Ali Baiardo is a San Francisco-based member of Reed Smith's U.S. Financial Services Litigation team.
In County of Los Angeles Board of Supervisors et al., v. the Superior Court of Los Angeles County, Case No. B257230, 2015 BL 103694 (Apr. 13, 2015), California's Second Appellate District Court of Appeals recently held that billing invoices issued by an attorney to his or her client are privileged attorney-client communications in their entirety. In doing so, the Court of Appeals reversed the trial court's finding that the invoices were not privileged in their entirety.
In reaching its decision, the court followed the California Supreme Court's recent 2009 decision in Costco Wholesale Corp. v. Superior Court, 47 Cal. 4th 725, 732 (2009), which establishes that the proper analysis of whether a billing invoice or other communication is privileged turns on the underlying relationship. The applicable test is simply whether there is an attorney-client relationship. It is not a content-based test, and does not distinguish between factual or legal aspects of the communication.
In Costco, the California Supreme Court held that a communication from counsel to his client is covered in its entirety by the attorney-client privilege, regardless of whether the communication contains factual or legal information—i.e., “when the communication is a confidential one between attorney and client, the entire communication, including its recitation or summary of factual material, is privileged.” Id. at 731–736.
On the precise question before the County of Los Angeles Court of Appeal, regarding whether billing invoices are likewise privileged in their entirety, the court recognized that, “[w]hile several cases have touched on the fringes of this question, none have squarely decided it.” After reviewing the case law, the court found that billing invoices are privileged communications in their entirety. Also, pursuant to California Evidence Code § 952, they are not subject to piecemeal redaction of time entries reflecting the attorney's legal opinions.
This is because § 952 provides that a confidential communication is:
Information transmitted between a client and his or her lawyer in the course of [the attorney-client] relationship and in confidence by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted, and includes a legal opinion formed and the advice given by the lawyer in the course of that relationship.
Cal. Evid. Code §952.
Furthermore, confidential communications include, but are not limited to, communications incorporating the lawyer's legal opinions or advice. County of Los Angeles, at *13–19.
The underlying dispute in the case concerned a California Public Records Act (“CPRA”) request, made by the ACLU to the Los Angeles County Board of Supervisors and the Office of the Los Angeles County Counsel (collectively, the “County”). This particular CPRA request asked for information concerning legal fees paid by the County in connection with nine different lawsuits brought by county jail inmates alleging jail violence. The ACLU sought this information based upon its belief that the County's outside law firms were engaging in “‘scorched earth’ litigation tactics” and had not advised settlement when it was in the County's best interests. The County refused to turn over its billing invoices on the grounds that they are privileged attorney-client communications, citing §952's protection of all confidential communications between a lawyer and client, “in the course of their relationship.”
The trial court found that the County had not met its burden in showing that the billing invoices were protected by § 952, because the statute “does not automatically apply to any communication between an attorney and his or her client.” County of Los Angeles, at *4. The trial court also found that the County had not shown any specific facts demonstrating why the billing invoices, “with proper redactions concealing actual attorney-client privileged communications or attorney work product,” would be exempt from disclosure under § 952. Id.
The Court of Appeals squarely reversed the trial court's decision, finding that billing invoices in their entirety are presumptively privileged, because they are communications transmitted by a lawyer to his or her client in the course of representation of that client. In reversing the trial court's finding that the invoices were not protected by § 952, the court noted the inherent tension presented between two important public policies: the public's interest in transparency in government, as reflected by the CPRA, and the sanctity of the attorney-client relationship.
However, the court found that the public policy espoused by the CPRA must give way to the paramount importance of the attorney-client relationship. The attorney-client relationship depends upon the confidentiality of that relationship; to allow discovery into that relationship harms that relationship, because it violates the public policy fostered by the privilege of each individual to, “freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, … [to] have adequate advice and a proper defense.” Id., at *8. In doing so, the court specifically rejected that the ACLU's argument that § 952's protection of confidential communications only extended to legal opinions or advice. This follows the California Supreme Court's instruction in Costco that “the proper focus in the privilege inquiry is not whether the communication contains an attorney's opinion or advice, but whether the relationship is one of attorney-client and whether the communication was confidentially transmitted in the course of that relationship.” Id., at *19.
Notably, the court also rejected the ACLU's “slippery slope” concerns that this decision would negatively impact all attorney's fee motions. The court responded to that concern by explaining that detailed billing statements are not always necessary to support fee awards, and that the client, of course, may choose to waive the privilege in order to obtain the fee award.
This opinion is significant, as it definitely finds under California law that an attorney's billing invoices transmitted to a client are privileged, confidential communications between the attorney and client. As reflected by the trial court's decision, this finding turns the current state of privilege analysis of billing invoices on its head because prior case law suggested that only portions of billing invoices that reflected a legal opinion could be privileged.
This decision is also important because it reminds practitioners that:
(1) California is committed to the sanctity of the attorney-client relationship and ensuring that clients can have a frank and open dialogue with their counselor.
(2) The test in California regarding whether a communication is a protected attorney-client privilege is not content-based. Rather, a communication is privileged when it arises in the course of representation in which the client has sought legal advice.
(3) Attorney-client privilege “protects a transmission irrespective of its content.” Id., at *21 (citing Costco v. Super. Ct., 47 Cal. 4th 725 (2009)).
(4) The U.S. Court of Appeals for the Ninth Circuit does not take the same approach. Remember the distinction between California's approach and that of the Ninth Circuit's, which notes that under federal common law, the client's identity, amount of the fee, case file name and general purpose behind the representation are not privileged. Id., at *12 n.3 (citing Clarke v. Am. Commerce Nat'l. Bank, 974 F.2d 127, 129–130 (9th Cir. 1992)).