LACBA Update Back Issues - October 2015
Attorney Billing Statements: Are They Privileged or Not?
By Robert K. Sall, who practices with Sall Spencer Callas & Krueger in Laguna Beach and is a past chair of the LACBA Professional Responsibility and Ethics Committee. His practice focuses on business litigation, legal malpractice litigation, and attorney-client fee disputes. He can be reached at . The opinions expressed are his own firstname.lastname@example.org.
A recent Second District opinion, now superseded by the California Supreme Court’s grant of review, has highlighted the ongoing controversy in California courts over whether or not law firm billing statements to clients are protected communications. In County of Los Angeles Board of Supervisors v. Superior Court,1 the real party in interest, ACLU of Southern California, sought the production of billing statements of law firms performing legal services for the County of Los Angeles on nine different lawsuits brought by inmates based upon alleged jail violence. 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, the scope of that work, the quality of the representation, and the 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 (B&PC) Section 6149.2 ACLU conceded billing entries that revealed advice to the County, or attorney work product, could be redacted, but 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 ACLU’s petition for writ of mandate to compel production, reasoning the attorney-client privilege does not protect every communication between attorney and client, and instead, the party claiming privilege must demonstrate with specific facts that the challenged documents qualify as privileged communications. The trial court concluded that the County had failed to demonstrate why billing statements, with proper redactions of entries containing advice or work product, would qualify as privileged communications. In ordering production of the billing statements, the trial court also determined that B&PC Section 6149 protects only fee agreements, not the invoices.
The County filed a petition for writ of mandate in the court of appeal, which reversed the trial court’s decision. In an extensive discussion of attorney-client privilege, the court reasoned that billing statements constitute communications because they are confidential communications transmitted between attorney and client, within the meaning of Evidence Code Section 952. Reviewing several earlier decisions, the court of appeal noted that while many California appellate cases have touched upon the fringes of the issue whether billing statements are protected as privileged communications, none of them had squarely decided it.3 The court of appeal also addressed ACLU’s assertion that numerous federal and out-of-state cases have held that “attorney-client privilege does not categorically protect billing records.” However, because attorney-client privilege in California is a creature of statute, the court concluded these authorities were “of limited utility.”4
The court of appeal, in its now-superseded decision, explicitly disagreed with ACLU’s position that it is a basic principle that billing statements that do not contain legal advice or opinions are not privileged. ACLU based this argument on its interpretation of the final clause of Section 952, which, after stating that a confidential communication is one transmitted in confidence between attorney and client in the course of the relationship, also states: “…and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.” (Emphasis added.) ACLU argued that this language meant the communication must actually contain opinion or advice to be privileged. The court concluded that the California Supreme Court’s decision in Costco Wholesale Corp. v. Superior Court5 compelled rejection of ACLU’s position. Quoting from Costco, a case that involved a lawyer’s opinion letter setting forth certain factual observations based on 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.”6 Applying principles of statutory construction to Evidence Code Section 952, the court of appeal held that a confidential communication between lawyer and client does not need to transmit opinion or advice to be subject to the privilege.7 The billing statements, it concluded, are therefore privileged communications simply because they constitute confidential communications transmitted between attorney and client.
The California Supreme Court granted review of County of Los Angeles Board of Supervisors v. Superior Courton July 8, 2015. The case is being closely monitored and will no doubt draw considerable amicus attention.
The unresolved question of attorney-client privilege or work product protection for billing statements is a question that commonly arises in fee disputes, malpractice claims, prevailing party fee motions, and similar contexts. Sometimes, legal fees incurred by a party in prosecuting or defending an underlying matter will constitute “tort of another” damages in a case. “One who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action.”8
If fees are sought as damages, this raises the question whether the billing statements for the services of the counsel that performed the work are then discoverable, or whether they remain protected as privileged communications. Sometimes parties will agree on a qualified waiver, or obtain a protective order to prevent waiver and public release of otherwise confidential information. Parties seeking an award of prevailing party attorney fees may elect to place billing statements into evidence to support a fee application, thereby risking potential waiver of privileges or work product. Unredacted billing statements may reveal the lawyer’s strategies, research subjects, and the evaluation of legal options by a party’s counsel, and advice given. Depending upon the circumstances, even if billing statements are not absolutely privileged, this could potentially result in a waiver of work product or privilege protections. If a lawyer anticipates that billing statements must be filed to support an award of attorney fees, it may be prudent to consider drafting time entries carefully to avoid exposure of confidential information, and to provide such information to the client instead in privileged correspondence.
The California Supreme Court’s future decision in County of Los Angeles Board of Supervisors v. Superior Court will hopefully settle open questions about the extent to which attorney-client privilege and work product doctrine apply to law firm billing statements. In the interim, lawyers must remain cautious when making the decision whether or not to submit billing statements in the public record, or produce them in discovery, and the extent to which steps should be taken to prevent waiver.
1 California Court of Appeal, Second District, Div. Three, Case No. B257230, April 13, 2015 (now superseded by grant of review and pending in the California Supreme Court as Case No. S226645).
2 Business and Professions 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.
3 See County of Los Angeles v. Superior Court, 211 Cal. App. 4th 57, 60-61 (2012); Smith v. Laguna Sur Villas Community Assn., 79 Cal. App. 4th 639, 642-43 (2000); and Concepcion v. Amscan Holdings, Inc., 223 Cal. App. 4th 1309, 1312-16, 1326-27 (2014) for examples cited by the court.
4 See California Court of Appeal, Second District, Div. Three, Case No. B257230, at 12 n.3.
5 Costco Wholesale Corp. v. Superior Court, 47 Cal. 4th 725 (2009).
6 Id. at 730-31.
7 Here, the court seemed particularly influenced by the County’s argument that if legal advice or opinion must be in the content of the transmission to make it subject to a valid claim of privilege, then an inquiry from a client to his or her lawyer that contains neither advice nor opinion would not be privileged.
8 Gorman v. Tassajara, 178 Cal. App. 4th 44, 78-79 (2009); Gray v. Don Miller & Associates, 35 Cal. 3d 498 (1984).
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