The WSJ reports on a dispute between Vanguard and a former in-house lawyer who has filed a complaint in NY alleging Vanguard has underpaid federal taxes. Vanguard is reported to accuse the lawyer of breaching confidentiality; the lawyer has asked the SEC to intervene on his side.
Such cases may raise two distinct issues: the report itself, which may fall within exceptions to confidentiality in a Model Rules jurisdiction or under the SEC’s rules, and backup for the report in the form of information–such as documents either in hard copy or digital form–the reporting lawyer might take from his or her employment. Even if we assume the report is protected the taking of documents raises distinct issues regarding client property.
I tend to think those issues should be resolved as issues regarding the report are resolved–i.e., taking such information does not violate a duty to a client to the extent the information is reasonably necessary to facilitate a permissible report. In essence the report would create a privilege (in the tort law sense) covering the disclosure to enforcement officials or courts; no privilege would attach if the lawyer put the documents up on the internet or mailed them to a reporter.
The documents issue lurks in the background of Meyerhofer v. Empire Fire & Marine Ins. Co., 497 F.2d 1190, 1194–96 (2d Cir.), cert. denied, 419 U.S. 998 (1974). Often discussed as a self-defense case there are actually two disclosures in that case–an initial report (including documents) to the SEC and a subsequent disclosure (of the material provided the SEC) to plaintiffs’ counsel on a self-defense basis. It provides some clues but, arising in the context of self-defense, does not decide these issues.
Books & Records: Delaware Extends Inspection Rights to Privileged Internal Investigation Documents
Recently, the Delaware Supreme Court – in Wal-Mart v. Indiana Electrical Workers Pension Trust Fund – approved granting shareholders the right to inspect privileged and confidential internal investigation materials upon showing “good cause.” This might lead to more books & records requests going forward. We are posting memos in our “Attorney-Client Privilege” Practice Area…
FYI: Conference Hotel Nearly Sold Out
As always happens this time of year, our Conference Hotel – the Las Vegas Mandalay Bay Hotel – is nearly sold out. Our block of rooms is indeed sold out – but there are still rooms outside our block available at essentially the same rate. Reserve a room now by calling 877.632.9001 (so no need to mention our conference at this time). If you have any difficulty securing a room, please contact us at 925.685.9271.
And if you haven’t registered for the conference, register now. If you really want to go, but you’re having budget issues – drop me a line…
– Broc Romanek