Attorney Billing Statements Revisited: the California Supreme Court Creates More Uncertainty over Attorney-Client Privilege Than It Resolves
By Robert K. Sall
Robert K. Sall practices with Sall Spencer Callas & Krueger in Laguna Beach and is a member of the LACBA Professional Responsibility and Ethics Committee. His practice focuses on business litigation, legal malpractice litigation, and attorney-client fee disputes. The opinions expressed are his own.
The Supreme Court's controversial 4-3 decision in County of Los Angeles Board of Supervisors v. Superior Court adds confusion and uncertainty to the controversy over the application of the attorney-client privilege to law firm billing statements. Portending that the decision's privilege implications extend well beyond billing statements, Justice Kathryn M. Werdegar writes, in a vehement dissent: "Following today's decision, attorneys in this state must counsel their clients that confidential communications between lawyer and client, previously protected by attorney-client privilege, may be forced into the open by interested parties once the subject litigation has concluded."
In its investigation into allegations of excessive force against inmates housed in the Los Angeles County jail system, the American Civil Liberties Union (ACLU) of Southern California sought the production of billing statements of law firms performing legal services for the county on nine different lawsuits brought by inmates based upon alleged jail violence. The ACLU made a California Public Records Act (CPRA) request for the billing statements to enable it to determine what work was being done on the lawsuits and the scope, quality, and efficiency of the work.
The county declined to produce its attorneys' billing statements for still pending lawsuits, asserting that the "detailed description, timing and amount of attorney work performed, which communicates to the client and discloses attorney strategy, tactics, thought processes and analysis," were privileged and exempt from disclosure under the CPRA. The county also asserted that its fee agreements with lawyers were privileged communications under Business and Professions Code section 6149. The ACLU conceded that billing entries that revealed advice to the county or attorney work product could be redacted, but that otherwise, billing statements were not protected by work product or attorney-client privilege and did not fall within recognized exceptions to the CPRA.
The trial court granted the ACLU's petition for writ of mandate to compel production of the legal invoices, but permitted them to be redacted to the extent they revealed legal opinions, advice, or work product. The trial court concluded that the county failed to demonstrate why billing statements with proper redaction of entries containing advice or work product would qualify as privileged communications. In ordering their production, the trial court also determined that Business and Professions Code section 6149 protects only fee agreements, not the invoices.
The county filed a petition for writ of mandate. The court of appeal reversed the trial court's decision, reasoning that billing statements are confidential communications transmitted between attorney and client within the meaning of Evidence Code section 952 and thus privileged. The ACLU argued that section 952 should be interpreted to mean that the communication must actually contain opinion or advice in order to be privileged. The court of appeal concluded that the California Supreme Court's decision in Costco Wholesale Corp. v. Superior Court compelled rejection of that position. Quoting from Costco, a case involving a lawyer's opinion letter that mixed both factual and legal observations based upon witness interviews, the court stated: "[T]he attorney-client privilege attach[ed] to [the subject] opinion letter in its entirety, irrespective of the letter's content."
The ACLU petitioned for review, which was granted in July 2015. In a decision that is surprising and disturbing for many reasons, a divided supreme court reversed the decision of the court of appeal. In summary, the opinion concludes that: 1) "[i]nvoices for legal services are generally not communicated for the purpose of legal consultation. Rather, they are communicated for the purpose of billing the client and, to the extent they have no other purpose or effect, they fall outside the scope of an attorney's professional representation." 2) the analysis of whether or not privilege applies to a communication is driven by the existence of a link between the content of the communication and its purpose, which must be one of legal consultation, which the court refers to as the "heartland" of attorney-client privilege; 3) "the contents of an invoice are privileged only if they either communicate information for the purpose of legal consultation or risk exposing information that was communicated for such a purpose. This latter category includes any invoice that reflects work in active and ongoing litigation;" and 4) billing statements in litigation matters that are long concluded may not be so protected as they no longer provide any insight into litigation strategy or litigation consultation.
The most troubling aspects of the opinion are its backtracking on Costco Wholesale with the suggestion that content of the writing is relevant to determining whether it is privileged, and that privileged communications may somehow lose their privileged status when the litigation in which they were generated concludes. This decision exposes not only billing statements but potentially other privileged communications to public disclosure when the litigation matters to which they pertain have been concluded.
The dissent effectively points out that the majority's analysis "ignores the core reasoning of Costco that section 954 prohibits courts from parsing a communication between lawyer and client in order that those parts not involving a legal opinion or advice can be disclosed." "The majority seemingly embraces the notion that courts may parse a legal communication to permit disclosure of those parts that were not 'made for the purpose of legal consultation'" while pointing out that the majority strains unconvincingly to distinguish Costco.
"Even more pernicious," the dissent says of the majority opinion, "…is its suggestion that the protective scope of the privilege somehow wanes with the termination of the subject litigation." The court fails to provide compelling authority or explain any legal basis for how a document, once privileged somehow loses the protection of privilege based upon the passage of time. Indeed, the dissent appropriately points out there is nothing in the Evidence Code to support it.
If billing statements become unprivileged once the litigation in which they were generated is resolved, what implications will that have for work product protection in legal malpractice actions? A client discharges Lawyer Number One and hires Lawyer Number Two who routinely sends billing statements detailing his or her work. Once the matter is resolved, Client sues Lawyer Number One for malpractice. Are the billing statements of Lawyer Number Two now discoverable because the state supreme court has declared billing statements to be unprivileged? There are broad implications for such a view in non-CPRA cases. How will this decision impact the protections normally available for work product of Lawyer Number Two? The County of Los Angeles decision leaves us with many questions and few answers.
Regardless of the public policy behind the CPRA, this opinion unfortunately goes too far, intruding into the sanctity of the attorney-client privilege and, as characterized by Justice Werdegar in her dissent, undermining "this pillar of our jurisprudence…." While it is possible to argue that the opinion is limited to cases under the CPRA involving production of law firm billing records, the court did not expressly so limit its holding and its broadly-worded pronouncements will no doubt be cited time and again in discovery disputes seeking discovery of billing statements and other privileged communications. The California Supreme Court should be more restrained and thoughtful of analysis before inviting such inroads into the most sacrosanct privilege in American jurisprudence.
 L.A. Cty. Bd. of Supervisors v. Superior Ct. (ACLU of S. Cal.), Cal. 4th, No. S226645, 2016 WL 7602131 (Dec. 29, 2016).
 Id., 2016 WL 7602131 at *8.
 Gov't Code §6250 et seq.
 Bus. & Prof. Code §6149 provides: "A written fee contract shall be deemed to be a confidential communication within the meaning of subdivision (e) of Section 6068, and Section 952 of the Evidence Code." Thus, fee agreements are privileged.
 Costco Wholesale Corp. v. Superior Ct., 47 Cal.4th 725 (2009).
 Id. at 730-731.
 L.A. Cty. Bd. of Supervisors v. Superior Ct., supra, 2016 WL 7602131, at *11.
 Id. at *10-11.
 Id. at *20.
 Id. at *15-16.
 Id., dissenting opinion at *6.
 See, Schlumberger Limited v. Superior Ct., 115 Cal. App. 3d 386, 394 (1981), holding that the work product of the client's counsel in a legal malpractice action is not generally discoverable unless it would unfairly prejudice the party seeking discovery or result in an injustice.
 L.A. Cty. Bd. of Supervisors v. Superior Ct., supra., 2016 WL 7602131, dissenting opinion, at *1-2.