Can an Executive Exert Control of Corporate Attorney-Client Privilege?
April 17, 2017
Publication| Bankruptcy & Corporate Restructuring
What exactly does it mean when a company’s attorneys represent the company, not the company’s executives? Suppose an executive consults with company attorneys to determine if the company’s course of action is legally permissible. Months after receiving the legal advice, the company files for bankruptcy. The executive is also criminally prosecuted over the very actions for which he consulted counsel. The executive wants to defend himself by arguing that the lawyers told him it was okay. However, the new bankruptcy trustee objects and directs the executive not to divulge the company’s attorney-client privilege. Can the executive exert control over attorney-client privilege and assert the defense?
The scenario seems common enough, but case law on the subject is sparse. A recent opinion spawned by the bankruptcy of F-Squared Investments, Inc. (“F-Squared”) provides guidance – though executives might not be happy with the answer.