Navigating the Attorney-Client Privilege Waiver Tightrope

The United States District Court for the District of Rhode Island cast a spotlight on the doctrine of implied waiver of attorney-client privilege in a recent False Claims Act (“FCA”) case.  The case, United States of America ex rel. James R. Berkley v. Ocean State, LLC, et al., Case No. 20-538-JJM-PAS (D.R.I., June 26, 2024), delves into the implications of asserting an affirmative defense in an FCA case based partly on advice of counsel.

In Ocean State, plaintiff alleged that defendants submitted false certifications of compliance in connection with Paycheck Protection Program (“PPP”) loans.  Defendants claim that they did not act with the requisite scienter because they acted in good faith and in consultations with their attorneys in applying for the PPP loans.  This affirmative defense prompted the plaintiff to seek discovery of all communications between the defendants and their attorneys concerning the PPP loans, leading to a contentious debate over the applicability of the attorney-client privilege.

The court’s analysis hinged on the principle that the attorney-client privilege cannot be wielded as both a sword and a shield.  It emphasized that an implied waiver may occur when a party’s defense places attorney-client communications at issue, making it unfair to protect those communications from discovery.  In this case, the defendants’ assertions of reliance on their good faith belief in the lawfulness of their conduct, underpinned by legal advice, was deemed to have triggered such an implied waiver.

This decision serves as a critical reminder of the potential implications of defense strategies on the preservation of the attorney-client privilege.  It highlights the need for litigants and their legal advisors to tread carefully when considering the invocation of legal advice as a cornerstone of their defense, mindful of the risk of inadvertently waiving the attorney-client privilege.

For a deeper exploration of the implications of this ruling and strategic considerations in navigating the attorney-client privilege in litigation, we invite you to engage with our experienced legal team.