Now in Legal Rebels:
Posted Apr 28, 2005 10:36 am CDT
But Ide says it will take hard evidence to show federal regulators, including the Department of Justice and the Securities and Exchange Commission, that weakening the privilege is not in the best interest of business or the public. That is “something we want documented as much as possible,” says Ide, a past ABA president.
The task force was created in October by current ABA President Robert J. Grey Jr. of Richmond, Va., to examine the purpose of the privilege–which protects attorney-client communications from disclosure in the context of adversarial legal proceedings–and the degree to which various government measures, particularly at the federal level, are affecting it.
In addition to evaluating Justice and SEC policies that require companies to waive the privilege as a condition to cooperating with government investigations, the task force is looking at the impact of recent amendments to federal sentencing guidelines that factor in privilege waivers as a condition to receiving more lenient sentences.
Ide says the task force is working to develop a set of initial recommendations for consideration by the ABA’s policy-making House of Delegates in August during the 2005 annual meeting in Chicago. But he adds that the task force, which is administered by the Section of Business Law, will likely live on past 2005.
Interest in the future of the attorney-client privilege was evident at the February midyear meeting, where the schedule to testify at the task force’s first public hearing was nearly full.
A widely shared concern among those who testified was that companies waiving the privilege risk having sensitive information fall into the hands of adversaries.
When companies and their employees are uncertain about whether they will be protected by the privilege, “they stop writing things down” and begin playing a “telephone game,” said James W. Conrad Jr., assistant general counsel to the American Chemistry Council, a trade group in Arlington, Va. Companies also self-censor, he said, and sometimes make legal decisions without consulting counsel.
The task force was told that the privilege also is compromised in the context of increasing pressure from auditors to reveal privileged tax opinions and other legal work product materials.
“There is a fairly urgent need for the bar to re-engage with accounting authorities,” said Kenneth W. Gideon of Washington, D.C., the incoming chair of the ABA Section of Taxation. Gideon urged the task force to find out exactly what auditors need to know and whether they actually need privileged documents. “I think there may be more flexibility than you would imagine on the other side,” he said.
John Gamino, senior tax counsel for TXU Corp. in Dallas, was one of the few witnesses at the hearing who delivered on Ide’s request for concrete examples of how the attorney-client privilege is coming under fire. Gamino held up a letter he says his company received from Deloitte Touche Tohmatsu requesting his office turn over all tax documents, including memos and opinions.
Gamino says the demands of auditors go beyond even the boundaries of recent regulations. “This hasn’t been a problem since this year,” he said. “The accounting firms need to back off.”