No @Reason, Attorney-Client Privilege Is Not Subject To The Third-Party Doctrine

It was one of those nutty things that, upon reading it, gave me whiplash. At Reason, Liz Mair, who describes herself as “a libertarian Republican political consultant,” and notably not a lawyer, can’t resist (who could?) going after Elizabeth Warren’s precious baby, the Consumer Financial Protection Bureau.

The Consumer Financial Protection Bureau (CFPB) has been in the spotlight lately, with courts and congressional Republicans zeroing in on the agency’s unconstitutional structure that leaves its head—currently Richard Cordray a likely future Democratic candidate for Ohio governor—in possession of vast powers, accountable to no one. Sen. Ben Sasse has dubbed Cordray “King Richard,” and President Donald Trump has been threatening to fire him.

Don’t let the name of the bureau fool you. Cordray doesn’t necessarily love consumers as much as its name suggests.

Now the CFPB may be headed back into big doo-doo, thanks to a rule it is pursuing that would allow it to share communication between an entity it regulates and that entity’s lawyer with a slew of other government regulators—potentially even with foreign governments.

The rule would also relieve the CFPB from any requirement that it inform an entity it regulates that it’s sharing such information with Congress, and bar entities it regulates from sharing any correspondence related to CFPB enforcement without the agency giving a proverbial thumbs up. It’s obviously a big boon to a big government regulator, written by and for big government regulators. Unsurprisingly, it’s also being decried as a straight-up erosion of attorney-client privilege, and something that jeopardizes a core, constitutionally protected civil liberty. (Emphasis added.)

Well, that piqued my interest. What is Mair talking about?

In comments on the proposed rule, the American Bar Association—an entity that more often than not seems to side on policy with Democrats like the ones who authored Dodd-Frank and act as protectors of the CFPB—writes that, “each such disclosure of privileged information by the CFPB to a non-federal agency or Congress could endanger the privileged status of the information.” In other words, every time the CFPB discloses privileged information, they’re making sure that legally, it’s no longer confidential. Or, you have the right to a lawyer, but what you and your lawyer say to each other is not really private and can totally be used against you.

Putting aside that it’s the American Bar Association, and thus lacks the basic credibility necessary to speak for lawyers, it’s hard to grasp how this could be.

This is so because under federal case law, if privileged communication is shared with any third party, even a federal agency, its confidentiality evaporates; the only instances in which this is not so are when it’s shared with a relatively narrow set of third parties, explicitly listed in actual legislation.

No, it’s not. Not even a little bit. The third-party doctrine is a Fourth Amendment concept that applies to the reasonable expectation of privacy under Katz. As per this law review article by Orin Kerr, it has no applicability to attorney-client privilege.

The most obvious example of a privilege that trumps the third-party doctrine is the attorney-client privilege. In the federal system, privileges are recognized by Federal Rule of Evidence 501: “[T]he privilege of a witness [or] person … shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience.”‘ Under the attorney-client privilege, “[c]onfidential disclosures by a client to an attorney made in order to obtain legal assistance are privileged.”‘ This rule encourages “full and frank communication between attorneys and their clients and thereby promote[s] broader public interests in the observance of law and administration of justice.”‘ Evidence collected in violation of the privilege must be suppressed.

But what’s the ABA talking about then? Mair includes no link to the ABA’s comments, but the internet is a wondrous thing.

Although the issue remains controversial and somewhat unsettled, at least one respected commentator [cite?] has observed that for the most part, federal law rejects the idea that entities can share privileged information with federal agencies or other third parties, and hence make “selective waivers” of the attorney-client privilege, absent express statutory authority. As the ABA noted in its previous comments to the CFPB, although a few federal courts have recognized the selective waiver doctrine and allowed parties to submit privileged materials to federal agencies without waiving the privilege as to third parties, most federal circuits have rejected selective waiver and concluded that such submissions waive the privilege as to all third parties. Therefore, as a general matter, a party risks implicitly waiving the protection of the privilege by disclosing a protected attorney-client communication to a third party, even when that third party is a federal agency.

Or, if you were so desperately bored by this paragraph that you couldn’t make it through, the ABA raises the nerdy issue that when a party intentionally provides an otherwise attorney-client privileged communication to the CFPB, it doesn’t vitiate the privilege in its entirety. The second issue addressed is that the privileged communication shouldn’t be handed out as a party favor when Cordray goes to a cocktail party at the manse of the CEO of a competing bank.

The problem raised isn’t silly, and the challenge is real. But the assertion that attorney-client privilege is subject to the third-party doctrine is completely bonkers. If this was so, then no lawyer could communicate with a client by telephone or email without forfeiting privilege.

While lawyers often suffer a minor cringe at a non-lawyer’s kinda stupid but minor misstatement of law, this mistake was so glaring, so huge, that it can’t go unmentioned lest non-lawyer readers believe they can’t engage in full and frank discussion with their lawyers without their statements being subject to disclosure to the Russian Ambassador or destruction of the attorney-client privilege.

It ain’t so. This misbegotten rule by the CFPB may have its issues, but that has nothing whatsoever to do with the third-party doctrine, and just because a political consultant says so doesn’t mean the attorney-client privilege is now secondary to the third-party doctrine.

10 comments on “No @Reason, Attorney-Client Privilege Is Not Subject To The Third-Party Doctrine

  1. Marc Whipple

    I agree with you that she’s wrong, and I’m really glad she’s wrong.

    Given the proliferation of cloud-based case management software, if this were true, it might be even more terrifying than it looks. Which is saying something. If the government could make myCase or Clio or whoever disclose a firm’s files and claim third-party doctrine… wow. I mean, sure, they’d have to find some way to declare the CMS provider a regulated entity, but I think we all know how hard it is for the government to find a way to do that when it really wants to.

    1. SHG Post author

      Note that I write about the telephone. As for cloud based storage, you introduce something very different. I’m not nearly as sanguine that cloud storage isn’t tantamount to handing over substantive content to a third party to peruse at their leisure, destroying privilege.

  2. MonitorsMost

    Just misuse of a term of art. There is plenty of case law discussing whether and when attorney-client privilege is waived based on the presence of a third party. It’s just not called the third party doctrine which is a completely different concept.

    1. SHG Post author

      It’s not that she just totally got it wrong. She just totally got it wrong. But if she got it different, then it wouldn’t be totally wrong. Thanks for clearing that up.

      1. MonitorsMost

        You often lambast legal and non-legal journalists for making people dumber by presenting misleading advocacy as “the law.” She didn’t do that here, she just messed up a bit in describing the concept.

        Minor cringe. Not “so glaring, so huge” so bigley that the line must be drawn here, this far, no further. My two cents anyway.

        1. SHG Post author

          Maybe you’re right. Maybe she meant to say the felony murder rule, or maybe the 23rd Amendment, or maybe the Logan Act, and just got her words wrong. Yeah, that’s how law works.

          1. Charles

            Unless I’m just missing it, this paragraph is not in any of the linked pages: “The most obvious example of a privilege that trumps the third-party doctrine is the attorney-client privilege…”

            Maybe she figured out she was wrong and Reason changed the article. If so, they did without noting a correction.

            1. SHG Post author

              You’re missing it. Look at the link above the quote. It’s from a law review article by Orin Kerr (See pp 597-98).

  3. Charles

    “Or, if you were so desperately bored by this paragraph that you couldn’t make it through…”

    Thanks for confirming that I didn’t need to go back and finish the paragraph. Your predictive powers are…predictive.


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