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January 10, 2017

California Supreme Court: Privileged Attorney Invoices May Lose Protection Once Litigation is Over

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On December 29, 2016, the California Supreme Court issued its opinion in Los Angeles County Board of Supervisors v. Superior Court (ACLU of Southern California), December 29, 2016, S226645, ___P.3d___ [2016 WL7602131]. This decision addresses whether attorney billing invoices in pending litigation are privileged, and whether the bills lose their privilege once the litigation is over. While framed in the context of Los Angeles County legal bills being compelled through the state law equivalent of a Freedom of Information Act ("FOIA") request, the decision presents the very troubling question of whether confidential communications between lawyer and client "may be forced into the open by interested parties once the subject litigation is concluded." Id. at p. 12.

Even though all seven justices agreed that invoices in pending litigation are privileged, in a 4-3 decision, the majority held that the bills lose their privileged nature once the litigation is over. While the Court of Appeal analysis was more black and white focusing on whether the communication was transmitted in the course of the attorney-client relationship, the high court focused its inquiry on the content and purpose of the communication, holding that the "attorney-client privilege does not categorically shield everything in a billing invoice from PRA disclosure." Id. at p. 1. Citing to Evidence Code § 952 and to Costco Wholesale Corp. v. Superior Court (2009) 47 Cal. 4th 725, 743, for support, the Court insists that the privilege does not encompass "every conceivable communication" that a client and attorney share, but rather "link[s] the privilege to communications that bear some relationship to the provision of legal consultation." Los Angeles County Board at p. 5. 

The context of the discovery request at issue arose when the ACLU sought "invoices" from outside law firms hired by the County in connection with lawsuits alleging police brutality. Billing records were requested to determine the scope, quality and efficiency of the law firms' work. While the County agreed to produce invoices related to three of the lawsuits no longer pending, subject to redactions for privilege, it declined to provide invoices for six matters still pending. After losing at the trial level, the appeal addressed whether attorney invoices constitute "confidential communications" within the meaning of California's attorney-client privilege and thus are categorically exempt from disclosure under the California Public Records Act ("PRA"). Id. at p. 2.

Borrowing from Federal law, as this was a case of first impression, the Supreme Court noted that "[p]ayment of fees is incidental to the attorney-client relationship, and does not usually involve disclosure of confidential communications arising from the professional relationship." Tornay v. U.S. (9th Cir. 1988) 840 F. 2d 1424, 1426. "When a lawyer is billing his or her client, the relationship evokes an arm's-length transaction between parties in the market for professional services, more than it does the diligent but discreet conveyance of facts and advice that epitomizes the bond between lawyer and client." Los Angeles County Board at p. 5. But the Court stopped short of approving discovery of legal bills in active cases, concluding that even where the invoicing contains only aggregate figures describing time spent, it may come close enough to the "heartland of the privilege" to threaten disclosure of confidential legal strategy, which remains at the core of the attorney's distinctive professional role.  Having decided against compelling legal bills in pending litigation, the Supreme Court went further to address disclosure in closed matters, indicating that "there may come a point where this very same information no longer communicates anything privileged, because it no longer provides any insight into litigation strategy or legal consultation." Id. at p. 7.

A strong dissent chastised the majority for interpreting California Evidence Code § 952 in contradiction to the plain language of the statute and in contravention of earlier precedent set forth in Costco, supra, 47 Cal. 4th 725. As explained in Costco, despite what might be the dominant purpose of the communication, "when the communication is a confidential one between attorney and client, the entire communication … is privileged." Costco, supra 47 Cal. 4th at 736. Justice Wedegar, writing for the dissent, observed that Costco's analysis leads inexorably to the conclusion that the legal invoices at issue are privileged under Evidence Code § 952. Yet, as a result of this decision, "attorneys in this state must counsel their clients that confidential communications between lawyer and client, previously protected by the attorney client privilege, may be forced into the open by interested parties once the subject litigation is concluded." Los Angeles County Board at p. 12.

The decision in Los Angeles County Board is a double-edged sword. On the one hand, it may be used to compel plaintiffs' counsel to turn over billing invoices for purposes of a fee motion. However, the cautionary tale is that while the decision should be limited to a FOIA-type request, the case dicta was not so limiting, creating a real danger that eventually creative plaintiffs' counsel will use this case to seek prior billing in other cases (e.g., to support a conscious indifference claim for punitive damages). Faced with this possibility, clients may wish to rethink the level of detail it requires in its attorney bills, opting perhaps for more generic descriptions of the legal work performed to better manage future risk.

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