultant, she is acting as if she were the head of Moskva and both internally and to the outside world, she likely is perceived as being the same as an employee. Outsourcing an entire area of the business, as opposed to filling a single position, however, would be treated differently. 5 0
14. If calls are made to Kiev Company about the unpaid bills and possible bribes, is it clear that those communications are "settlement negotiations" protected from disclosure? A. Yes B. No 5 1
Answer • No. No claims have been made yet. Reaching out to a party before there is any threat of a dispute will probably not be considered to be part of a settlement negotiation, even if it may be good business practice. 5 2
15. Can Alexei and Anastasia claim attorney- client privilege for their conversation with Boris and prevent Kremlin from disclosing the information Alexei and Anastasia have passed on to Boris? A. Yes B. No 5 3
Answer • No. They must be jointly represented along with Kremlin by Boris to be in a position to block disclosure. 5 4
16. Can Boris insist that Alexei speak to him before Alexei consults with his own lawyer? A. Yes B. No 5 5
Answer No. Alexei has the right to consult with counsel and Boris should allow • him to do so. Boris may insist that Alexei cooperate, however, and if Alexei fails to do so, Alexei could probably be fired. 5 6
17. Is it obvious that Alexei's demand for indemnification has no merit? A. Yes B. No 5 7
Answer • No. Alexei may have a right to indemnification under the company's by-laws. There is also a right to statutory indemnification under some circumstances. Boris should investigate before responding. 5 8
Play Scene 2 5 9
18. Even though Nicholas Romanov is only representing the Kremlin board, are his communications with Moskva personnel and Kremlin's in-house counsel privileged? A. Yes B. No 6 0
Answer • Yes. Again, communications with others in the corporate family should not result in loss of privilege unless the disclosure is not necessary to accomplish the task given Nicholas by the Board or the personnel with whom Nicholas speaks have interests at odds with that of the Board. 6 1
19. Can the privilege be waived by Alexandra Hesse forwarding Nicholas Romanov's emails to others at Moskva? A. Yes B. No 6 2
Answer • Yes. If the emails are sent to those who do not need to know the information or without an understanding that the communications will be kept confidential, privilege may be waived. Of course, should Alexandra simply forward the advice (and not the email) in a way that makes it unclear that the advice is from an attorney, the privilege also may be waived. 6 3
20. Does copying Natasha on emails about a contract ensure that those emails will be covered by the attorney-client privilege? A. Yes B. No 6 4
Answer • No. The email must be composed and sent for purposes of obtaining attorney advice. Simply copying a lawyer does not indicate that was the purpose of the communication. The wording of the email can help establish privilege, by saying, for example, that the sender is seeking legal advice. 6 5
21. Does labeling all email communications as "attorney/client privilege" further the claim of privilege? A. Yes B. No 6 6
Answer • No. While it is useful to label privileged communications as such, overusing the label undercuts its value. Failure to use the label does not cause the privilege to be lost, so long as it can be demonstrated that the parties to the communication intended to keep it confidential. 6 7
22. Does Boris’s presence at a meeting and being asked legal questions at the end of the meeting cloak the entire meeting in attorney-client privilege? A. Yes B. No 6 8
Answer • No. The mere presence of an attorney does not create privilege. The meeting must be for the purpose of seeking and receiving legal advice to be entirely cloaked in privilege. Otherwise, only the requests made at the meeting for legal advice and the advice will be protected. To help assure protection of the entire meeting, the attorney should call and run the meeting. 6 9
23. Are emails Moskva personnel are sending directly to or copied to Lavrentiy at NKVD to provide him information he and the lawyers need for the investigation jeopardizing the attorney-client privilege claim? Yes • No • 7 0
Answer • Yes. Under the Kovel doctrine, the consultant should be acting as a "translator" for the attorney. If the client and consultant are communicating directly, this can undermine the assertion that the consultant is only rendering assistance to the lawyer so that the lawyer can give legal advice. This does not mean that Boris and Natasha have to directly receive all the information – they may use non-lawyer personnel at Kremlin under the lawyers’ supervision to assist them. 7 1
24. Is Boris’s and Natasha’s meeting with Josef Dzughashvili covered by the attorney-client privilege? A. Yes B. No 7 2
Answer • Yes. Josef works for their client, Moskva, and he is giving them information so that they can render legal advice. This, however, does not cloak the facts he tells them in privilege, just what Josef said to Boris and Natasha. 7 3
25. Was it really necessary for Natasha to warn Josef at the beginning of the interview about who her client was and who controlled the privilege? A. Yes B. No 7 4
Answer • Yes. Here, Josef may have had involvement in the bribery issues and so he is under investigation. His interests and those of Moskva and Kremlin are potentially different. A warning should be given to dispel any misunderstanding. 7 5
26. Does Lavrentiy's participation in the interview of Josef result in a waiver of the attorney-client privilege and attorney work product protection? A. Yes B. No 7 6
Answer • No. He is there to assist the attorneys, so under the Kovel doctrine, there should not be a waiver. 7 7
27. Is it clear that Boris and Natasha can request that third-parties like Cathy keep her interview confidential and she not cooperate with others except the prosecutor? A. Yes B. No 7 8
Answer • No. Model Rule 3.4(f) prohibits a lawyer from requesting that a person who is not the lawyer's client refrain from voluntarily providing relevant information to another party. There are exceptions. A lawyer may ask employees, agents or relatives of a client not to cooperate if the lawyer believes those people’s interests actually will not be affected by refusing cooperation. The rule, however, is different in different jurisdictions. 7 9
28. Are Boris's notes of the interview of Cathy protected by both the attorney-client privilege and the work product doctrine? A. Yes B. No 8 0
Answer • No. They should be work product, but not attorney- client privilege (work product usually only is applicable if another privilege does not apply). Note that factual portions of the notes may be discoverable if the opposing side can show a need and inability to reasonably be able to obtain the information in another way. Thus, to best protect the notes, the attorney's views should be interwoven. 8 1
29. Were Boris and Natasha obligated to say something to either Josef or Cathy when each revealed information that might show he or she violated law, were subject to claims, or seemed to be lying (the watch and taking Moskva personnel on a trip to Paris)? A. Yes B. No 8 2
Answer • No. There is no obligation to warn a party that the attorney does not represent. In fact, Rule 4.3 prohibits a lawyer from giving advice to an unrepresented party where the interests of the party and the lawyer's client may possibly be in conflict. 8 3
Play Scene 3 8 4
30. Were Nicholas and Boris violating any of their ethical obligations by talking in the hallway outside the board room? A. Yes B. No 8 5
Answer • No. Rule 1.6 contains a duty of confidentiality, which a lawyer may violate by talking in a public place. But, speaking outside a board room in the client's offices does not seem to be inadvisable, although the lawyers probably should have at least looked around before speaking. 8 6
31. Was Nicholas obligated to raise with the Board the issue of conflicts when he was told by certain board members that they were concerned about their personal liability? A. Yes B. No 8 7
Answer • Yes. If a lawyer cannot properly represent an entire group, the lawyer should raise the possible conflict with the group before proceeding. Further, if some of the directors have a personal interest that is at odds with that of the board as a whole, the attorney-client privilege can be lost by including those directors in the communications. 8 8
32. Was it proper for Nicholas to tell Board members that they could not bring their own personal counsel to the Board meeting? A. Yes B. No 8 9
Answer • Yes. The presence of third parties – the lawyers – at the board meeting could result in the waiver of privilege. 9 0
33. Will Nicholas’s report to the Board be privileged despite the presence of Alexandra’s and Lavrentiy’s making part of the presentation? A. Yes B. No 9 1
Answer • Yes. The privilege should not be lost because of the presence of an official of a related entity who needs to be present. Likewise, if Kovel has been followed, the involvement of Lavrentiy should not result in a waiver of the privilege. 9 2
34. Does Nicholas's presentation of his Board report to Moskva management in advance of the Board meeting waive attorney-client privilege? A. Yes B. No 9 3
Answer • No. Sharing privileged information with a related party on a need-to-know basis should not result in a waiver. If the report were presented to people being investigated and reached negative conclusions about those people, a waiver might well occur. 9 4
35. Were all of Nicholas's communications with Kremlin's in-house lawyers in London, Paris and Tokyo protected by attorney-client privilege under the laws of the UK, France and Japan? A. Yes B. No 9 5
Answer • No. While the privilege in the UK is much like that in the US and so advice of in-house lawyers is protected, that is not true in France. In France, only independent lawyers may be members of the bar. In Japan, the privilege just extends to records in the possession of the lawyer or legal department. 9 6
36. Was the information that Nicholas shared with the prosecutors under a promise of confidentiality protected by the attorney- client privilege or work product doctrine? A. Yes B. No 9 7
Answer • No. This would result in a waiver despite the confidentiality agreement because the prosecutor is looking for wrong-doing at Kremlin and Moskva and the purpose of providing the report is to dissuade the prosecutor from taking action. Thus, the interests of Kremlin and Moskva, on the one hand, and the prosecutor, on the other, are not aligned. 9 8
Play Scene 4 9 9
Play Epilogue 1 0 0
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