Client Invoices Reside in the “Heartland” of Attorney-Client Privilege While Matters Are Ongoing . . . But Maybe Not Later
January 5, 2017
On December 29, 2016, the California Supreme Court posted its long-awaited decision in Los Angeles County Board of Supervisors v. Superior Court
(S226645). The case speaks to whether information contained in billing invoices sent by lawyers to clients is covered by the attorney-client privilege.
A four-justice majority declared the attorney-client privilege protects attorney invoices for work in pending and active legal matters from disclosure under the California Public Records Act (“PRA”). The court reasoned that invoices in ongoing matters are so closely related to attorney-client communications they implicate the “heartland” of the privilege. The majority went on, however, to state that because the attorney-client privilege depends on content and purpose of the communication, its protection may not last forever. Discussing “fee totals in legal matters that concluded long ago,” the majority held that “the privilege turns on whether those amounts reveal anything about legal consultation.” The majority explained “there may come a point when this very same information no longer communicates anything privileged, because it no longer provides any insight into litigation strategy or legal consultation.”
The three-justice dissenting opinion, penned by Justice Werdegar, criticized the majority opinion for undermining the privilege and finding that invoices initially privileged may lose that protection once litigation concludes. The dissent would hold that the entirety of a confidential communication between attorney and client, including all communications contained in legal invoices, is and remains categorically privileged.
The ACLU of Southern California and an individual sent a PRA request to Los Angeles County, seeking “invoices” that specified the amounts billed to the County in nine different excessive force lawsuits. After the County refused to turn over any information for six active cases, the ACLU sought relief in court. The ACLU argued that given the allegation of “scorched earth” litigation tactics in those lawsuits, the public had a right to ensure transparent and efficient use of taxpayer money. Finding the County failed to prove the invoices were attorney-client privileged communications, the trial court ordered the billing statements released, but allowed information reflecting an attorney’s legal opinions or advice to be redacted pursuant to the attorney-client privilege and the work product doctrine.
The County sought appellate review. The Court of Appeal found the attorney-client privilege protected any invoice between an attorney and client “irrespective of its content.” The Court reasoned that the trigger for application of the privilege in this context was that the invoice was a transmission between the attorney and client and therefore within the purview of the privilege.
The four-justice majority of the Supreme Court reversed the Court of Appeal and its “transmission” based test. The specific issue examined was the scope of a PRA exemption found in Government Code section 6254(k), which allows public agencies to withhold from disclosure “[r]ecords, the disclosure of which is exempted or prohibited pursuant to federal or state law, including, but not limited to, provisions of the Evidence Code relating to privilege.” The Court declared the key question was “[w]ould treating invoices as sometimes nonprivileged undermine the fundamental purpose of the attorney-client privilege?” Carefully parsing various Evidence Code sections regarding the attorney-client privilege, the majority held the privilege protects only those attorney-client communications “made for the purpose of seeking or delivering the attorney’s legal advice or representation.” The Court thus fashioned a context-driven test for application of the privilege and declared “the heartland of the privilege protects those communications that bear some relationship to the attorney’s provision of legal consultation.”
Relying on prior case law, and not referencing anything in the factual record before it, the majority opined that legal invoices are “generally” not sent for the purpose of legal consultation. Rather, the Court stated the purpose of an invoice is simply to bill the client and thus falls outside the scope of representation of a client by an attorney. The application of the privilege depends not on transmission between the client and attorney but instead on “the link between the content of the communication and the types of communication that the attorney-client privilege was designed to keep confidential.” In other words, just because an invoice is sent in confidence does not mean it is privileged, as – according to the majority – invoices from an attorney to a client are not sent for the purpose of legal consultation.
Having established its context-based test, the majority then determined that although invoices are generally not made for the purpose of legal representation, certain categories of information contained within invoices are privileged. The Court stated that invoices that (1) convey information about the nature or amount of work occurring as to a pending legal issue or (2) aggregate billing amounts lie or may lie “in the heartland” of the privilege. As to the amount of fees, which was the thrust of the ACLU’s PRA request, the majority noted invoices that revealed “[m]idlitigation swings in spending” might improperly reveal investigative efforts or trial strategy such as an impending filing or concern about a recent event. For these reasons the majority held that everything in an attorney’s invoices is protected by the attorney-client privilege as long as “a legal matter remains pending and active.”
The majority then turned to “fee totals in legal matters that concluded long ago.” Again, existence of the privilege for such matters depended on whether billing amounts revealed anything about the substance of legal consultation. The majority repeated its recognition that fee totals communicated in real time during ongoing litigation “can indirectly reveal clues about legal strategy, especially when multiple amounts over time are compared.” However, disclosing a “cumulative amount” of fees from “long-concluded litigation –– with no ongoing litigation to shed light on the context from which such records are arising –– may communicate little or nothing about the substance of legal consultation.” Thus, a time may come when such billing information “no longer communicates anything privileged, because it no longer provides any insight into litigation strategy or legal consultation.”
The three-justice Dissent was strongly critical of the majority opinion. The majority opinion was, according to the Dissent, not supported by the plain language of Evidence Code section 954 and ran contrary to leading applicable case law (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725). The Dissent charged the majority with discovering a “heretofore hidden meaning” in the privilege statute – that attorney-client privilege only protects communications made to seek or deliver legal advice or representation. The Dissent accused the majority of failing to defer to the Legislature and instead elaborating upon the Legislature’s formulation of the attorney-client privilege.
The Dissent asserted that Costco compelled a different result. In Costco, a written communication between an attorney and client arguably contained both a confidential legal opinion and non-confidential facts obtained from witnesses. The Dissent relied upon the statement in Costco that “[t]he attorney-client privilege attaches to a confidential communication between the attorney and the client and bars discovery of the communication irrespective of whether it includes unprivileged material.” (Italics in original.) The majority, according to the Dissent, suggests when an attorney sends a legal invoice for rendering legal services, the attorney “steps outside the role of a lawyer and into the role of accountant.” Further, argued the Dissent, the majority ignored Costco’s prohibition on a communication being parsed to determine whether it contains privileged or non-privileged material. The Dissent held to a bright-line standard: when a confidential communication occurs between attorney and client, the entire communication is privileged.
The Dissent branded as “pernicious” the majority opinion’s determination that the privilege’s scope “somehow wanes with the termination of the subject litigation.” The Dissent chided that “nothing in the Evidence Code supports the notion that the reach of the attorney-client privilege is different for pending litigation versus legal matters that have concluded,” citing to both case law and an attorney ethics treatise.
The Dissent also expressed concern with the majority opinion’s practical impact on the attorney-client relationship: “Following today’s decision, attorneys in this state must counsel their clients that confidential communications between lawyer and client, previously protected by the attorney-client privilege, may be forced into the open by interested parties once the subject litigation has concluded.”
The decision will likely lead to ensuing litigation over a number of issues. By way of example:
First, the decision arises in the PRA context, in which the public’s interest in access to documents is paramount. Is the decision’s scope limited to PRA requests? After all, the majority states that what it “hold[s] is that the attorney-client privilege does not categorically shield everything in a billing invoice from PRA disclosure,” stating again in the opinion’s conclusion that the case concerns legal invoices sent to a public agency. The opinion does not address issues that arise in discovery or trial.
Second, is the holding limited to the portions of an invoice that disclose amounts charged by an attorney (e.g., legal fees)? The thrust of the PRA request in issue was the amount charged by the County’s outside counsel, which the ACLU asserted might disclose waste of taxpayer funds through scorched earth litigation tactics. In justifying its holding, the majority relied upon examples concerning how timing and amount of invoices could disclose privileged information such as trial strategy. More substantive information typically included in invoices (such as recitation of the key issues addressed in a telephone call or email, or description of specific legal analysis conducted) receives little discussion in either the majority opinion or the Dissent.
Third, the majority opinion vaguely states “fee totals in legal matters that concluded long ago” may not necessarily reveal substantive legal communication, and may thus migrate beyond the scope of the privilege at some time. But how “long” is “long ago”? Must attorney invoices be disclosed one year, two years, five years after a representation ends? No clue is provided as to the answer to this core question.
Fourth, even if a court should find that “long ago” has arrived in a given case, may portions of invoices the attorney and client assert remain privileged be redacted before the invoices are produced? The answer may be “Yes.” The majority opinion asserts that under the PRA, “the fact that parts of a requested document fall within the terms of an exemption does not justify withholding the entire document.” According to the majority, after portions that are exempt from inspection (such as privileged material) is deleted, a “reasonably segregable portion of a record” must be made available for inspection. Thus redaction of privileged material, such as substantive descriptions of client communications or work performed, would arguably not run afoul of the majority holding, even after a matter is concluded.
Fifth, whether or not a court has declared invoices must be produced, what is an attorney to do with respect to invoices in the face of the attorney’s duty of confidentiality, a duty that is stronger in California than in any other state in the nation? Government Code section 6254(k) allows public agencies to withhold from disclosure “[r]ecords, the disclosure of which is exempted or prohibited pursuant to . . . state law.” Further, California Business and Professions Code section 6068(e)(1) requires an attorney to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client,” thus prohibiting an attorney from disclosing client confidences and secrets. Do Government Code section 6254(k) and Business and Professions Code section 6068(e)(1), read together, require an attorney, “at every peril to himself or herself,” to refuse to produce invoices that contain confidential information even in the face of a court order to do so?
The Supreme Court’s opinion in Los Angeles County Board of Supervisors v. Superior Court leaves unanswered these and perhaps other questions that will impact attorneys and clients in the future. Attorneys should carefully review future appellate opinions discussing the attorney-client privilege in light of this opinion.