Attorney-Client Privilege
Auditors’ Quest for Legal Documents Could Risk Exposure
Posted Nov 16, 2007, 11:37 am CDT
By Debra Cassens Weiss
Auditors complying with post-Enron laws are increasingly asking for legal documents, putting the material at risk for disclosure in lawsuits.
When confidential documents are shown to outside parties, they are no longer protected from disclosure by the attorney-client privilege, the New York Times explains. Only around 30 states protect the auditor-client privilege, and there are few federal rulings on the subject.
“Requests for information from outside auditors are generally broader and more expansive than they were several years ago,” Carol Ann Petren, the chief general counsel of the Cigna Corp., told the Times. Companies “must be sensitive to the possibility that a third party may subpoena this material.”
In a case involving military contractor Textron Inc., a Rhode Island federal judge refused to allow the IRS to see documents prepared by in-house lawyers about the company’s aggressive tax strategies. But in a case involving stent makers, a federal judge allowed release of meeting minutes given to auditors with details about the company’s exposure to litigation.
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