When Your "Client" Is Your Company's Investor, How Is Attorney-Client Privilege Applied?

In the corporate context, the attorney-client privilege's application is rarely straightforward. When tested in court, the privilege's very existence often turns on crucial questions that may not have been considered at the time of the communication. Was the advice primarily business or legal? Which employees qualify as "clients"? Was the advice rendered to assist in the commission of a transaction that might later be viewed as fraudulent?

Now let's add another question: is management seeking legal advice to advance the best interests of the company? If not, an investor may be able to pierce the attorney-client privilege in a litigation against the company. This exception to the privilege is known as the "fiduciary exception," but is also referred to as the "good cause" exception and, in the corporate context, as the "Garner Doctrine."