APPELLATE COURT HOLDS AN ATTORNEY DOES NOT WAIVE THE WORK PRODUCT PROTECTION BY SHARING WITH AUDITORS ATTORNEY'S THOUGHTS, IMPRESSIONS, AND OPINIONS ABOUT A MUTUAL CLIENT'S PENDING LITIGATION

The California Court of Appeal (Fourth District, Division Three) has held that an attorney does not waive the work product protection by discussing with an auditor a mutual client's pending litigation, provided the attorney does not intend to waive the protection and the attorney expects the auditor to maintain the information in confidence. (Laguna Beach County Water District vs. Superior Court, Case No. G034238, December 15, 2004.)

Plaintiff sued the Laguna Beach County Water District for allegedly defective construction of a reservoir near her home. During discovery, plaintiff sought production of letters sent by the District's attorney to the District's accountant that were responsive to the accountant's inquiries about pending litigation possibly affecting the District's financial condition. Because these letters summarized the attorney's thoughts, impressions, and opinions, they were "clearly work product." The novel legal question presented was whether the attorney waived the work product protection by sending such information to a public accounting firm.

The Court of Appeal held there was no waiver. First, the letters themselves contained the notation "Attorney-Client and Attorney Work Product Communications." This was evidence the attorney did not intend to waive the work product protection. Second, nothing in the record showed that the accountant intended to disclose the contents of the letters or that the attorney expected the accountant to do so. Although an accountant is required to disclose certain loss contingencies, the accountant is not required to disclose an attorney's thoughts, impressions, or opinions on pending litigation.

The Court of Appeal rejected plaintiff's argument that disclosing confidential information to a public accounting firm automatically waives the attorney-client privilege or work product protection. Even though an accounting firm has public functions and obligations, as recognized by the Supreme Court in United States v. Arthur Young & Co. (1984) 465 U.S. 805, it is not obliged to divulge privileged information about its clients.

Click here to see a copy of the Court of Appeal's decision or view it at the following website:
http://www.courtinfo.ca.gov/opinions/documents/G034238.PDF

Horvitz & Levy LLP represented petitioner Laguna Beach County Water District in this matter.

For more information, call Mitchell C. Tilner or Kim L. Nguyen at (818) 995-0800 or send an e-mail to them at mtilner@horvitzlevy.com or knguyen@horvitzlevy.com.

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