Wednesday, November 26, 2014
Firm Sued by Client May Have Attorney-Client Privilege—C.A.
By KENNETH OFGANG, Staff Writer
The attorney-client privilege may apply to intrafirm communications between attorneys concerning disputes with a current client, when that client later sues the firm for malpractice, this district’s Court of Appeal ruled yesterday.
Div. Three partially granted a writ of mandate sought by the international law firm of Edwards Wildman Palmer LLP, ordering further proceedings on Shahrokh Mireskandari’s motion to compel disclosure of communications among the firm’s partners concerning his claims that his case was mishandled.
Mireskandari briefly retained Edwards Wildman as counsel in his invasion-of-privacy suit against the Daily Mail, a British newspaper. The tabloid reported in June 2012 that Mireskandari had faked his legal qualifications from a mail-drop university in Hawaii, concealed criminal convictions, and bilked his clients.
The paper also reported that he took a “leading role” in a fraudulent telemarketing business in Ventura in the early 1990s. Mireskandari has also sued the Ventura Superior Court clerk, claiming that court records were falsified to make it look like he was guilty of a crime, leading to his disbarment in England, where he was once a partner in the London firm of Dean & Dean, Courthouse News Service reported.
Edwards Wildman’s representation of Mireskandari was “short lived, and for the most part, contentious,” Justice Richard Aldrich explained in his opinion for the court. Mireskandari sent emails to Dominique Shelton, then a partner in the firm and the lawyer in charge of his case, accusing her and the firm of being “in complete breach of the terms of the retainee,” claiming he had been given an unrealistically low estimate of litigation costs, and threatening to hold the firm liable for damages.
He also claimed the firm failed to advise him of the likelihood of the newspaper filing an anti-SLAPP motion, and said he was ““deeply troubled by the swinging pendulum of advice that I have been given by you.” He subsequently substituted Greenberg Glusker Fields Claman & Machtinger LLP as his new counsel.
He sued Edwards Wildman for malpractice last year. His attorneys in the action demanded production of several categories of documents, including internal communications among the firm’s attorneys.
The firm turned over a number of requested documents, but also produced a privilege log listing 387 documents it contended were protected by the attorney-client privilege. Those included emails among Shelton, Boston-based partner Jeffrey Swope, and Chicago-based partners Mark Durbin and James A. Christman.
Right to Counsel
The firm contended that because the client and the firm were engaged in a dispute over billing, or a potential malpractice claim, Shelton had the right to seek counsel regarding those matters, and that it was common practice within the legal community for an attorney in that position to seek such counsel within her own firm.
It asserted that Swope’s involvement was in his capacity as general counsel, that Christman had been acting as “claims counsel,” and that Durbin had been “deputized” by Swope and Christman to communicate with Shelton regarding her responses to the client’s complaints “and on management of the client relationship.”
Mireskendari responded that the firm’s fiduciary duties to him took precedence over whatever privilege it might have. He cited Thelen Reid & Priest LLP v. Marland (N.D.Cal. Feb. 21, 2007) 2007 U.S. Dist. Lexis 17482, which held that there is, under California law, a “fiduciary” or “current client” exception to the privilege.
The firm argued that Thelen was incorrectly decided and inconsistent with a state Supreme Court ruling, and with rulings in other states that rejected Thelen’s reasoning.
Trial Court Ruling
Los Angeles Superior Court Judge Terry Green sided with the plaintiff, saying the client’s right to be informed took precedence over any claim of privilege, that Mireskandari was entitled to his file, and “if there were . . . discussions among members of the firm regarding the client, the client’s case, the client’s claims, what was going on, that belongs to the client” as “the holder of the privilege.”
Aldrich, however, said any such exception to the privilege would be inconsistent with California’s strict rule against implied exceptions. He rejected the plaintiff’s claim that the trial court ruling merely enforced existing duties under the State Bar Act and Rules of Professional Conduct, including the requirements that attorneys preserve inviolate the secrets of their clients and keep the clients informed about the progress of their cases.
Aldrich cited Wells Fargo Bank v. Superior Court (2000) 22 Cal.4th 201, which held that a bank that served as a co-trustee, and became embroiled in litigation with the beneficiaries, was entitled to assert the attorney-client privilege as to documents reflecting communications with its in-house and outside attorneys about the beneficiaries’ claims of misconduct.
The Supreme Court acknowledged that courts in other states had held that a trustee’s reporting duties take precedence over the attorney-client privilege. But such a holding would be inconsistent with California’s strict rule that privileges, and exceptions thereto, are purely statutory, the high court said.
“Wells Fargo thus forecloses Mireskandari’s argument that a fiduciary or current client exception to the attorney-client privilege exists,” Aldrich wrote. “Just as the trustee’s reporting duties did not trump the attorney-client privilege in Wells Fargo, in the absence of a statutory exception, the Firm’s ethical duties to its client do not trump assertion of the privilege here.”
The justice went on to say, however, that the privilege did not extend to communications with Durbin, because there was no showing that he provided counsel to Shelton. ”Even more significantly, Durbin actually worked on the Daily Mail case, supervising the preparation of pleadings,” Aldrich noted.
On remand, the jurist said, the trial judge will have to determine whether the firm made a sufficient showing that Shelton had an attorney-client relationship with Swope and Christman, an issue Aldrich said was not briefed by the parties or ruled on by Green.
The case is Edwards Wildman Palmer LLP v. Superior Court (Mireskandari), 14 S.O.S. 5346.
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