{"id":126228,"date":"2020-06-05T15:00:15","date_gmt":"2020-06-05T21:00:15","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=126228"},"modified":"2021-03-16T15:00:54","modified_gmt":"2021-03-16T21:00:54","slug":"attorney-client-privilege-business-owners","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/attorney-client-privilege-business-owners","title":{"rendered":"What Investors Should Understand About Attorney-Client Privilege"},"content":{"rendered":"

When it comes to going over your business plans and tax structure with your lawyer, you need to understand what information is privileged and what is not.<\/p>\n

You don’t want to be that client who gives crucial information to his or her lawyer and then ends up wondering whether that information is \u201cattorney-client privileged\u201d or not. Knowing the difference will help your lawyer just as much as it will help you.<\/p>\n

What Is Attorney-Client Privilege?<\/h2>\n

Attorney-client privilege<\/strong> is a fundamental legal protection for individuals, companies, and organizations who provide confidential information and who seek counsel from a lawyer or law firm.<\/p>\n

Under law, an attorney cannot be required to provide attorney-client privileged information to a plaintiff in a lawsuit (such as a creditor) or to a government agency (such as the IRS) except in certain scenarios<\/em>.<\/p>\n

Below are a couple of common situations where you may lose attorney-client privileges and a few tips on how to make sure your confidential information stays a secret.<\/p>\n

Related: <\/em><\/strong>Buying? Selling? New to the Business? Why You Need a Lawyer Now<\/a><\/em><\/p>\n

\"Secret<\/p>\n

Exceptions to the Attorney-Client Privilege Rules<\/h2>\n

Was a third party present with your lawyer when the information you wanted to be privileged was discussed? For example, was your financial advisor, your accountant, or a nosy family member there? If so, the attorney-client privilege is compromised.<\/p>\n

There is nothing keeping your accountant from getting a subpoena, and there is nothing keeping Grandma from gossiping on bridge night.<\/p>\n

If your lawyer hires third party professionals like accountants, your attorney can extend attorney-client privilege to them. This is called a \u201cKovel<\/a>\u201d hiring, and its origins are worth a read if you like legal history. It comes from a landmark case where a lawyer got an accountant for a client and the accountant’s work was covered under the lawyer\u2019s attorney-client privilege.<\/span><\/p>\n

Here’s a pro tip:<\/strong> For sensitive matters where you want information to remain confidential and privileged, do not involve outside parties, as those non-attorney advisers cannot raise the attorney-client privileged defense.<\/p>\n

Related: <\/em><\/strong>4 Questions Every New Investor Needs to Ask Their Attorney<\/a><\/em><\/p>\n

Only Legal Advice Is Attorney-Client Privileged<\/h3>\n

This is especially tricky for companies who have their own \u201cin-house\u201d legal counsel that also offers business advice. In this case, o<\/span>nly the information exchanged that pertains to legal advice would be privileged.<\/p>\n

For example, was an organizational chart of the company’s holdings \u201cprivileged\u201d when provided to the company lawyer if that lawyer also manages those assets for the business?<\/p>\n

Also, what if that lawyer shared that organizational chart with accountants, property managers, or other non-lawyers? If they did, then that information is no longer attorney-client privileged.<\/p>\n

The solution here is to stay tight-lipped. If you have documents that you only want to share with your lawyer, have your lawyer designate them \u201cattorney-client privileged\u201d and keep them out of the hands of non-lawyers. Always tell your attorney what information is privileged when you share it, so they can proceed accordingly.<\/span><\/p>\n

\"man<\/p>\n

In short, keep everyone on a “need-to-know” basis. L<\/span>et your attorney know before<\/em> you provide the confidential information that you intend it to be privileged. This way your lawyer can make sure that your information is properly handled.<\/p>\n

Here’s another pro tip: <\/strong>If you have sensitive documents or information you want to keep only between you and your lawyer, ask your attorney to identify the document as \u201cattorney-client privileged\u201d<\/span> and do not<\/em> provide it to non-lawyers.<\/p>\n

Conclusion<\/h2>\n

Like so many legal concepts, attorney-client privilege is multi-faceted. There are some common mistakes that you can make that will compromise your protection. If you fall under these exceptions, your confidential information can be examined.<\/span><\/p>\n

You should know what information is protected by attorney-client privilege and what information is not. Violating the privilege might lead to catastrophe, or it might just be embarrassing. Either way, knowing when to keep your mouth shut is a handy skill to possess.<\/span><\/p>\n

\"\"<\/a><\/p>\n

Questions? Comments?<\/em><\/p>\n

Join the discussion with a comment below.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

When it comes to going over business plans and tax structures with a lawyer, you need to understand which information is privileged and which is not. Don’t give crucial information to a lawyer and then wonder whether it is attorney-client privileged after the fact. Here’s what to disclose when\u2014and to whom.<\/p>\n","protected":false},"author":23983,"featured_media":117551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4241],"tags":[],"class_list":["post-126228","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-business-management"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/126228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/23983"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=126228"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/126228\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/117551"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=126228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=126228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=126228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}