1 Corporate Communications and Attorney-Client Privilege: What You Need to KnowAssociation of Corporate Counsel CLE Presentation October 19, 2016 San Francisco, California

2 Presenters Edward P. Boyle Joëlle Quilla Lawrence H. Cooke IIPartner Venable LLP New York Lawrence H. Cooke II Joëlle Quilla SVP-Legal & General Counsel – Client and Corporate Services Cognizant Technology Solutions Jonathan Robbins Executive Director, Legal and Compliance Morgan Stanley LHC to introduce panel (each to provide self-introduction) Disclaimer – opinions are not those of the ACC or any of the speaker’s employer. Michael Martinez Senior Vice President and Associate General Counsel for Dispute Resolution Marriott International © 2016 Venable LLP

3 Introduction Lawrence Not cutting edge, but increasingly importantMore communication is written as the pace of communication has increased s to members of the General Counsel’s office are routine Many assume that including an attorney in the conversation makes it privileged As court’s have examined claims of privilege; they are increasingly looking behind the identity of the communication to look at the purpose. Audience questions: Have you been involved in PR activities for your company? Do you have an internal PR or corporate communications department? Have you been involved in a PR matter that was related to or resulted in litigation? Do you or our outside counsel retain an external PR firm? Have you been confronted with producing or withholding documents shared with the PR firm? Has a party to litigation served a third party subpoena on your PR firm? © 2016 Venable LLP

4 Attorney-Client Privilege - StandardAttorney-client privilege applies to: communication between client and counsel, which was intended to be and was in fact kept confidential, and was made for the purpose of obtaining or providing legal advice. Control group; authority Subject matter: Legal advice, or other? Ed: Choice of Law rules applicable to both. Standard for attorney-client privilege: * A communication between client and counsel, which; * Was intended to be and was in fact kept confidential, and; * Was made for the purpose of obtaining or providing legal advice Takeaway: Just because a conversation is private between the client and the attorney does not make it confidential. See McNamee, 2014 WL , at *3 (statements regarding proposed statement to press “were prepared in anticipation of a publicly issued statement, and not in anticipation of any pending litigation or with the desire to seek legal advice”). Control group. © 2016 Venable LLP

5 Attorney-Client Privilege: PR Contextpurpose of obtaining legal advice, or assisting in the provision of legal advice Intent to keep communication confidential Ed Communications with counsel that are also conveyed to third parties usually waive the attorney-client privilege. However, “[t]he privilege may be expanded to those assisting a lawyer in representing a client, such as public relations consultants and agents.” The purpose of the communication is key – was it related to legal advice and was it intended to be kept confidential? Many people (attorneys included) believe that communications between an attorney and client made in private are automatically privileged. Not so. Needs to meet the purpose test – confidential purpose, and purpose of obtaining legal advice © 2016 Venable LLP

6 Attorney Work Product - StandardWork product protection applies to: A document or tangible thing That was prepared in anticipation of litigation i.e., prepared because of litigation Prepared by or at the direction of client or counsel Opinion versus factual material Ed The work product doctrine protects from discovery: * A document or tangible thing; * That was prepared in anticipation of litigation (i.e., prepared or obtained because of the prospect of litigation); And was prepared by or for a party, or by or for his representative. “Opinion work product” receives higher protection than “factual material” work product. © 2016 Venable LLP

7 Waiver Disclosure of attorney-client communications to a third-party waives the privilege Work product waiver if voluntarily disclosed in a manner that it’s likely to be revealed to adversary In addition, disclosure can be compelled on showing of substantial need Lawrence Generally, advice given by a lawyer to a corporate employee can be passed on to another non-lawyer employee to whom the advice should be conveyed, or for the purpose of obtaining information at the attorney’s direction. Blanket asserting that the communication was supposed to remain confidential would not suffice -- Courts will look at the purpose of relaying the advice. The power to waive ACP on behalf of a corporation rests with corporate management, and is normally exercised by officers and directors. CFTC v. Weintraub (U.S.). AWP waiver not as sensitive, but you still need to keep it from being disclosed. Privilege logs – Nobody likes preparing these, but they are important when privilege fights come up. The party asserting privilege has the burden to establish on the log a prima facie case that the privilege applies to the withheld document. Parties that have played fast and loose with this requirement have gotten burned. © 2016 Venable LLP

8 Key Considerations for Communications with P.R.Overall objective of the P.R. effort Purpose of the specific communications between P.R. and legal Participants in the communication Ed © 2016 Venable LLP

9 Privilege in the Context of Third-Party Communications: FACT PATTERNLawrence © 2016 Venable LLP

10 You are general counsel of Healthy-R-Us, a publicly-traded health food company. Your company’s most prominent celebrity sponsor is world-renowned swimmer Jane Jacques. Healthy-R-Us and Jacques recently signed a multi-million dollar endorsement deal through the end of 2018. The media has just reported Jacques has been arrested in South America for public intoxication, indecency, disturbing the peace, possession of controlled substances, and resisting arrest. The particulars being reported are salacious and embarrassing. There are high-resolution videos of the incident all over social media. Lawrence We developed the hypo before the Rio Summer Olympics Any similarities to anyone dead or suspended by USA Swimming & the Olympic Committee is entirely unintentional Only made 2 changes: swimmer who resisted arrested. © 2016 Venable LLP

11 Attorney-client privilege? Work product?Healthy-R-Us’s Public Relations department s the CEO, the head of marketing, and you: “We are barraged with calls from the press and institutional stockholders asking what were are going to do. We need to get our message out there. I’ve drafted this press release. Thoughts?” The draft press release announces that Jacques’ behavior is inconsistent with Healthy-R-Us’s values, and that the company is considering its options. Attorney-client privilege? Work product? Lawrence to read. Then asks Mike – Privilege? No, the and the draft are not privileged. A communication with public relations agents is protected if it is “made in confidence for the purpose of obtaining legal advice from the lawyer.” If the information is intended to be passed on to a third party (e.g., in a publication or press release), the communication is not considered “confidential” and is not privileged. E.g., Gucci America – draft press releases by in-house PR not privileged because made for business purposes and in the ordinary course of business, and not made for rendering legal advice Reino de Espana – industry news report sent to in-house counsel not privileged because purpose was business-related, and inclusion of in-house communications member on supported finding communication was business-related; handwritten notes from mtg. with counsel also not privileged. Calvin Klein – “routine suggestions” about how to put favorable “spin” on developments in litigation are not protected from disclosure. The hypothetical raises an interesting question: When you get an from a non-legal officer at the company that asks for your “Thoughts” – is that a request for advice? Maybe, maybe not. We’d all prefer that our colleagues use clear language when they seek legal advice, but it’s not realistic. As the lawyer getting the , your goal would be to clarify that the question, at least as far as it relates to you, is asking for legal advice, and you are providing legal advice. WP? No. This is not prepared at the direction of counsel, and it is not prepared in anticipation of litigation. © 2016 Venable LLP

12 Attorney-client privilege? Work product?Shortly after, the CEO responds: “I would like legal to tell us whether we can terminate the contract, and what our exposure would be.” You respond that the contract contains a morality clause that you believe would justify terminating the agreement based on the press and social media that you have seen. Attorney-client privilege? Work product? Lawrence to read. Then asks Joelle – Privilege? Yes. This is a pretty straightforward request to the GC for legal advice concerning the company’s contractual rights. And the GC carefully limits the response to legal advice – there is no mention of business considerations, only legal rights and analysis. Work product? Doesn’t matter with the privilege protection but this is work product too. When you are talking about terminating a contract, I would say you are reasonably anticipating litigation. This is an easy call. One of the reasons is that the question from the CEO and the answer from the GC don’t reference the draft press release. © 2016 Venable LLP

13 Is this email protected?The head of marketing responds by “That’s good to know. I see an opportunity here to strengthen our brand with health-conscious consumers. Let’s fire Jacques and immediately issue a press release disapproving her conduct.” Is this protected? LHC to read. Then asks Jonathan. Privileged? No. The head of marketing is suggesting action in response to legal advice. But there is no further request for legal advice. It’s possible that “That’s good to know” could be considered privileged, as it implies what the legal advice was. But the rest of the message would not be protected. The head of marketing likely believes that this is a privileged discussion. After all, the General Counsel is one of the people on the chain. Courts have held time and time again that the presence of counsel in a business discussion among non-lawyers at the company does not cloak the discussion in privilege. So this raises the question – are there things the GC can do to protect the non-lawyers from ing something that the company may later regret? A reply all advising that the communication of business issues may not be privileged? Better yet, maybe a phone call to the participants? Work Product? No. Again, nothing suggests this communication was at the direction of counsel or made in anticipation of litigation. © 2016 Venable LLP

14 Is the draft press release protected? The P.R. department circulates a draft press release for comments to the CEO, head of marketing, 5 other executives, and you. You respond that one sentence should be deleted because it may hurt the company if there is litigation. The press release is issued without that sentence. Is the draft press release protected? Are your comments on the draft press release protected? What about comments from others on the draft? Lawrence to read. Then asks Joelle: Draft press release protected? No. GC’s comments on draft press release? Deletion of the sentence for defensive litigation purposes would be protected from disclosure, as privileged and work product. But, not all attorney comments and changes to a draft press release will be protected. The key is whether the lawyer is reviewing with a “legal eye” or with a “business eye or editorial eye.” See In re Seroquel Prods. Liability Litig., No. 06-md-1769, 2009 WL (M.D. Fla. Nov. 6, 2009). Also, some courts have held that an attorney’s drafts of statements meant for publication are not privileged because they contained information intended to be conveyed to third parties. AND because they did not reflect legal advice but rather a thought process for communicating with the public. See Robbins & Myers, Inc. What about comments from others on the draft? Definitely not protected. There is no suggestion that any of the non-lawyers was asking the lawyer for legal advice about the draft. And their changes to the draft would not be protected. The fact that in-house counsel are among the recipients of this does not cloak these comments in privilege. It is worth noting the district court’s reasoning in the Seroquel product liability MDL. The court allowed plaintiffs to take discovery of AstraZeneca’s draft press releases. One of the factors the court found persuasive was that the drafts “went to 16 people” only one of which was an in-house lawyer. The court held the presence of counsel on the distribution list does not protect those people’s involvement in the evolution of the draft press release. © 2016 Venable LLP

15 Will your communications with the P.R. firm be protected?Three days later, Jacques sues for breach of contract. The suit generates intense media interest. You hire outside counsel to defend the suit. You direct outside counsel to hire an outside P.R. firm. The engagement letter says the P.R. firm will “assist with the litigation” and “devise and implement a public relations strategy in connection with the litigation.” Will your communications with the P.R. firm be protected? What about your outside counsel’s communications with the P.R. firm? Lawrence to read. Then asks Ed: Will your communications with the PR firm be protected? Probably not. Does it matter if the PR firm is hired by outside counsel, instead of the company? No. Discuss Clemens case. Does it matter if the discussions are with an outside PR firm as opposed to internal PR personnel? In re Grand Jury Subpoenas; In re Copper Mkt., but compare with Calvin Klein © 2016 Venable LLP

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17 Are those communications protected?The first project for the P.R. firm is to address a particular allegation in Jacques’ complaint that has attracted a great deal of press attention. The complaint alleges that Healthy-R-Us marketing people knew about her hedonistic tendencies before signing the endorsement contract because they had “partied hard” with Jacques on multiple occasions during the contract negotiations. The complaint provides a great deal of detail. The P.R. firm is instructed by your outside counsel to put together a P.R. campaign that brands Jacques as a liar. Lawrence reads. Then asks Jonathan. Protected? No. The PR campaign is designed to influence public opinion – in this case, to create a negative public opinion of Jacques. Courts have held that this is not legal advice or for the purpose of litigation. E.g., Calvin Klein Trademark case (non-legal purpose) – communications with outside PR firm concerning effect of ongoing litigation on CK customers and vendors were not privileged because (i) few contained confidential information; (ii) “helping lawyers assess legal strategy” is not seeking/obtaining legal advice; (iii) communications about the “effects” of litigation is not the same as strategy concerning “how to conduct” the litigation”. Contrast this hypothetical to the Martha Stewart Grand Jury Subpoena case. Stewart’s lawyers were trying to persuade the prosecutors not to indict. They were concerned that “unbalanced and inaccurate press reports” would influence the prosecutor’s decision. They hired a PR firm for “defensive” reasons: to balance the press coverage, with the goal of influencing the prosecutors, not the public at large. The court found that this was different from traditional PR work. The court also explained how PR professionals can function as important parts of a legal team, in which case their communications are protected: “Questions such as whether the client should speak to the media at all, whether to do so directly or through representatives, whether and to what extent to comment on specific allegations, and a host of others can be decided without careful legal input only at the client’s extreme peril. “This Court is persuaded that the ability of lawyers to perform some of their most fundamental client functions such as advising the client of the legal risks of speaking publicly and the likely legal impact of possible alternative expressions, seeking to avoid or narrow charges brought against the client, and zealously seeking acquittal or vindication Would be undermined seriously if lawyers were not able to engage in frank discussions of facts and strategies with the lawyers’ public relations consultants. “And there is simply no practical way for such discussions to occur with the public relations consultants if the lawyers were not able to inform the consultants of at least some non-public facts, as well as the lawyers’ defense strategies and tactics.” [Also discuss Copper Markets?] Takeaway: There are legitimate legal reasons for in-house PR department to consult with lawyers before making public statements about pending or threatened legal action. But the protection will only apply if the Court is persuaded that the purpose of the advice was legal in nature. Are those communications protected? © 2016 Venable LLP

18 Jacques’ woes continueJacques’ woes continue. A national television network terminated her contract to serve as a color commentator on a popular weekly sports program. Jacques files a separate breach of contract lawsuit against the television network. Your outside counsel enters into a joint defense/common interest agreement with counsel for the network, to facilitate the exchange of information that may help each company in their respective cases. Lawrence to read. then: Here is a little background on joint defense/common interest agreements and a significant NY case * They do not create privilege. What they do is protect a pre-existing privilege from waiver if you disclose it to someone with a joint defense or common interest, who agrees to keep that information confidential. * There are good reasons why outside counsel generally would want a joint defense/common interest agreement in this situation. Promotes the sharing of information and strategy freely with a party in a similar situation and a common enemy. Helps attorney investigate case more efficiently. Allows cooperation even when there is not completely aligned legal interest (potential conflict requiring separate counsel) Also, there is a difference between federal and at least some state standards about when joint defense or common interest exists. Schaeffler (more forgiving federal standard) – communications between parties in the course of an ongoing enterprise and with a shared common legal interest are privileged , and actual litigation is not required Compared with Ambac Assur. Corp. (New NY case – litigation required) - no common interest privilege unless parties reasonably anticipated litigation ; a number of states have codified this rule © 2016 Venable LLP

19 Is the memo protected from disclosure?Following execution of the joint defense/common interest agreement, a conference call is organized in which you, your outside counsel, and your P.R. firm speak with counsel for the television network. The call begins with a discussion of defense strategy for the litigation. Next, the P.R. firm talks about the work it has done and shares some ideas for joint public relations efforts targeting Jacques’ credibility. The P.R. firm circulates minutes of the call afterwards. Is the memo protected from disclosure? Lawrence reads. Then asks Mike: Protected from disclosure? Let’s start with the basics. There is a valid common interest agreement here under even the stricter standard, because both companies are in litigation adverse to Jacques. But the common interest agreement doesn’t create privilege, or work product protection. It only protects against waiver. So the question here is really whether the discussion itself is protected by privilege or work product. You have the company, its outside counsel, and its PR firm talking about defense strategy. That may or may not be protected by attorney-client privilege, depending on whether the strategy was communicated to the PR firm because it was necessary to the lawyers’ advice to the company. But it would be protected as attorney work product since it involves litigation. They also discuss the work the PR firm has done, which Jonathan has explained is not protected by privilege. Is it work product? It depends – did the PR firm prepare it at the direction of counsel? Is the purpose to assist with the ongoing litigation? Unless those answers are yes, that part of the memo is not protected. E.g., Pemberton case (no ACP, but WP) – no ACP because defense counsel didn’t rely on PR firm’s expertise to give legal advice; but WP protection for documents created by attorneys and PR firm because of litigation And they discuss a potential joint public relations strategy targeting Jacques’ credibility.. This would not be privileged, as there is no legal advice involved. And it would not meet the work product test either, unless the parties could show how influencing public opinion regarding Jacques’ credibility is relevant to defense of the litigation. © 2016 Venable LLP

20 What is your feedback to outside counsel about the privilege log?During the course of discovery, your outside counsel determines that approximately 1,000 documents should be withheld as privileged. The outside counsel sends you a privilege log for your approval. You see that the privilege log contains a blanket claim for all the documents describing them as “communications between counsel and public relations firm regarding ongoing litigation.” What is your feedback to outside counsel about the privilege log? Lawrence to read. Then asks Ed. Feedback? Go back and do this right! There are a host of cases that crop up in the PR space that reflect heightened judicial animosity about conclusory privilege logs – especially for communications that are suspicious on their face. The log needs to make a prima facie case that each communication withheld is protected by privilege or work product. That is the burden of the party asserting privilege. If you don’t meet that burden, you can’t withhold the document. Discuss Clemens Bloomingburg (privilege log)– full waiver and order to produce all documents immediately for failure to conduct privilege review and produce privilege log What to do? Some courts have developed rules permitting summary privilege logs. Commercial Division NY, e.g. In other situations, you can work with opposing counsel to negotiate reasonable limits on privilege logs. For example, date cut-offs, summary entries for chains, etc. © 2016 Venable LLP

21 Key Takeaways The purpose of the document or communication is key: courts will ask whether it relates to legal advice or has some other purpose Where possible, communications between attorneys and the corporate communications group should expressly reference a request for legal advice and/or a request in connection with anticipated or existing litigation Absent anticipated or pending litigation, work product protection does not apply Many jurisdictions – including New York – do not recognize a common interest privilege unless there is pending litigation Lawrence to read. Flip around to different panel members for further thoughts, and points to add. © 2016 Venable LLP

22 Key Takeaways, cont. Keep communications on a need-to-know basisMake sure the corporate communications group is familiar with these rules When withholding privileged documents, make sure outside counsel submits a detailed privilege log explaining the privilege claim for each document or communication Lawrence to read. Flip around to different panel members for further thoughts, and points to add. © 2016 Venable LLP

23 Questions © 2016 Venable LLP

24 Thank you Edward P. Boyle Joëlle Quilla Lawrence H. Cooke IIPartner Venable LLP New York Lawrence H. Cooke II Joëlle Quilla SVP-Legal & General Counsel – Client and Corporate Services Cognizant Technology Solutions Jonathan Robbins Executive Director, Legal and Compliance Morgan Stanley Last slide to leave up Michael Martinez Senior Vice President and Associate General Counsel for Dispute Resolution Marriott International © 2016 Venable LLP