‘What’s Up, John?’: A Refresher on the ‘Upjohn’ Standard When Interviewing a Corporate Client’s Employees

The Legal Intelligencer

(by Alex Farone)

As outside counsel for a company, a concern is always whether the corporation will be named as a respondent or defendant in litigation. When those situations do arise, counsel should pay particular attention to the nuances of the attorney-client privilege when beginning an investigation. Many attorneys make assumptions regarding the applicability of the attorney-client privilege when dealing with the company’s employees. Those assumptions, in certain circumstances, can result in discoverable communications. Because in-house counsel serve a dual role of providing legal advice as well as business advice, a more careful analysis must be given to their communications with employees. Therefore, this article focuses solely on typical communications to and from outside counsel when performing an investigation.

In Pennsylvania, the attorney-client privilege operates as a two-way street to protect client-to-attorney and attorney-to-client communications made for the purpose of obtaining or providing legal advice. When the client is a company, do all employees count as an extension of the client such that conversations with them would be privileged? In most situations, they do not.

For a corporate client, the attorney-client privilege extends to communications between the attorney and the corporation’s agents or employees authorized to act on the corporation’s behalf. This is typically interpreted as directors, officers and management employees.

Until the U.S. Supreme Court’s decision in Upjohn v. United States, 449 U.S. 383 (1981), some courts used to adhere to the so-called “control group test,” a similar but restricted version of the “authorized to act” standard used in Pennsylvania. The control group test only applied the privilege to communications made to officers or agents of the corporation responsible for directing the corporation’s actions in response to legal advice. However, the control group test overlooks the fact that the privilege is also meant to protect information given to the attorney. In rejecting the control group test, the Supreme Court created the rule that guides attorneys’ interviews with lower-level employees.

Upjohn recognized that, in many instances, an attorney cannot obtain the information it needs to defend a suit or make a strategy recommendation without speaking to lower-level, nonmanagement, rank and file employees. Aside from a termination or disciplinary issue, these “boots on the ground” employees often have first-hand knowledge of key information about a claim or defense. But, are these conversations privileged? It depends.

Pennsylvania courts have adopted this Upjohn rationale: If the employee possesses facts that the attorney needs in order to advise the corporate client, the communication may be privileged. Often the lower level employees alone will have information vital to counsel’s advice to the corporation. In order for this privilege to apply, the information relayed in the communication must be information known to the employee by virtue of his position or within the scope of his employment. For example, interviewing a new employee whose former employer accuses the corporation of tortious interference involving a restrictive covenant would be a privileged communication. On the other hand, if a corporation is faced with a toxic tort claim for water pollution affecting a community and an employee happens to live in that community, the privilege protection would not apply if the attorney questions the employee on his personal experience with his water because this is not information related to the scope of his employment.

The safest course of action to preserve the attorney-client privilege in conversations with a lower-level employee is to begin the communication with an “Upjohn warning”—a distant step-cousin to the Miranda warnings. An Upjohn warning should state that the attorney represents the corporation and not the interviewed employee, inform them that the corporation holds the attorney-client privilege, confirm that the conversation is occurring because the employee has information not generally available elsewhere and that the attorney needs to advise the corporate client, and instruct the employee not to share the substance of the communication except to other employees on a need-to-know basis. Though no Pennsylvania court has officially held that Upjohn warnings are always required to preserve the attorney-client privilege in these situations, it has been referenced in dicta in multiple Pennsylvania cases over the last five years. Therefore, it would be in the attorney’s best interest to give the Upjohn warnings out of an abundance of caution—if nothing else, it sets clear expectations for the interviewed employee and will allow them to understand the scope and purpose of their interaction with counsel.

For the full article, click here.

Reprinted with permission from the March 25, 2021 edition of The Legal Intelligencer© 2021 ALM Media Properties, LLC. All rights reserved.