Attorney-Client Privilege: All Communications to Clients Are Not Equal

Many of us have been there: In deposition, a question is asked that does not directly seek information related to an attorney-client communication, but opposing counsel nonetheless objects and instructs the deponent not to answer. In Meir v. Meir et al., the issue was whether questions in deposition seeking facts can be protected by the attorney-client privilege. The North Carolina Business Court’s answer? An emphatic “no,” especially where the party being deposed had previously attested to having personal knowledge of the subject facts.

In Meir, Plaintiff’s verified Complaint alleged that her former lawyer and her sons wrongfully induced her to transfer her deceased husband’s businesses to the sons for a value much less than they were worth. At deposition Plaintiff’s attorney instructed her not to answer multiple factual questions that related to her allegations in the Complaint, such as:

  • Whether she was dissatisfied with the price she received for the businesses;
  • Whether she has ever become unhappy with the price she received for the family businesses;
  • Whether, other than what was said to her in connection with the lawsuit, anyone had ever said to her that the purchase price of the businesses was too low;
  • Whether she was ever unhappy with any of her former attorney’s legal work;
  • Whether, “other than based on things [she] may have been told . . . by her lawyer,” she felt that her former attorney at any time had not served her well;
  • Whether she felt today that she had any reason not to trust her former attorney.

Plaintiff’s counsel refused to permit the deponent to answer on the grounds that the attorney-client privilege “prohibits disclosure of the factual information in the substance of confidential communications between attorney and client,” and that Plaintiff “did not have independent knowledge of her claims…until she engaged legal counsel to investigate and her counsel reported the information back to her in the form of confidential communications made for the purpose of giving legal advice.”

Somewhat predictably, the Court disagreed, holding that “the attorney-client privilege does not protect against the disclosure of facts. Rather, it only protects against the disclosure of certain confidential communications between an attorney and client,” and “the attorney-client privilege does not attach to specific facts simply because [Plaintiff] is aware of those facts only because of conversations with her attorney.”

Interestingly, while the Court noted that the deposition questions related to facts alleged in Plaintiff’s verified Complaint, and even though a motion to compel was necessary and Plaintiff was ordered to answer the questions, the Court decided against imposition of sanctions. This caused us to ponder what type of conduct may result in the Business Court imposing sanctions, and, while there isn’t a ton of guidance, we found that the Business Court did impose sanctions in, see Allen Smith Inv. Props., LLC v. Barbarry Props., LLC, 2013 NCBC LEXIS 1 (sanctioning plaintiffs for failure to timely provide a damages calculation by striking a portion of plaintiffs’ affidavit related to damages); Clark v. Alan Vester Auto Group, Inc., 2009 NCBC 18 (ordering defendants to pay plaintiffs’ expenses and attorneys’ fees for making “inconsistent representations as to discovery and the status of documents, obstruct[ing] efforts to obtain discovery in violation of orders of the court, destroy[ing] relevant documents outright and ma[king] inaccurate representations to the court”); Kornegay v. Aspen Asset Group, LLC, 2007 NCBC 5 (ordering defendant to pay costs of expert deposition and associated fees for failing to timely designate an expert).

Our takeaway: Lawyers should use caution in educating clients regarding facts developed in a case, particularly if the lawyer’s perspective or opinion is also communicated, unless the lawyer is comfortable with the client testifying about both. However, even where that happens and lawyers attempt to avoid discovery by objecting and instructing their clients, it appears somewhat unlikely that sanctions will be imposed by the Business Court for first time offenders, unless the objections are violative of a court order.