Attorney-Client Privilege Not Eroded By Textron Case

25 Oct Attorney-Client Privilege Not Eroded By Textron Case

An attorney’s work product was outside the attorney-client privilege and therefore not confidential when it was used to produce financial statements required by the Internal Revenue Service, said the First Circuit last May in United States v. Textron. I do not believe that this will apply in bankruptcy circumstances.

The bankruptcy process begins with you presenting information and documents to your attorney so s/he can prepare the bankruptcy filings. The attorney works diligently on them, perhaps sharing revisions with you on the way to reaching final versions. This reflects the attorney’s work product. It is, and it should be, heldconfidential as part of the overall communications of the attorney-client relationship as previously discussed by my colleague Craig Andreson.

The First Circuit, in its 3-2 decision, ruled that the work product doctrine was limited to work product in anticipation of litigation, and not applicable to product for preparing required financial statements, despite the obvious fear that the IRS might contest the statements and litigate their accuracy – making the work product “in anticipation of litigation”.

The Textron dissent was harsh and vigorous. It invited Supreme Court review (which was not requested).

I am confident that this ruling will not apply to bankruptcy work. The court emphasized its belief that the work product being considered was for a regulatory requirement and therefore a public corporation’s ordinary course of business, as opposed to an anticipation of litigation.

With bankruptcy, (1) there’s certainly nothing ordinary about the work and (2) the final product is directed to a court of law, not to a regulatory agency. Courts, as we know, is where litigation takes place.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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