by Carole J. Buckner
As you record your billing entries to send to clients, you probably expect that your descriptions will be covered by the attorney-client privilege. You may not be thinking at all about what will happen to the invoices containing those time entries after the case is over. You may assume that information in invoices is protected by the attorney-client privilege even after the case is over. This used to be the case under the law providing that the attorney-client privilege continued even after litigation ended. But things changed with the decision of the California Supreme Court in Los Angeles Cty. Bd. of Supervisors v. Superior Court (ACLU of Southern California), 2 Cal. 5th 282 (2016). A majority of the court has determined that an attorney’s invoices to a client are protected by the attorney-client privilege so long as litigation is ongoing, but there is no categorical privilege covering attorney invoices to clients, so that “there may come a point when [the invoices] no longer communicate anything privileged.” Id. at 298.
The decision is controversial for several reasons. First, the court has changed the law pertaining to the duration of the attorney-client privilege, holding that the privilege may no longer protect invoices after litigation ends. What may or may not continue to be protected after litigation ends is now subject to argument. Second, the decision requires examination of the purpose and content of the communication in order to determine whether the attorney-client privilege is available, providing that only communications pertaining to a legal consultation or those that create a risk of exposing such information fall within the protection of the attorney-client privilege. In addition, the broad language of the decision leaves room for the extension of the principles announced beyond a Public Records Act scenario, and beyond invoices to other types of documents and other exchanges of information. The invitation of the dissent to the legislature for a solution to the uncertainties created by the language of the opinion signals the problematic nature of the doctrinal pronouncements.
Justice Werdegar, in dissent, describes the majority’s decision as not only “pernicious,” but as undermining a pillar of the court’s jurisprudence. Prior authority indicated that the attorney-client privilege continued in force even after the attorney-client relationship ended, as long as a person or entity existed to continue to assert the privilege. HLC Properties, Ltd. v. Superior Court, 35 Cal. 4th 54 (2005). After the 2016 decision, Justice Werdegar advises that “attorneys in this state must counsel their clients that confidential communications between lawyer and client, previously protected by the attorney-client privilege, may be forced open by interested parties once the subject litigation has concluded.” Los Angeles Cty. Bd. of Supervisors, 2 Cal. 5th at 308. Prudence may dictate an amendment to engagement letters going forward.
The Public Records Act Request
The dispute arose when the ACLU sought information under California’s Public Records Act, Government Code section 6255, including invoices pertaining to billings by law firms representing the County of Los Angeles in litigation involving alleged use of excessive force against inmates in the jails. Notably, the ACLU wanted this information to evaluate a scorched-earth litigation strategy, with cases dragged out even when it would be in the best interests of the County to settle. While at first blush this factual context may seem very unique (public records, jails), a similar effort to obtain invoices from a series of cases in order to show a scorched-earth litigation strategy might apply in other contexts where a defendant is engaged in serial commercial litigation, such as insurance bad faith litigation or product liability defense.
The County agreed to produce the records for closed cases, with redactions for attorney-client privileged and work-product protected information. At the same time, the County declined to produce invoices for ongoing litigation, claiming the attorney-client privilege under the California Evidence Code. The trial court ordered the release of such records, with redaction of information reflecting an attorney’s legal opinions, advice, mental impressions, or theories of the case. Id. at 289. The appellate court held that the invoices were confidential communications protected by Evidence Code section 952. Citing the California Supreme Court’s decision in Costco Wholesale Corp. v. Superior Court, 47 Cal. 4th 725 (2009), the appellate court held that the “privilege protects a transmission irrespective of its content.”
The California Supreme Court majority opinion in Los Angeles County Board of Supervisors acknowledges the sanctity of the attorney-client privilege in safeguarding communications between attorney and client, and promoting full and frank discussions between attorney and client. California Evidence Code Section 952 provides that a client can refuse to disclose confidential communications between attorney and client. A confidential communication is defined as:
information transmitted between a client and his or her lawyer in the course of that relationship and in confidence by a means which, so long as the client is aware, discloses the information to no third persons other than those reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.
Cal. Evid. Code § 952. The majority of the court also cited California Business and Professions Code Section 6148, which addresses both the attorney-client fee agreement and attorney billing. The court noted that the following section, Business and Professions Code Section 6149, explicitly provided that a written fee contract is deemed to be a confidential communication, and thus protected by the attorney-client privilege in Section 952, as well as Business and Professions Code Section 6068(e). Significantly, the court indicated, the legislature did not designate attorney billings as confidential or privileged, signaling, according to the majority, that the privilege was not intended to provide protection for invoices. Id. at 299.
Privilege Applies, Then May Disappear
The court reiterated the well-established principle that “the privilege does not apply to every single communication transmitted confidentially between lawyer and client.” Id. at 294. According to Evidence Code Section 952, a confidential communication includes legal opinions formed and advice given by the lawyer in the course of the attorney-client relationship. The majority of the court interpreted this as an indication that the application of the privilege is appropriate if the communication “bear[s] some relationship to the provision of legal consultation.” Id. at 295. Thus, the “privilege turns on content and purpose, not form.” Id. at 298. The court agreed to some degree with the ACLU that invoices from attorneys are not designed to further the purpose of the legal representation, but rather, further a separate “business purpose that is merely incidental to the attorney-client relationship.” Id. at 293. This reasoning ultimately led the court to conclude that invoices for legal services are not communicated for the purpose of legal consultation, nor are invoices “made for the purpose of representation”; therefore, they are not protected categorically by the attorney-client privilege. Id. at 295-96.
At the same time, the majority decided that some of the information contained within invoices sent by attorneys to their clients in fact may be protected by the attorney-client privilege, to the extent the information is conveyed for the purpose of legal representation, including information that informs clients of the nature and amount of work. Id. at 297. The majority acknowledged that during ongoing litigation, fluctuations in spending might reflect litigation strategy. Id. at 298. Accordingly, the majority held that invoices were protected by the attorney-client privilege while litigation was pending.
The court held that “the contents of an invoice are privileged only if they either communicate information for the purpose of legal consultation or risk exposing information that was communicated for such a purpose.” Id. at 300. Thus, delving into content will be required to evaluate the availability of the privilege. At the same time, the court indicated that there may come a point where invoices “no longer communicate anything privileged because it no longer provides any insight into litigation strategy or legal consultation.” Id. at 298. Thus, what is once privileged may not always be so. Accordingly, the court concluded, the privilege turns on content and purpose, not form, and may no longer protect the invoices after the litigation is over.
Going forward after the Los Angeles County Board of Supervisors decision, an examination of the purpose and content of legal invoices will be required in order to determine whether the invoices are protected by the attorney-client privilege, once the litigation has concluded. The matter was remanded for further consideration of how these new doctrinal standards apply in light of the ACLU’s request seeking evidence of scorched-earth litigation tactics in past cases. Under the logic of the court’s decision, if the invoices no longer revealed insight into litigation strategy, it would be appropriate to produce them. If that were the case, the ACLU would not be able to use them as evidence of litigation strategy. Somewhat paradoxically, invoices thought to reveal litigation strategy and tactics during the pendency of the litigation would no longer do so after the litigation had ended, warranting disclosure.
The recent Los Angeles County Board of Supervisors decision sharply disagrees with the California Supreme Court’s earlier decision in Costco Wholesale Corp. v. Superior Court, 47 Cal. 4th 725 (2009), an opinion authored by Justice Werdegar, the vehement dissenter in the more recent case. The Costco decision addressed whether the attorney-client privilege protected an opinion letter written by an attorney to Costco pertaining to wage and hour issues, prepared after the lawyer had interviewed employees. The Costco court held that the attorney-client privilege protected the letter from discovery “irrespective of the letter’s content.” Id. at 731-32. Costco also held that a court cannot order an in camera review of information claimed to be privileged in order to rule on the claim of privilege. Id. at 746. Evidence Code section 915(a) so provides.
As Justice Werdegar’s dissenting opinion points out, the majority in Los Angeles County Board of Supervisors rejects the primary holding in Costco by requiring that a determination be made regarding whether parts of a legal communication were not made for the purpose of legal consultation. Going forward, in direct contradiction to Costco, courts must deconstruct a legal communication to determine whether parts of it that do not pertain to legal advice or legal opinion can be disclosed. How such analysis can be conducted remains a mystery, given the statutory prohibition on examination of allegedly privileged documents in order to rule on a claim of privilege.
Discovery of Invoices
The majority’s determination that invoices may not be protected by the attorney-client privilege after litigation ends raises multiple issues. The court indicates that it may be the case that invoices no longer “provide any insight into litigation strategy or legal consultation.” Los Angeles Cty. Bd. of Supervisors, 2 Cal. 5th at 288. When this may be the case is not clear. Perhaps most practitioners would assert that invoices always reflect insight into litigation strategy and legal consultation. The ACLU sought to obtain the invoices to show a so-called scorched-earth litigation strategy, which arguably would be equally evident whether or not the litigation had terminated.
Because the court indicated that invoices generally are not communicated for the purpose of a legal consultation, efforts to discover invoices may increase after litigation has concluded. Although redaction will be appropriate when litigation is ongoing, the implication of the court’s reasoning is that un-redacted invoices likely will be discoverable after litigation has concluded, depending on the content. One additional and important issue that was not addressed is the applicability of work-product protection after litigation has ended.
Beyond Invoices and Beyond the PRA
Many aspects of the court’s decision are very broad and therefore present the potential to be extended well beyond the factual scenario from which the decision arose. The logic of the opinion could be extended to other defendants allegedly engaged in scorched-earth tactics. Plaintiffs in civil commercial cases might be similarly interested in showing an inappropriately aggressive litigation strategy by a variety of institutional defendant litigants.
The broad language of the majority opinion characterizing the scope of the attorney-client privilege as dependent on the content of the communication also invites extension beyond Public Records Act scenarios. In addition, this language puts courts back into the business of determining the application of the attorney-client privilege based upon an examination of the content of the communication.
The broad language of the majority opinion also opens a range of potential inquiries into areas where a lawyer is engaging in business dealings rather than legal consultation, based on the language of the opinion rendering the attorney-client privilege inapplicable. Beyond transmission of invoices, other routine activities of lawyers in connection with billing and collection of legal fees may “evoke an arm’s length transaction between parties in the market for professional services” rather than a “diligent and discreet conveyance of facts and advice that epitomizes the bond between lawyer and client.”
Based on the logic of the decision, an argument can be made that not only invoices, but all communications about billing will no longer be protected by the attorney-client privilege after litigation has concluded, given that such communications arguably pertain to the business relationship between the lawyer and client, rather than to legal consultation. To the extent that most lawyers and clients operating on a day-to-day basis commonly regard such communications as privileged, the doctrinal niceties announced by the court reflect a disconnect with the realities of legal practice.
Justice Werdegar invites the legislature to address the issues she finds are beyond the scope of the court’s authority. Id. at 306. One approach might be to amend Business and Professions Code Section 6149 to include invoices. However, such a change would not remedy the potential confusion that may be created by the distinction between legal consultation and arm’s length business relationships, which may require amendment to Evidence Code Section 952. The potential for the attorney-client privilege to apply during litigation only to vanish when that litigation ends should also be evaluated by the legislature. In the interim, absent legislative clarification, future cases interpreting the meaning and scope of the California Supreme Court’s decision will provide further guidance.
Carole J. Buckner is the owner of Buckner Law Corp. and focuses her practice on legal ethics and professional responsibility. She serves as co-chair of the OCBA Professionalism & Ethics Committee. She is the Dean of St. Francis School of Law in Newport Beach. She can be reached at email@example.com.