Imagine that an attorney receives notice from client that a malpractice suit is being considered and that attorney consults with in-house ethics counsel at his or her firm to understand how best to proceed before obtaining consent from the client or terminate representation; client later brings a suit and demands production of the communications between attorney and ethics counsel. Should these communications be privileged?  Some opinions have held that the fiduciary-duty exception to the privilege is applicable. Others have concluded that the current-client exception is applicable. With variation, this exception theorizes that the law firm is ethics counsel’s client along with the outside client by imputation and the two clients have conflicting interests. So what should the attorney do? Consult with ethics counsel and risk disclosure? Withdraw? Seek consent from the client? Retain an outside firm? Each option has obvious pitfalls. Two recent state supreme court decisions held that communications between consulting lawyers and the firm’s in-house counsel were subject to the attorney-client privilege towards the client provided certain conditions were met. RFF Family P’ship, LP v. Burns & Levinson, LLP, 465 Mass. 702 (2013))  and St. Simons Waterfront, LLC v. Hunter, MacLean, Exley & Dunn, P.C. (Ga. S12G1924 July 11, 2013). For example RFF Family P’ship held

 [i]n law, as in architecture, form should follow function, and we prefer a formulation of the attorney-client privilege that encourages attorneys faced with the threat of legal action by a client to seek the legal advice of in-house ethics counsel before deciding whether they must withdraw from the representation to one that would encourage attorneys to withdraw or disclose a poorly understood potential conflict before seeking such advice.

 The Court set forth the prerequisites for attachment of the privilege in this context. First, the law firm must formally designate the attorney or attorneys that will serve as ethics counsel. Next, ethics counsel cannot have worked on the matter at issue or a substantially related matter. Third, the time spent by the attorneys cannot be billed to the client – it should be billed to the firm. Finally, the communications must be made in confidence and kept confidential.

For a more detailed analysis of the issue, you can see Nathan Crystal, Communications with Law Firm In-House Counsel: Does the Privilege Apply?, South Carolina Lawyer 11 (September 2013). Read here