Michael T. Flannery on Attorney Client Privilege and Native American Trusts

Michael T. Flannery on Attorney Client Privilege and Native American Trusts

In this Analysis, Professor Michael T. Flannery addresses the "fiduciary" exception to attorney client privilege related to representing clients in their fiduciary capacity as trustees, specifically discussing the application of the fiduciary exception to attorney client privilege in cases involving Native American trusts but drawing on the reasoning of these cases to assess its application to all fiduciary relationships involving trusts. Professor Flannery also details precautions that should be taken to minimize problems when issues of attorney-client privilege and the "fiduciary" exception are raised. He writes:

The Fiduciary Exception to Attorney-Client Privilege

     The attorney-client privilege is one of the oldest and most sacrosanct of privileges recognized by the common law. Under the attorney-client privilege, a client has a right to refuse to disclose confidential communications between attorney and client made for the purpose of obtaining legal advice. The privilege belongs only to the client, and the client is the only person who can waive the privilege. The attorney may not assert the privilege against a client's wishes or against the client himself.

     However, there are several exceptions to the privilege. For example, the United States Supreme Court has held that a privilege may not protect communications made in furtherance of the commission of a crime or fraud (the "crime-fraud" exception). Other courts have recognized a "joint client" or "community of interest" exception, which provides that when one attorney represents the interests of two or more entities on the same matter, those entities are viewed as "joint clients," or as clients in a "community of interest" relationship, and, therefore, communications between one of the clients and the attorney are not privileged with respect to the other client or clients. Other courts have recognized a third limitation on the attorney-client privilege, referred to as the "fiduciary" exception. Under the fiduciary exception to attorney-client privilege, a fiduciary may not prevent a beneficiary from discovering information that is otherwise protected under the attorney-client privilege when that information relates to fiduciary matters, including the administration of trusts.

     . . . .

The Fiduciary Exception in Cases Involving Native American Trusts

     Until December 30, 2009, when the Federal Circuit decided In re United States, 590 F.3d 1305 (Fed. Cir. 2009), no federal court of appeals had ever applied the fiduciary exception to the United States as trustee over tribal assets. However, there had been three federal trial courts that had applied the principle in this context.

     In In re United States, the United States Court of Appeals for the Federal Circuit adopted the fiduciary exception to attorney-client privilege in tribal trust cases. In that case, Jicarilla Apache Nation sued the United States, claiming that the United States breached its fiduciary duties by mismanaging the tribe's trust assets and other funds. In support of its claims, Jicarilla moved to compel discovery of specific documents that the United States claimed were protected by the attorney-client privilege. The trial court held that the United States must allow discovery of the documents because they were subject to the fiduciary exception. The trial court held that the fiduciary exception applies to the "general trust relationship between the United States and the Indian people,' which comprises a distinctive obligation of trust incumbent upon the Government.'" "Congress had enacted legislation appointing the United States as trustee over "56 million acres of land and billions of dollars in tribal assets" and created an Office of Special Trustee "to ensure that each tribe received as complete a trust fund accounting as soon as possible." The trial court recognized that the "U.S. Supreme Court had evaluated the fiduciary relationship using principles of common law and had judged tribal trust cases with the "most exacting fiduciary standards.'"

(citations omitted)

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