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Attorney-Client Privilege when Malpractice is Threatened

Koen Book Distributors v. Powell, Trachtman, Logan, Carril, Bowman & Lombardo, P.C.,
212 F.R.D. 283 (E.D. Pa. 2002).

PA. underlying bankruptcy proceeding

Student contributor: Cheryl Neuman

Facts: Plaintiffs retained Defendants for advice concerning a security interest from one of its customers. After the customer filed for bankruptcy, defendants continued to represent plaintiffs as creditors in the bankruptcy proceeding. Plaintiffs eventually informed defendants that they would be initiating a malpractice action against them due to their dissatisfaction with the defendants’ services. The attorney client relationship was terminated 3 months later. During the time when the defendants were first put on notice about the pending the lawsuit and the time when the attorney-client relationship was actually terminated, defendants consulted with other lawyers in their firm concerning ethical and legal issues regarding the upcoming malpractice action. The plaintiffs wanted access to the documents that were produced as a result of the inquiry within defendants’ law practice.

Issue: Does the attorney-client privilege apply to documents that a lawyer prepared in response to an ethical inquiry concerning the client, who has threatened to initiate a malpractice action against the firm?

Ruling: No. The attorney client privilege does not apply in this situation. The defendants also relied on the work-product doctrine, but this doctrine does not apply where a client, as opposed to another party, seeks discovery of the lawyer’s mental impressions. The documents are therefore discoverable.

Lesson: The purpose of the attorney client privilege is to promote full disclosure and communication between attorneys and their clients, thereby encouraging broader public interests. In this case, had the defendants realized the predicament involved in this situation, they should have either
a) Withdrawn from representing the plaintiff, or
b) They could have requested consent from the plaintiff and continued representation after full disclosure and consultation. 

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Posted in: Commercial, Scope of Representation