Limits on the Attorney-Client Privilege: Business Advice

Clients often assume that by copying their lawyer on a communication, the communication becomes privileged.  They’re wrong, and so are many lawyers.

Simply put, not all communications between clients and lawyers are privileged.  To qualify as privileged, “the communication must be between the client and lawyer for the purpose of obtaining legal advice.”[1]  “The fact that a person is a lawyer does not make all communications with that person privileged.”[2]

This topic arose in Cung Le v. Zuffa, LLC where the parties disputed whether an email thread was privileged.[3]  Resolving the issue was fact intensive.  Parts of the communication were privileged, other parts were not.

The first redacted paragraph relates Pride FC’s negotiating positions, the fact the Pride did not trust Zuffa anymore than Zuffa trusted Pride, and that Pride did not want its business tied up any longer in negotiations. The paragraph reports the parties’ negotiating positions and contains no legal analysis or advice. The second paragraph relates Zuffa’s business purpose for the acquisition—to stop others from buying Pride and to acquire Pride to shut the business down and acquire its fighters for the UFC. It relates Pride’s negotiating position that resulted Zuffa’s business decision to set a low threshold for due diligence before the deal became binding on both sides. However, a portion of the last sentence of the paragraph relates the client’s concern about a legal matter. In context, it appears to be a legal issue the client and counsel discussed in the expectation it was a confidential communication. The remaining communications do not relate to legal advice sought by or given to Zuffa. Mr. Pachal relates Pride’s communications to him during the course of business negotiations. Mr. Paschal was merely serving as a conduit of this information from Pride to his client, Zuffa. The other communications relate to the negotiating parties’ commercial strategies and tactics. As such, they are not privileged.

[1] United States v. Martin, 278 F.3d 988, 1000 (9th Cir. 2002).

[2] Id. at 999.

[3] No. 2:15-cv-1045, 2016 U.S. Dist. LEXIS 69813 (D. Nev. May 26, 2016).