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Attorney-Client Privilege Does Not Survive “Death” of an Organizational Client

Jan 4th, 2021

The Ogborn Mihm, LLP legal team of Michael Mihm, Susan Jacks, Thomas Neville, and James Fogg recently went before the Colorado Court of Appeals to address an important question of first impression in Colorado: does the attorney-client privilege survive the dissolution of a corporate client?  Delivering a victory to Ogborn Mihm, LLP’s client, the Court answered that question: “No.”

The case, Affiniti Colorado, LLC v. Kissinger & Fellman, P.C., 2019 COA 147, arose when a law firm, Kissinger & Fellman (“Fellman”), issued an opinion letter to Affiniti Colorado, LLC (“Affiniti”).  Affiniti filed a lawsuit against Fellman alleging negligent misrepresentations in that opinion letter.  In response, Fellman asserted that it was entitled to immunity under the Colorado Governmental Immunity Act (the “CGIA”) because of Fellman’s work for EAGLE-Net Alliance, a purported intergovernmental agency that voluntarily dissolved in 2017 and no longer has any officers, directors, or employees.

The Court permitted limited discovery relating to Fellman’s CGIA defense and, as a part of that discovery, Affiniti requested communications between Fellman and EAGLE-Net. In response to Affiniti’s request, Fellman asserted the attorney-client privilege and filed a motion for a protective order regarding the communications. Siding with Affiniti, the district court denied the motion and ordered Fellman to comply with Affiniti’s discovery requests. Fellman then requested permission to stay the proceedings and appeal the district court’s decision, which the district court granted.

In its interlocutory appeal, Fellman relied heavily on the Colorado Supreme Court’s decision in Wesp v. Everson, 33 P.3d 191 (Colo. 2001), which holds that the attorney-client privilege survives the death of a natural client, to argue that that principle should extend to organizational clients.  Relying on the authority supplied by Ogborn Mihm, LLP, the Colorado Court of Appeals rejected that argument, holding that when (1) a corporation dissolves; (2) there are no ongoing post-dissolution proceedings; and (3) no one with the authority to invoke or waive the corporation’s attorney-client privilege remains, the privilege ceases to exist.

In its analysis, the court noted that the justifications of the “posthumous” privilege that apply to deceased individuals “do not apply with equal force to defunct corporations for several reasons,” and proceeded to discuss them.

First, the court wrote:

while frank and full communication are undoubtedly important between corporations and their attorneys, a corporation’s privilege is held by its managers, who often change over time. Thus, no individual manager can be assured that future managers will not waive the privilege and reveal confidences.

The appellate court reasoned that the fact that the attorney-client privilege is not guaranteed to remain intact after a change of management undermines the presumption that a posthumous privilege exists.

The court further recognized that “corporations do not have friends or family who could be embarrassed or harmed, nor do they have a reputation to protect following dissolution.” This factor, the court wrote, also weighs against the concept of a posthumous privilege for defunct corporations.

In its analysis, the appellate panel acknowledged that some other jurisdictions have found that “limited post-dissolution circumstances exist where an individual with the authority to act on behalf of a corporation may invoke or waive the privilege.” Generally, such circumstances are limited to when the entity is still engaged in ongoing post-dissolution events, such as windup proceedings or bankruptcy. In such instances, other courts have found that “successors, assigns, or trustees in the dissolution” could still assert the attorney-client privilege.  In the case before it, however, the appellate panel noted, no one had asserted that EAGLE-Net was still engaged in any kind of post-dissolution proceedings and no one was authorized to speak on EAGLE-Net’s behalf.  Indeed, the appellate panel denied Fellman’s contention that Mr. Fellman, as former general counsel of EAGLE-Net, had the authority to invoke the privilege under the facts of the case.

Accordingly, the Colorado Court of Appeals held, the attorney-client privilege does not survive the dissolution of an organizational client if there is no one with the authority to assert it on behalf of the organization. Based upon its holding, the panel affirmed the district court’s Order denying Fellman’s motion for a protective order regarding communications between EAGLE-Net and its former counsel and ordering Fellman to comply with Affiniti’s discovery request.