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Reliance on Advice of Counsel Defense in Business Torts – Where We are in California Jurisprudence and What it Means for In-House Counsel
E-Mail Communications Between Attorney and Client on Employer’s Computer
 
Attorney Spotlight: Catharina Min
Business Development Series Article #3: “What Spenser and Hawk Know About a Network Based on Reciprocity”
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  Reliance on Advice of Counsel Defense in Business Torts – Where We are in California Jurisprudence and What it Means for In-House Counsel  
  by Constance Yu, Sideman & Bancroft LLP  
 

Attorneys are among the wide range of advisors that businesses, officers and directors rely upon to assist them in making informed business decisions. California courts have recognized the “advice of counsel” defense since as early as 1862. Despite the defense’s long tenure in California jurisprudence, only a dearth of decisions exists in the context of business torts outside of patent infringement and bad faith insurance coverage cases. Moreover, California jurisprudence treats the defense differently depending on the context in which is raised. This article examines the current state of California law relating to the advice of counsel defense in business litigation.

 
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  E-Mail Communications Between Attorney and Client on Employer’s Computer  
  by Sejal Friday, Gordon & Rees LLP  
 

On January 13, 2011, the Court of Appeal of California addressed the controversial issue of whether e-mail communications between an attorney and client/employee are privileged on an employer’s computer.

In Gina M. Holmes v. Petrovich Development Company, LLC, Plaintiff Gina Holmes (“Holmes”) worked for a real estate developer. When she took the job, she read and signed the company’s computer use/e-mail policy that clearly stated that all activity on the company computers was open to monitoring by management.

During her employment, Holmes sent e-mails regarding possible legal action against the company to her attorney from the company computer. The Court of Appeal concluded that these e-mails did not constitute “‘confidential communications between client and lawyer’” within the meaning of California Evidence Code section 952. The Court based its decision on the following: (1) Holmes knew the company’s computer policy required that its computers were to be used strictly for company business and not personal e-mails; (2) she was warned that the company could monitor and inspect all files and messages at any time; and (3) she was advised that use of the company computer for personal information or messages would have no associated right of privacy.

 

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read full article .
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  Business Development Series:
“What Spenser and Hawk Know About a Network Based on Reciprocity”
 
  by Martha Sullivan, Thornton Marketing  
 

Fans of Robert B. Parker’s novels will recognize Spenser and Hawk as two characters that appeared in a series of crime stories (and not the name of a law firm). As I was rereading one of the earlier books, I realized that the two of them were at the center of a network that took years to build. The strength of their connection was based on shared interests, similar ethics, work they performed together and their willingness to help each other in any situation, without question. They had some “shared” connections and were always willing to introduce other contacts, as needed. Although they probably would not have said this, their actions demonstrated their willingness to help anyone who helped them. Spenser and Hawk understood that reciprocity is essential in creating an effective network.

 

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read full article .
     
March/April 2011
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| March / April 2011 |
.. ..
  Reliance on Advice of Counsel Defense in Business Torts – Where We are in California Jurisprudence and What it Means for In-House Counsel
. by Constance Yu, Partner, Sideman & Bancroft LLP
.. ..
 

Attorneys are among the wide range of advisors that businesses, officers and directors rely upon to assist them in making informed business decisions. California courts have recognized the “advice of counsel” defense since as early as 1862.1 Despite the defense’s long tenure in California jurisprudence, only a dearth of decisions exists in the context of business torts outside of patent infringement and bad faith insurance coverage cases. Moreover, California jurisprudence treats the defense differently depending on the context in which is raised. This article examines the current state of California law relating to the advice of counsel defense in business litigation.

The Advice of Counsel Defense – Application in Practice
Although the vast majority of over 200 California court opinions discussing the advice of counsel defense fall in the context of malicious prosecution actions or bad faith insurance claims, the defense is used in other contexts including: patent infringement actions in defense of “willful infringement” accusations, SEC violations, civil or criminal fraud, assertion of the business judgment rule, limitation of punitive damages, tortious interference claims, use of funds by a public officer, and taxpayer defense.2

The Elements. In general, reliance on advice of counsel defense has evolved under California law to require that the proponent establish:3 (1) good faith reliance on the opinion and advice of its lawyer; (2) that the lawyer’s advice was based on full disclosure by the party seeking to invoke the defense of all relevant facts that it knew or could have discovered with reasonable effort;4 (3) that selection of counsel for opinion was reasonable;5 and (4) that there was a reasonable belief that advice of lawyer was correct.6

The Consequences. It is well settled that “[t]he privilege which protects attorney-client communications may not be used both as a sword and a shield.”7 Thus, a party cannot rely on an advice of counsel defense without waiving its attorney-client privilege with respect to the relied-upon attorney-client communications. Courts are divided on the extent of the scope of the waiver, but the majority of courts construe the waiver to impliedly include a subject-matter waiver of at least all privileged communications leading up to the relied-upon opinion.8 Some federal courts find that the waiver only applies to pre-complaint attorney-client communications because the pivotal issue is the accused party’s state of mind at the time of the alleged bad act. Accordingly, documents created after the commencement of litigation are generally deemed not relevant, nor reasonably calculated to lead to admissible evidence.9 By contrast, other courts – particularly in the Northern District – have taken a broad view of the scope of waiver,10 finding that a party cannot preserve any privilege, including work product, by an express voluntary waiver. Under this line of reasoning, even work product not communicated to the client can be considered relevant and discoverable.11

 

What It All Means For In-House Counsel
The following questions highlight important factors that in-house counsel should consider as soon as an advice of counsel defense is anticipated to be potentially relevant.

Who may assert the defense? Only the attorney’s client who received and relied on the attorney’s advice can waive the attorney-client privilege in order to assert the defense. Thus, it is important to determine who is the actual client who holds the ability to invoke the defense. For example, in a shareholder derivative action, if the board received legal advice regarding a particular strategy from the company’s counsel, who can assert the defense, and perhaps more pointedly, who is entitled to waive the attorney-client privilege?
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How relevant and thorough is the legal opinion upon which a party seeks to rely? Correct advice is not an element of the defense12 but relevance, thoroughness of the opinion, the competency and expertise of its preparer, and the credibility of a party’s reliance becomes critically important to a party’s entitlement to assert the defense, and ultimately to the factfinder.
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At what stage in the case must a party raise the defense?13 A discovery complication arises for trial counsel who, for strategic purposes, would prefer a later disclosure of the defense so as to limit the scope of discoverable attorney-client communications. Yet, the law is clear that a party intending to assert reliance upon advice of counsel defense must make a timely and complete disclosure of the relied-upon attorney advice.14
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What happens when the advice of counsel defense is invoked by the corporate defendant against the best interests of the company’s director(s) or officer(s), or vice versa? When company officers and directors seek to rely on the company’s counsel, in-house counsel necessarily must consider whether the company is inclined or disinclined to waive the privilege belonging to corporate client.
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Should counsel who provided the relied-upon advice be segregated from the trial counsel team? Whenever practical, it is a good idea to keep advice-giving counsel (or author(s) of legal opinions) separate from trial-team counsel because the advice-giving attorneys are invariably likely to serve as a witnesses at trial.15
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Constance Yu is a Partner at the San Francisco office of Sideman & Bancroft LLP. Her primary practice areas are civil litigation and business crimes defense. Ms. Yu advises clients in criminal investigations involving corporations, former government officials and private individuals in financial and other business disputes. Sideman & Bancroft LLP is a certified Women Owned Business Enterprise. The firm is the largest women-owned provider of legal services in the Western United States, certified through National Association of Minority and Women Owned Law Firm (NAMWOLF) and Women’s Business Enterprise National Council (WBENC).
cyu@sideman.com; (415) 392-1960
 
 
| March / April 2011 |
   
  E-Mail Communications Between Attorney and Client on Employer’s Computer
.. by Sejal T. Friday, Senior Counsel, Gordon & Rees LLP
   
 

On January 13, 2011, the Court of Appeal of California addressed the controversial issue of whether e-mail communications between an attorney and client/employee are privileged on an employer’s computer.

In Gina M. Holmes v. Petrovich Development Company, LLC, Plaintiff Gina Holmes (“Holmes”) worked for a real estate developer. When she took the job, she read and signed the company’s computer use/e-mail policy that clearly stated that all activity on the company computers was open to monitoring by management.

During her employment, Holmes sent e-mails regarding possible legal action against the company to her attorney from the company computer. The Court of Appeal concluded that these e-mails did not constitute “‘confidential communications between client and lawyer’” within the meaning of California Evidence Code section 952. The Court based its decision on the following: (1) Holmes knew the company’s computer policy required that its computers were to be used strictly for company business and not personal e-mails; (2) she was warned that the company could monitor and inspect all files and messages at any time; and (3) she was advised that use of the company computer for personal information or messages would have no associated right of privacy.

The Court further explained that while an attorney-client communication does not lose its privileged character solely for being communicated electronically or because others may have access to the content of the communication, "the e-mails sent by Holmes in

 
 

these circumstances were more akin to her consulting a lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person could expect that their discussion would be overheard by her employer."

By using the company’s computer to communicate with her lawyer, knowing that the communications violated her company’s computer policy and could be discovered through the company’s monitoring, she did not communicate “in confidence by 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.” (Evid. Code, § 952.) Consequently, the communications were not privileged.

This case highlights the importance of employers having a computer policy that makes clear that computers are the sole property of the company and should be used strictly for company business. The policy should also state that employers have the right to monitor these computers at any time, for any reason, to provide employees with a clear understanding of their privacy rights relating to computer use.

 
Sejal Friday is Senior Counsel in the San Diego Office of Gordon & Rees LLP.
sfriday@gordonrees.com; 619.696.6700
   
     
  Attorney Spotlight: Catharina Min  
  by Kristine Chen, Associate, Reed Smith LLP  
     
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 “Don’t look back with regret.” These are words that led Catharina Min to make several daunting choices over the course of her legal career. These choices have shaped her into the attorney she is today.

Catharina was born in Seoul, Korea, and immigrated to the United States with her family when she was eleven years old. Although Catharina’s parents endured much discrimination in the United States, they worked hard including running a dry cleaning business, just so they could provide Catharina and her three siblings an opportunity for a better education. Catharina has never forgotten this incredible sacrifice made by her parents. At a very early age, Catharina was determined to excel in everything she did.

In school, Catharina excelled academically and socially. Although she spoke only Korean when arriving in the United States, she was forced to pick up English quickly. She read many books. Extroverted by nature, she became the first Asian-American president of her high school. Catharina went on to attend the University of Virginia for both college and law school.

After law school, Catharina considered staying on the East Coast, but also had an offer to be an associate at a large law firm in California. Catharina was hesitant, however, because it was just after the 1989 Loma Prieta earthquake. Her parents were also worried and did not want her to move. But Catharina was convinced there were more opportunities in the San Francisco Bay Area. She told her parents she did not want to look back and regret her decision. So she packed up her bags and moved across the country.

At the time, there were few women, let alone Asian-American women, in law firm leadership roles. But Catharina refused to just stand on the sidelines. Although it was easier to keep her head down and just work, Catharina found her own mentor at the firm, and asked to go on pitches and take a more active role with clients. She was given more opportunities as a result. In fact, she finds this experience so important in her own career, that when asked what advice she would give young associates, she often says, “don’t wait for mentors to come knocking on your door.” There are times you need to go find them yourself.

Catharina also participated in Bay Area bar organizations. As a young attorney, she was moderating a panel for a local Korean bar organization, and met a partner from a law firm in Korea. The partner was so impressed by Catharina that he offered her a job.

 
 

Again, faced with a career-altering choice, Catharina was intrigued but hesitant. She also knew such an opportunity rarely comes along and did not want to look back in regret. Once again, Catharina packed up her bags, this time moving back to her birthplace of Seoul, Korea.

However, the transition in Korea was not easy. It had been over a decade since Catharina left, and she was forced to re-familiarize herself with Korean language and culture. Although she spoke Korean to her parents at home, she did not know how to conduct business in Korean. This was a completely new language she had to learn. Catharina had also gotten used to being in an American-centric culture. Customs were different in Korea. For instance, she found that she could say one thing during negotiations in Korea, but could not expect for it to be interpreted the same way it would have been in the United States. Such a realization was humbling, but also prepared Catharina for the many foreign and multinational companies she deals with now.

After more than four years, Catharina returned to the United States with a set of skills that differentiated her from her counterparts. However, Catharina had to make it known that she could offer clients what others could not. Catharina recognizes that self-promotion is not always easy, particularly for Asians because it is in such contrast to their cultural customs. She feels strongly that it is essential to longevity in this field, and if Catharina could give any other advice to young associates, she says you must self-promote, particularly in down times and when the economy is not doing well. You have to recognize that you are not being obnoxious or bragging, she says. You have to think of it as “sharing information.” You just need to find a style you are comfortable with.

Over the years, Catharina has continued her involvement with local Korean organizations. She previously served as president of several organizations, including the International Association of Korean Lawyers (IAKL), Korean American Bar Association of Northern California (KABA), and Korean American Chamber of Commerce of San Francisco (KACC). She was the first woman president of IAKL in over twenty years.

Since 2007, Catharina has been a partner in the corporate and securities group at Reed Smith, and is currently office managing partner of the firm’s Silicon Valley office. She represents both U.S. and international clients in mergers and acquisitions, private financings, joint ventures, strategic alliances, corporate partnering, securities offerings, and other corporate transactions. She also represents emerging companies in general corporate matters and financings. She has extensive experience representing Asian clients doing business in the United States and Asia.

Despite all her career accomplishments, Catharina emphasizes that raising her two young daughters has been her most rewarding experience. Catharina and her husband are both attorneys, so work-life balance is naturally a challenge. Admittedly, she gives up sleep to squeeze more hours into the day. But Catharina’s survival has really come from finding balance over a period of time. In the end, you have to have a good support network, she says.

 
Kristine H. Chen is an Associate at the San Francisco office of Reed Smith LLP.
kchen@reedsmith.com; 415.659.5924
 
     
 
 
  “What Spenser and Hawk Know About a Network Based on Reciprocity”
  by Martha Sullivan, Thornton Marketing
   
.

Fans of Robert B. Parker’s novels will recognize Spenser and Hawk as two characters that appeared in a series of crime stories (and not the name of a law firm). As I was rereading one of the earlier books, I realized that the two of them were at the center of a network that took years to build. The strength of their connection was based on shared interests, similar ethics, work they performed together and their willingness to help each other in any situation, without question. They had some “shared” connections and were always willing to introduce other contacts, as needed. Although they probably would not have said this, their actions demonstrated their willingness to help anyone who helped them. Spenser and Hawk understood that reciprocity is essential in creating an effective network.

What does this have to do with your networking efforts? If you have read my previous columns, you know that I believe relationships are central to your success at business development. To switch gears from the fictional to the research realm, it may interest you to hear that studies of star performers have shown that their success is due not to their intelligence, but to their ability to build relationships with a network of people. In Daniel Goleman’s book, “Emotional Intelligence,” he cites studies that show that “things go more smoothly for the standout because they put time into cultivating good relationships with people whose services might be needed in a crunch as part of an instant ad hoc team to solve a problem or handle a crisis….a more sophisticated view of informal networks shows that there are at least three varieties: communications webs – who talks to whom; expertise networks, based on which people are turned to for advice; and trust networks.”

In other words, these informal networks are based on reciprocal relationships. If you want to leverage your own network of contacts, consider what you can offer in terms of introductions, advice, referrals and other help.

Live Networking vs. Social Networking
As you think about how to build your own network of contacts, remember that the best rainmakers have both an external network of current and potential clients and referral sources,

 
 

and an internal network of people who are willing to work with them on a variety of matters.  They seem to know everyone and have immediate access to whatever resources they need.  Although the rainmakers at smaller firms may not have large internal networks to tap, they often partner with firms who offer different services, as well as other professional service providers.  The more extensive your network is, the more likely you are to generate business.

Depending on your age and your degree of introversion or extroversion, you may prefer virtual networking to real life networking.  Given my second rule of business development (it’s a face to face activity), I recommend a combination of both.  And whether you’re considering live networks or online sites to join, think about your marketing strategy.  Who is your target audience and what marketing messages do you need to communicate to them?  What can you contribute to the members of those networks?

For example, if you are a member of the CMCP discussion group on LinkedIn, you can see who the other members are, who posts messages about diversity issues, and who responds to posts.  That discussion group has created the three communications webs identified by Goleman and has become a valuable resource for its members. 

Online sites allow a degree of transparency that isn’t as accessible in live networking situations.  They allow you to deliver communications to your network as efficiently as possible.  However, there is no substitute for the connections that are formed by in person meetings, so it’s important to balance virtual contacts with live ones.  And as Spenser and Hawk knew, the best networking meetings occurred over a cup of coffee from Dunkin’ Donuts.
 
Martha Sullivan is Principal of Thornton Marketing
in San Rafael, CA.
marthasullivan@earthlink.net; 415.472.7126; www.thorntonmarketing.com

 
    Jimmy Nguyen joins Davis Wright Tremaine LLP  
    LOS ANGELES, APRIL 13, 2011 – Jimmy Nguyen, a highly regarded intellectual property lawyer [and CMCP board member and past co-chair] with a particular focus in the emerging worlds of new media as well as traditional entertainment industries, has joined Davis Wright Tremaine LLP as a partner in the firm’s Los Angeles office. Nguyen was previously with Wildman, Harrold, Allen & Dixon LLP in Beverly Hills. Read Full Press Release.  
 
    Black Women Lawyers of Northern California's Networking Lunch - May 12, 2011  
    CMCP Board Co-Chair Deborah Broyles of Reed Smith, and CMCP members Theodora Lee of Littler Mendelson and Wilma Wallace of Gap, Inc., are among the all-star speakers on Advancing Your Career and Achieving Excellence at The Black Women Lawyers of Northern California's networking lunch, May 12, 2011. Click here for details.  

Wednesday, May 11, 2011 - 5:00pm - San Francisco
RSVP Here

 

ACC Diversity Committee
“Cinco de Mayo Mixer”

Thursday, May 5, 2011
Bingham McCutchen LLP
Three Embarcadero Center
28th Floor
San Francisco, CA 94111
5:00 PM - 8:00 PM

Please join the Association of Corporate Counsel San Francisco Bay Area Chapter for a Cinco de Mayo celebration and mixer sponsored by Bingham McCutchen LLP. This will be an informal event to allow members and friends to network and unwind. What better way to spend Cinco de Mayo than with colleagues, enjoying drinks and appetizers? Bingham’s offices. At 6:00, there will be a short panel discussion on diversity and the elimination of bias in the legal profession.
Please RSVP by contacting Tess Pascual at tess.pascual@bingham.com


 
 
     
  Job Announcement: Senior Level Employment Litigator
Podo Legal, San Francisco, CA

 
 

Podo Legal seeks an experienced employment litigator for a temp-to-perm position that we have been asked to fill.

We're working directly with a small firm growing by leaps and bounds, providing both attorney and case management assistance, in addition to our usual discovery services. We now need to add a strong, senior-level employment litigation attorney to the team.

The ideal candidate is a legal research and writing star with strong case management skills. This attorney must be able to take bottom-line responsibility for pleadings and motion practice; assign and manage projects to be done by more junior attorneys and paralegals; and help keep a busy partner or two on top of an active caseload!

This attorney would work directly with Podo Legal and other team members on selected research and pleadings type projects at first. If things went well, the candidate would have the opportunity to become a full-time employee in a "Managing Attorney" or "Of Counsel" role.

In addition to employment litigation, general commercial litigation and broker/dealer work is anticipated. Therefore, experience in FINRA (and/or its predecessor NASD) proceedings would be a plus.

The candidate must be a CA-licensed attorney in good standing.  A strong academic background and 10+ years of experience are required, as is background managing cases independently, with partner oversight.

The law firm Podo Legal is assisting is in downtown San Francisco.

Please contact Dean Vanech at dean@podolegal.com if you are interested in this position. (Candidates only, please!)

 
     
     
  Job Announcement: Litigation Associate
Meserve, Mumper & Hughes LLP - Los Angeles, CA

 
  Downtown Los Angeles office of a well-established Firm seeks experienced 2-4 year litigation associate with top academic credentials and experience in a private law firm. The Firm specializes in the areas of life, health and disability coverage; bad faith; ERISA disputes; and/or employment litigation (defense of management) and commercial litigation.

We offer a competitive compensation and benefits package, substantial case responsibility and direct client contact.

Please send confidential resume via email recruiting@mmhllp.com
 
     
 


April 28 - May 1, 2011
34th Annual Conference
California Association of Black Lawyers.
Los Angeles.
read more
April 29, 2011
6:00pm
ALC 39th Anniversary Dinner
Asian Law Caucus.
San Francisco.
read more
May 3, 2011
5:30pm
18th Annual Awards Dinner
Center for Civic Mediation.
Los Angeles.
read more
May 12, 2011
6:00pm
Barristers Spring Social
Alameda County Bar Association.
Oakland.

read more
May 12, 2011
6:00pm
Annual Dinner & Awards Ceremony
Tom Homann LGBT Law Association.
San Diego.
read more
May 21, 2011
11:00am - 2:00pm
36th Annual Scholarship & Awards Luncheon

Black Women Lawyers Association.
West Hollywood.
read more
May 24, 2011
5:00pm
Annual Dinner "Backwards and in Heels"

Lawyers Club of San Diego.
San Diego.
read more
May 31, 2011
6:00pm - 9:00pm
How to have a Legal Career AND a Life

South Asian Bar Association of Southern California.
Los Angeles.
read more
June 23, 2011
Judiciary Reception
La Raza Lawyers Association.
San Diego.

read more
 
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