Attorneys and employers regularly encounter employment issues, including human resource issues, that raise legal implications for a company and ethical considerations for both in-house and outside counsel. This article explores the relevant law surrounding these issues, strategies in legally advising corporate clients while preserving the attorney-client privilege, and best practices for attorneys and employers.

Attorney-Client Privilege

The attorney-client privilege prevents the disclosure to third parties of confidential communications between an attorney and a client made for the purposes of legal advice and that are not otherwise waived. Four types of communications might be entitled to protection: requests for legal advice by an organization, disclosure of facts to their attorneys, requests by company counsel for information they need to formulate legal advice, and legal advice provided by company counsel. 

Communications are confidential if they involve only employees who are within the scope of the attorney-client relationship. This includes all attorneys whether they are outside counsel, in-house counsel, or attorney agents retained to help counsel provide legal advice. The privilege will also cloak discussions between counsel and upper management, employees who “need to know,” and former employees (but only under certain circumstances). 

Upjohn Co. v. United States

In Upjohn Co. v. United States, 449 U.S. 383 (1981), the United States Supreme Court ruled that the attorney-client privilege applies broadly to all employees including internal investigations and the interviews with employees to complete the investigation. A company client can assert privilege over employees and attorneys in the following scenarios:

• To secure legal advice for the company when company superiors directed the employees to communicate with the company's in-house or outside counsel.
• The employees were sufficiently aware that they were being questioned so that the company could obtain legal advice.
• Counsel was acting in a legal capacity on the company's behalf.
• The communication concerns matters within the scope of the employees' duties and is not available from upper-echelon management.
• The employees understood at the time that the communications were confidential.
  
  Under the Upjohn test applied by the Supreme Court, the attorney-client privilege may protect communications between a company counsel and a current employee, a former employee, an employee of a corporate affiliate (look at company and affiliates as one company), an outside client-agent (very rare), and an outside attorney-agent. Among non-legal employees, the attorney-client privilege may protect discussions involving legal advice received and intent to seek legal advice. 
  
  Upjohn Warning
  
  An Upjohn warning is a procedural oral or written warning given to employees by the company’s attorneys or investigators during an investigation for the company. Since the interviewer represents the company, not the interviewee, notice is given to the interviewee that the interviewer (attorney) does not represent them in their personal or professional capacity. The attorney places the interviewee on notice that the conversation is privileged and confidential and requests the interviewee to keep the conversation confidential. All communications between the interviewer and the employee are protected by the attorney-client privilege because the privilege belongs to the company. The company, in its sole discretion, may choose to waive the attorney-client privilege and disclose communications. However, the employee cannot share information from the interview.
  
  Limitations on Upjohn 
  
  There are a few limitations on a company asserting privileges during a company employment claim investigation. Documents not communicated to counsel are not privileged. Legal Advice, that is, the duty to explain the legal risks to the client and mitigate the risks where possible is covered by the privilege. However, business advice is not legal advice and therefore is not protected by the attorney-client privilege, e.g. whether a company should assume a risk. The privilege may be waived if the communication is later shared with someone outside of the attorney-client relationship. Finally, the privilege will not extend to communications or internal investigations if made in furtherance of criminal conduct or fraud or to hide criminal conduct from third parties. 
  
  Dual Representation
  
  Counsel may represent a company and an employee of the company if there is no conflict. An alternative would be for in-house counsel to assign separate counsel for the employee and enter into a common-interest/joint defense agreement. Either method affords the protection of certain materials shared between a company and employee.  
  
  Best Practices for Investigating Employment Claims
  
  If outside counsel is investigating the employment claim, do not assume that in-house counsel has sent notice. A litigation hold should be issued as soon as practical. Identify all employees who may have relevant information and/or documentation, e.g. human resources, managers, IT for emails and other electronic stored information. Identify the location of all relevant documents. The next step is to interview the employees with relevant information and issue a written Upjohn warning to them. In-house counsel should call outside counsel early in the process, if outside counsel will be handling the matter. One of the most important things to do during the investigation is to maintain confidentiality of the entire investigation so that all materials will be cloaked with the attorney-client privilege. This involves keeping the materials in a secure and confidential location, labeling all interview notes and documents with a privilege or attorney work product stamp. 
  
  Conclusion
  
  There are many ethical concerns for both in-house and outside counsel concerning employment claims. A primary concern is protecting and securing all relevant information through a litigation hold. Protecting the attorney-client privilege is also of paramount importance. Issuing Upjohn warnings to employees that are interviewed and securing and labeling all materials collected during the investigation are important steps in the process.  
  
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  This article was inspired and contents derived from the presentation Ethical Considerations for and the Role of Attorneys and Employers Handling Employment Decisions/Litigation, by Sean P. Hatley, Stephen M. Cornelius, and Richard J. Berwanger, Jr., as part of the MSBA’s 2024 Legal Summit in Ocean City.
  
  Sean P. Hatley serves as the General Counsel for Lumina Solar since August 2023. Prior to that, Sean was an attorney at Bowman Jarashow Law LLC. Sean also serves as a Judicial Law Clerk for the Honorable Michele D. Jaklitsch at the Circuit Court for Anna Arundel County. Sean earned his MBA from the University of Baltimore Merrick School of Business and his Juris Doctor degree with cum laude honors at the University of Baltimore School of Law. 
  
  Stephen M. Cornelius is a Principal at Eccleston and Wolf and serves as the firm’s President and Managing Principal. Stephen earned his B.S. from Methodist University with summa cum laude honors. He earned his J.D. at the University of Baltimore School of Law with magna cum laude honors.
  
  Richard J. Berwanger, Jr., is a partner in Frost Law’s litigation department and is the firm’s General Counsel. Richard serves on the Board of the Anne Arundel Bar Association and Partners in Care, Inc. He received his law degree, magna cum laude, from the University of Baltimore School of Law and his M.B.A. from the University of Baltimore Merrick School of Business. Richard also has an undergraduate degree in finance from the University of Maryland.