5th Cir: In House Lawyers Are Lawyers, Privilege Applies - In House
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5th Cir: In House Lawyers Are Lawyers, Privilege Applies

The smoking gun memo. The "hey, this is really bad for us, and we're totally nuking the neighbors, but my legal opinion is don't tell anyone" memo. That's what Exxon Mobil had: a memo from their in-house attorney, Rosemary Stein, to an employee.

The memo was privileged legal advice, but a doc reviewer let it slip through the cracks. Louisiana has a claw-back provision, but before opposing counsel returned the Stein Memo, he forwarded it to basically the entire state bar. Exxon wanted it suppressed, but the district court declined, holding that it was more business correspondence than legal advice, and therefore not privileged.

The Fifth Circuit, thankfully, disagreed.

Fifth Circuit is Your Friend

In-house attorneys have a variety of duties: from legal counselor to boardroom advisor. Some tasks are business, some are legal, and some fall somewhere in between. The district court here thought that the memo was business-related, not legal, but the Fifth Circuit couldn't have disagreed more strongly:

[T]he context in which the Stein Memo was produced -- even before we say anything of the memorandum itself -- strongly suggests that Exxon Mobil was approaching its in-house counsel for just the sort of lawyerly thing one would expect of an in-house lawyer: advice on transactional matters. Though we recognize that in-house counsel can often play a variety of roles within an organization, this record is devoid of any indication that Stein was providing business advice divorced from its legal implications.

Or, if you prefer the short version: "the Stein Memo cannot be mistaken for anything other than legal advice."

Lessons Learned

For one: get better document reviewers. From the court's description of the memo, it really, really was the smoking gun. It said (paraphrasing): they are asking for the data in Table IV. The other tables contain holy crap data. Give them exactly what they want, Table IV, remove references to all other tables, add a bunch of disclaimers, and keep quiet otherwise. It is clearly legal advice, clearly incriminating, and clearly privileged.

Second: In-house lawyers are lawyers. This seems obvious, but the district court had trouble with the notion and seemed to apply some sort of heightened standard, presuming that in house memos are business documents, rather than legal advice. The Fifth Circuit evaluated the privilege claims under the highest clear error standard and still had no trouble, whatsoever, reversing the district court.

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