in house counsel deppositions: navigating complex legal and...

Presenting a live 90‐minute webinar with interactive Q&A

In‐House Counsel Depositions: pNavigating Complex Legal and Ethical IssuesResponding to Deposition Notices and Subpoenas and Protecting Privileged Information

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

THURSDAY, JANUARY 17, 2013

Today’s faculty features:

David B. Fawcett, Partner, Reed Smith, Pittsburgh

Matthew R. Sheldon, Partner, Reed Smith, Falls Church, Va.

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In-House Counsel Depositions: Navigating

Complex Legal and Ethical Issues

A Strafford Webinar Presented By:D id F tt R d S ith LLPDavid Fawcett, Reed Smith LLPMatt Sheldon, Reed Smith LLP

January 17, 2013

Question: How often do you worry about beingQuestion: How often do you worry about being deposed?

A Once a dayA. Once a day.

B. Once a week.

C. Once a month.

D. Rarely.y

E. Never.

F So often it keeps me up at nightF. So often it keeps me up at night.

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Q ti Wh t i fid l l ith t tQuestion: What is your confidence level with respect to understanding the rules and strategies of being deposed?

A. Very high.

B. High.B. High.

C. Moderate.

D LD. Low.

E. Very low.

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Overview General rules regarding depositions of in General rules regarding depositions of in-

house counsel.

Responding to deposition notices and Responding to deposition notices and subpoenas.

I h l d iti d i il In-house counsel depositions and privilege issues.

Q ti ? Questions?

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In-House Counsel Depositions Basic Deposition Rules Basic Deposition Rules

Preparing for the Deposition

Issues During the Deposition

Responding to the Deposition Notice or p g pSubpoena

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Deposition Ground Rules Preparing the witness is the key.p g y

Notice/subpoena must be proper.

Be cooperative but push back if necessary.

Familiarize yourself with local practice.

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Preparing for the Deposition

What questions are likely to be asked?

What other areas of inquiry might the questioner delve into?

What are the areas where answers will be permitted?

What are the areas where an instruction not to answer will likely be given?

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Issues Relating to Deposition Preparation

Document Review Review documents that refresh the witness’s recollection or that

the witness will likely rely on in her testimony.

Draw Clear Lines on Privilege/Work ProductDraw Clear Lines on Privilege/Work Product Waiving privilege as to particular documents or discussions may

inadvertently waive the privilege on the subject matter generally. Conversely making subjects off-limits in depositions can makeConversely, making subjects off limits in depositions can make

them off-limits at trial (e.g. an advice of counsel defense).

Understand the Risks and Rules Going In In-house counsel: discuss strategy in advance but remember that In-house counsel: discuss strategy in advance but remember that

you are the witness and not the lawyer at the deposition!

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During the deposition Instructions Not to Answer:Instructions Not to Answer: May Be Risky. May Be Necessary. Be Prepared Going In, But Don’t Be Afraid to Confer on

Privilege Issues During the Deposition. Be Prepared to Seek Immediate Court Intervention.

In-house counsel: Focus on Being the Witness − Not the Lawyer.

/Off Understand What is at Issue Versus What is Privileged/Off-Limits and Provide Outside Counsel the Factual Foundation to Object.

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Hypothetical During litigation opposing counsel serves During litigation, opposing counsel serves

interrogatories.

In house counsel verifies the interrogatory In-house counsel verifies the interrogatory answers.

C i h l b ti d? Can in-house counsel be questioned?

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Hypothetical 2 In house counsel verifies interrogatory In-house counsel verifies interrogatory

answers that inadvertently contain a factual mistake regarding the company’s principal g g p y p pplace of business.

In-house counsel, in response to a motion toIn house counsel, in response to a motion to dismiss, signs an affidavit stating that the interrogatory answer was incorrect and then provides an accurate statement of facts.

Can in-house counsel be questioned?q

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Hypothetical 3 In house counsel authorizes the hiring of a In-house counsel authorizes the hiring of a

private investigator.

The PI improperly/unlawfully records phone The PI improperly/unlawfully records phone conversations.

C i h l b ti d? Can in-house counsel be questioned?

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Hypothetical 4 You are defending the deposition of in house You are defending the deposition of in-house

counsel. In response to a question that arguably seeks privileged information, in-g y p g ,house counsel says “I need to confer with my counsel before answering that question.” Opposing counsel objects and demands an answer to the question.

What do you do?

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Responding to the Deposition Notice gor Subpoena Is the noticed deponent aware of facts that are

legitimate subjects of discovery?legitimate subjects of discovery? Has the company put the advice of counsel at issue? Has counsel been noticed to harass or for other

improper purposes?improper purposes? Is the notice procedurally proper? Does the notice satisfy rule requirements? Was service proper? Was service proper? If the corporation is not a party: Does a subpoena accompany the notice? Does the issuing court have jurisdiction? Does the issuing court have jurisdiction? Did the serving party obtain the proper

commissions?

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Challenging a Deposition Notice/Subpoena Challenging a deposition notice/subpoena may be

the best alternative if:t e best a te at e Defect in notice/subpoena is clear. Noticed party has no non-privileged

information. The serving party is being unreasonable The serving party is being unreasonable. The serving party’s motives are questionable. You can obtain leverage re: scope, length of

deposition. You can afford the expense of challenging.

Options for challenging include: Negotiating with opposing counsel Negotiating with opposing counsel. Moving for a protective order. Serving objections and then forcing a motion to

compel. Note: Failing to file or serve a written response

can be risky.

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But Compliance May Be the Best Option If . . .

The requested discovery is legitimate.The requested discovery is legitimate.

You want to use counsel as a witness.

Any defect is debatable or just technical in nature.

Supplying a deponent is the best way of creating a record that there is no legitimately discoverable information.

You want to avoid incurring fees associated with a challenge You want to avoid incurring fees associated with a challenge.

Your opponent will agree to limits or restrictions as favorable as the court or discovery master will likely grant.

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Hypothetical Opposing counsel has been difficult to deal with. During discovery, he notices pp g g y

the deposition of your client’s General Counsel, who has had very little involvement in the case. Opposing counsel never conferred with you prior to noticing the deposition and the deposition is scheduled at a time and place extremely inconvenient for you and the witness.y y

What do you do?A. Serve objections and wait to see what happens.

B. Immediately file a motion for a protective order.

C. Call opposing counsel and tell him he’s a jerk.

D. Comply with the notice so as not to cause a stir.

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Other Tactical Responses Objecting: even if you decide to comply with a depositionObjecting: even if you decide to comply with a deposition

notice, consider serving objections in advance to: Demarcate privileged or work product areas that will be off-

limits to spur up-front agreements or strengthen laterlimits to spur up front agreements or strengthen later defenses.

In the case of a corporate notice, object to overbroad or ambiguous topicsambiguous topics.

Reciprocating: If you have legitimate grounds for deposing your opponent’s

counsel, noticing their depositions can often lead to more productive negotiations and/or better behavior during depositions.

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Local Practice Despite federal and state rules each court Despite federal and state rules, each court

may handle depositions differently.

Local rules can impact deposition location Local rules can impact deposition location and the proper way to assert objections.

F ili i lf ith th j d ( d Familiarize yourself with the judges (e.g. do they frown upon calling the court when a dispute arises during the deposition anddispute arises during the deposition and prefer that disputes be handled post-deposition?).p )

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Hypothetical You are defending the deposition of in-house counsel. Opposing g p pp g

counsel is being very aggressive, argumentative, and demanding that the witness discuss matters you consider to be privileged. At one point, opposing counsel threatens to call the judge after you instruct the witness not to answerthe witness not to answer.

What do you do?A. Hand him the phone.B. Articulate clearly on the record the basis for your objection and tell opposing counsel you will seek an immediate protectiveorder if he continues this line of questioning.C I di t l dj th d itiC. Immediately adjourn the deposition.D. Ask for a short recess to discuss the matter with opposing counsel to try to reach a resolution.

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Let’s Talk . . . Attorney-Client Privilege The Rule: applies to communications

made in confidence between a clientmade in confidence between a client and his or her attorney for the purpose of obtaining legal advice.

Assume nothing is privileged, then ask: Is it a communication that fits the

definition?D ti l ? Does an exception apply?

Have we done everything we can to prevent a waiver?

Are there foreign law implications? Are there foreign law implications?

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Work Product Doctrine Two kinds: Fact and Opinion.Two kinds: Fact and Opinion. Protection includes work of “agents.” (Rule

26) Key Test: “Anticipation of Litigation.” Problem of “Ordinary Course of Business.”y Law Department as First Responder.

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Common Privilege Problems In gDepositions Facts v. Legal AdviceFacts v. Legal Advice

Business Advice v. Legal Advice.

Employee conversations in the presence of counsel – “The Zone of Secrecy.”

Conversations with outside parties relating to legal matters. Are they protected?

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The Facts and Nothing But the Facts . . .

Communications relating to legal Communications relating to legal advice are privileged.

Facts are not Facts are not.

Separating the two can be tricky.

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Hypothetical In house counsel is asked in a deposition: In-house counsel is asked in a deposition:

“What did you discuss with the CEO about Mr. Doe’s termination?”

Privileged?

I h l i th k d “W th In-house counsel is then asked: “Was the CEO concerned about the consequences of terminating Mr Doe?”terminating Mr. Doe?

Privileged?

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Hypothetical 2 In litigation involving a dispute over theIn litigation involving a dispute over the

interpretation of a contract, in-house counsel for one of the parties is deposed and during the deposition i k d h t h b li th i f “ t fit”is asked what he believes the meaning of “net profit” is in the contract. The interpretation of “net profit” was the subject of extensive discussion between in-house counsel and management prior to and during the litigation.

Sh ld i h l th ti Should in-house counsel answer the question or invoke the privilege?

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Hypothetical 3 Same scenario In house counsel answers Same scenario. In-house counsel answers

the question and tells the questioner his interpretation of “net profit.” Questioner then p p Qasks in-house counsel the basis of his interpretation. Counsel defending the deposition objects and instructs in-house counsel not to answer on the grounds of privilege and work product protection Theprivilege and work product protection. The questioner threatens to call the judge.

Wh i i ht? Who is right?

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It’s Just Business Business Advice v. Legal Adviceg

Wearing two hats.

Commingled communications.

“P d i t P ” d “B f” T t “Predominant Purpose” and “Because of” Tests. Common 3-part analysis: Could a non-lawyer perform a given task? For what purpose was the lawyer contacted? Did either the client or lawyer acknowledge the nature of the

lawyer’s role?

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The “Privileged” Life of In-House Counsel. So what does Jane do?

Gathers facts.

E-mails client.

P d t Prepares documents.

Alludes to no legal principle and conducts no legal analysis

• Meet Jane Doe:

• Senior Vice President/Deputy G l C l t fi i l analysis.

Makes recommendation.

Jane’s company declines to

General Counsel at a financial institution.

• Experienced lawyer, highly honor the LOC.

If Jane is deposed, are her recommendations privileged?

p y , g yplaced in law department.

• One day her phone rings. She is asked: should her company honorasked: should her company honor an existing Letter of Credit?

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Scenario: While negotiating a contract, in-house counsel provides advice to the client as to obligations and risks under the contract andobligations and risks under the contract and whether to proceed to closing. Counsel does not cite case law, but counsel’s opinion is based on her understanding of applicable state/federal laws.

Question: If in-house counsel is asked during deposition about her advice, should she answer?

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Investigations Fact gathering Fact-gathering.

In-house counsel’s role.

Communications with management about the investigation.

Compliance issues.

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Hypothetical In house counsel is asked to investigate In-house counsel is asked to investigate

employee claims of discrimination.

In house counsel interviews several In-house counsel interviews several employees to obtain information pertinent to the investigation.the investigation.

In-house counsel is later asked in a deposition about her conversations with thedeposition about her conversations with the employees.

Should she answer? Should she answer?

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The “Zone of Secrecy”y

There is a persistent belief among non-There is a persistent belief among nonlawyer employees that copying in-house counsel on communications will result in privilege protection.

Results in a dilution of the privilege that can have significant adverse consequences.

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Hypothetical During a meeting the CFO informs the CEO During a meeting, the CFO informs the CEO,

in the presence of in-house counsel, about an accounting issue, and states “I hope this g , pdoesn’t get us sued.” Counsel is not asked for his advice during the meeting. In subsequent litigation over the accounting issue, in-house counsel is asked about the conversation during his depositionconversation during his deposition.

Is the communication between the CFO and CEO i il d?CEO privileged?

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Hypothetical (Part 2) Same scenario as before Same scenario as before.

CEO responds to CFO and says “Who cares if we get sued? We’re hiring Reed Smithif we get sued? We re hiring Reed Smith. They win all of their cases! I for one am going to sleep soundly tonight. Want to gogoing to sleep soundly tonight. Want to go golfing tomorrow?”

Privileged?Privileged?

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Outside Parties

Sharing privileged information with outside consultants may result in waiver of privilege. The “interpreter” standard: communications with a financial advisor p

are covered by the attorney-client privilege if the financial advisor’s role is limited to helping a lawyer give effective advice by explaining financial concepts to the lawyer. U.S. v. Kovel, 296 F.2d 918 (2d Cir. 1961).Th “f i l i l ” d i d h li The “functional equivalent” doctrine: extends the attorney-client privilege to communications between a corporation’s counsel and corporate consultants who are de facto employees. F.T.C. v. GlaxoSmithKline, 294 F.3d 141 (D.C. Cir. 2002).

Disclosures to outside auditors: work product protection can extend to auditor-created documents

prepared in course of determining appropriate litigation reserves. consistent with “agency” approach in Rule 26. Focus is on contentconsistent with agency approach in Rule 26. Focus is on content

and the purpose behind creating the document.

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Hypothetical In-house counsel shares privileged communicationsIn house counsel shares privileged communications

with outside financial advisor.

Claims “functional equivalence.”q

Intense restructuring negotiations – consultant spends 90% of time on negotiations with bank/creditors.

Consultant at the table with in-house counsel.

In-house counsel is deposed.

Communications protected by the privilege?

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Hypothetical 2 There is a large explosion at a company factory andThere is a large explosion at a company factory and

three workers are severely injured. The event generates lots of media attention and there is likely

i t b f ll liti ti i t thgoing to be follow-on litigation against the company. In-house counsel wants to get ahead of any negative publicity and retains a PR firm to consult the company on its response. In-house counsel wants to discuss the litigation risks with the PR firm but is concerned that she may waive any privilegebut is concerned that she may waive any privilege by doing so.

What should in-house counsel do?

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Conclusion In-house counsel depositions create risks but are oftenIn house counsel depositions create risks but are often

inevitable.

Solid preparation of the witness before the deposition is criticalcritical.

Counsel must establish early on the parameters of the deposition through objections, a protective order, or otherwise.

Understand and recognize any privilege issues that may come up so you can avoid a waiver.

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Questions? Who To Contact: David Fawcett David Fawcett dfawcett@reedsmith.com

412 288 4188 412-288-4188

Matt Sheldon msheldon@reedsmith.com 703-641-4334

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