Thursday, June 20, 2013

Courts Holding Employer Attorney-Client Privilege Applies to Employees and DOL

A number of courts have recently held that the attorney client privilege you have between you and your attorney as a plan sponsor will also extend to all of your employees and the DOL under the theory that your employee benefit plan is solely to be administered for the benefit of your participants.  I.e., if you discover you've been overcharging an employee for years and you call your lawyer to ask what you should do; that employee might very well have a legal right to know exactly what your lawyer has to say about that.  

This is not an employer friendly development at all. See

Call Me: Applying the Attorney-Client Privilege for Employee Benefit Plans 

"Several courts have recently held that the attorney-client privilege should not block participants from learning the content of communications between the plan fiduciary and its attorney. The reasoning follows one of two lines: 

(1) the benefit of any legal advice runs to the plans' beneficiaries (the participants), so that anything legal counsel says to the administrator is in effect being said to the participants, or

(2) the fiduciary duty to act in the 'best interest of the participants' and disclose information related to plan administration outweighs the attorney-client privilege. ...

If anything about the situation could be awkward if it is disclosed, talk with your benefits counsel by telephone to explain the problem before e-mailing and before talking with any outside parties, such as a recordkeeper, trustee or actuary."  (Warner Norcross & Judd LLP) 

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