In-House Counsel Beware: Your Software Audit Related Communications With Your Client May Not Be Privileged

In our software audit defense practice, we often see in-house counsel advising their client under audit for much of the audit process, without bringing in outside counsel skilled in software audit defense such as Tactical Law. This decision to "go it alone" by Oracle customers in particular may be risky in the event Oracle sues the customer in federal court in California for breach of contract and copyright infringement arising out of an Oracle audit. That is because most Oracle license agreements contain California dispute resolution provisions. California is in the Ninth Circuit, and the Ninth Circuit's law on when attorney-client privilege applies to in-house lawyers advising their clients is not very protective of the privilege, especially as compared to other circuits. That is because the Ninth Circuit held in the In Re Grand Jury case that "the primary-purpose test applies to attorney-client privilege claims for dual- purpose communications" between in-house