In-House Counsel
GCs Fear Litigation Strategies Would Be Revealed if Rule Changes
Posted Jul 24, 2008, 05:49 am CDT
By Debra Cassens Weiss
The ABA is among the critics of a proposed accounting rule change that would require public companies to disclose more details about the risks of litigation.
In-house lawyers and other critics say the rule change would force companies to reveal details that could provide opponents with a preview of their litigation strategies, the Recorder reports. The ABA is particularly concerned the rule would result in waiver of the attorney-client privilege.
The proposed changes (PDF posted by the Recorder) by the Financial Accounting Standards Board would lower the threshold for reporting a potential loss from a lawsuit from “probable” to anything more than “remote,” the story says. Companies would be required to estimate legal costs and the likely outcome, and would have to explain the reasoning for their predictions.
The ABA is drafting a letter criticizing the proposal, says R. William Ide III, chair of the ABA Task Force on Attorney-Client Privilege. "The concern is that there is case law on work product and on attorney-client privilege," Ide told the Recorder. "If you reveal discussions of a lawyer and a client to a third party, then you waive it."
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Posted by Kay Sieverding - 1 month, 3 days, 16 hours, 1 minute ago
This article proves why blogging is useful. “If you reveal discussions of a lawyer and a client to a third party, then you waive it.” That was the exact quote I was looking for to prove waiver of attorney client privilege.
It’s interesting to in the context of forcing people to hire lawyers by dismissing the case if they don’t. Part of that strategy is to get the self-represented to reveal their discussions with lawyers that they may have considered hiring, thus waiving their privilege. If the self represented were to report, for instance, that the lawyer wanted cash instead of a %, the other side could claim that was because their case was weak. Maybe they could also use information about payment arrangements to coerce the lawyer into helping the other side.
Another point I think is interesting has to do with the Colorado Intergovernmental Risk Sharing Agency. I have a copy of their 2002 evaluation by KPMG. The business sells insurance so the value of their litigation is the most major factor on their balance sheet, much more important that their office space commitments. The KPMG report relied entirely on the director to value the potential losses from litigation and he was not even a lawyer, nor were the cases detailed. Then another blog helped me realize that Colorado statute authorizes risk sharing financial “pools” not new organizations and that any director of such a pool is required to personally sign their annual financial statements submitted to the state insurance department. But when I did an open records request on the Col Division of Insurance they reported that they have no financial statements signed by the director and don’t even know how much he is compensated even though the organization shows no tax expenses on their financial statements and implies that it is a government agency. No one seems to know who owns CIRSA as the state insurance commissioner and the state attorney general don’t have articles of incorporation or a government charter, according to a recent email from Peg Brown in the Colorado Insurance Division. CIRSA management apparently has more privacy and control than a typical public company or a government agency. It doesn’t even have an directors who are lawyers, CPA’s or CLEE’s. The directors are an electrical engineer, some “risk managers”, a city manager, and a city clerk. Can they evaluate litigation risk?
Maybe preservation of their litigation strategy is one reason why so many companies selling professional liability insurance don’t register with state insurance authorities.