United States federal common law does recognize the attorney-client privilege.  It is “the oldest of the privileges for confidential communications known to the common law.”  Upjohn Co. v. United States, 449 U.S. 383, 389 (1981). The purpose of the attorney-client privilege is to encourage full and frank communication between attorneys and their clients to enable attorneys to provide fully informed legal advice.  Fisher v. United States, 425 U.S. 391, 403 (1976).  The privilege is not codified by statute at the federal level.  A common articulation is that the privilege protects: (1) a communication, (2) made between privileged persons (i.e., attorney, client or agent), (3) which is made in confidence and kept in confidence, (4) for the purpose of obtaining or providing legal assistance for the client.  See, e.g., RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 68. Once established, and not waived or subject to an exception, the attorney-client privilege is absolute and continues after the termination of the attorney-client relationship and even the death of an individual client. See, e.g., Swidler & Berlin v. United States, 524 U.S. 399, 405-06 (1998).  The attorney-client privilege protects communications, but it does not permit a party to resist disclosure of the facts underlying those communications.  Upjohn, 449 U.S. at 395-96.  

In the United States, the law regarding the attorney-client privilege is substantive rather than procedural.  In proceedings in federal court, Rule 501 of the Federal Rules of Evidence governs whether state or federal substantive law will be applied.  In federal proceedings that are based solely on diversity jurisdiction, privilege claims are analyzed based on state attorney-client privilege law.  When jurisdiction is based on a federal question, privilege claims are governed by federal common law, at least as to federal claims, even if the challenged testimony is relevant to a pendent state claim.  

A detailed discussion of the attorney-client privilege and the work product doctrine can be found in DAVID M. GREENWALD AND MICHELE L. SLACHETKA, Protecting Confidential Legal Information: A Handbook for Analyzing Issues Under the Attorney-Client Privilege and the Work Product Doctrine (Jenner & Block 2019), available at https://jenner.com/resource_centers/8.  
 

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The attorney-client privilege applies in both civil and criminal proceedings.  Indeed, issues relating to privilege are often litigated in the context of federal grand jury and other criminal proceedings.

Under federal common law, in the corporate context, the test for determining who qualifies as the client for the purposes of the attorney-client privilege is established by the U.S. Supreme Court’s decision in Upjohn v. United States, 449 U.S. 383 (1981), and subsequent decisions interpreting Upjohn.  In Upjohn, the Court rejected the narrow “control group” test, and set forth five factors to guide courts in determining the validity of attorney-client privilege claims for communications between legal counsel and lower-echelon corporate employees on a case-by-case basis.   In Upjohn, communications between lower-level employees and company counsel were privileged where:  (1) the communications were made to enable counsel to provide legal advice to the company; (2) the communications were made at the direction of corporate superiors; (3) the employees were aware that the communications were intended to assist the company in obtaining legal advice; (4) the communications concerned matters within the scope of the employee’s corporate duties and the information needed was not available from upper-echelon management; and (5) the employees were informed that the communications were considered highly confidential, and they were kept confidential.  Upjohn, 449 U.S. at 394-95. Some courts have applied the principles of Upjohn to non-employees who are acting as the functional equivalent of employees.  The leading case on this approach is In re Bieter Co., 16 F.3d 929 (8th Cir. 1994).

Theoretically, for the purpose of asserting the attorney-client privilege, the determination of who is the attorney is straightforward, and the privilege treats in-house counsel and outside counsel equally.  See, e.g., United States v. United Shoe Machinery Corp., 89 F. Supp. 357 (D. Mass. 1950).  However, some courts have made it clear that they do treat in-house counsel differently when assessing assertions of privilege.  These courts explain that, because in-house counsel often plays both legal and business roles in the corporation, the courts will apply heightened scrutiny in determining whether the elements necessary for privilege have been established, requiring in-house counsel to make a “clear showing” that withheld communications were made for a legal purpose.  See, e.g., In re Vioxx Prod. Liab. Litig., 501 F. Supp. 2d 789, 797 (E.D. La. 2007).  Simply copying in-house counsel on a company email will not protect a communication that is not legal in nature.    

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The common interest doctrine is recognized under federal common law.    

The common interest doctrine is not an independent basis for privilege, but an exception to the general rule that the attorney-client privilege is waived when privileged information is shared with a third party.  The common interest doctrine applies where: (1) communications are made by a party or a party’s lawyer to a lawyer representing another party; (2) regarding a matter of common interest; (3) for the purpose of furthering a common legal rather than business strategy; (4) where the communications were intended to be confidential; and (5) where the privilege has not been waived.  See, e.g., United States v. BDO Seidman, LLP, 492 F.3d 806, 815-16 (7th Cir. 2007); RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 76.  Although the Restatement does not require participation of an attorney to apply the common interest doctrine, many courts will not apply the doctrine in the absence of an attorney.  Compare Haines v. Liggett Grp., Inc., 975 F.2d 81, 90 (3d Cir. 1992) (doctrine allows clients facing a common litigation opponent to exchange privileged communications); with The Regents of the Univ. of Cal. v. Affymetrix, Inc., 326 F.R.D. 275, 281 (S.D. Cal. 2018) (doctrine does not apply unless each party to a common interest arrangement is represented by counsel).  Although some courts do not require parties to possess entirely congruent interests, other courts require parties asserting a common interest privilege to share identical legal interests.  Under federal common law, the common interest doctrine is not limited to cases where the shared information relates to pending or anticipated litigation.  

Although a written common interest agreement is not generally required, documenting the arrangement increases the parties’ ability to meet their burden to demonstrate that they were acting jointly at the time they communicated with each other.  

Litigation funding is not prohibited under federal law. Indeed, the use of outside capital in the legal industry is increasingly widespread in the United States. Burford Capital recently reported that the use of litigation finance increased at least 237% between 2013 and 2018.  

A party seeking financing must provide diligence materials to a potential funder in order to convince the funder that the litigation merits an investment. An important question is whether communications between a party to litigation and a litigation funder are protected by either the attorney-client privilege and/or the work product doctrine.

Attorney-Client Privilege: The general rule is that the attorney-client privilege is waived when privileged information is shared with a third party.  As a litigation funder is a third party, privilege will be maintained only if the common interest doctrine applies. Federal courts are split on whether the common interest doctrine applies in this context.  Some courts apply the exception on the basis that a litigation funder shares a common legal interest with the litigation party.  Other courts refuse to apply the exception on the basis that, although funders may share common business interests with the litigation party, they do not share common legal interests.  Due to the risk of waiver of the attorney-client privilege, many litigation funders are careful not to request or to review attorney-client privileged materials.

Work Product Doctrine:  A majority of federal courts apply the work product protection to litigation funding agreements, and find that disclosure of work product protected materials to a litigation funder does not waive the protection. In federal courts, the work product doctrine protects materials prepared in anticipation of litigation or for trial.  By their nature, communications between litigation parties and litigation funders satisfy this test, and the majority of courts apply the work product protection to these communications. In addition, given that work product protection is only waived by disclosure to a third party when the disclosure “substantially increases the opportunities for potential adversaries to obtain the information,” most courts have held that work product protection is not waived when litigation funding documents are shared with third party funders because there is an expectation of confidentiality between the parties.  

Under federal common law, the crime-fraud exception is an exception to both the attorney-client privilege and the work product protection.  

Attorney-Client Privilege:  The attorney-client privilege does not apply when a client consults a lawyer for the purpose of furthering an ongoing or future crime or fraud.  See, e.g., United States v. Zolin, 491 U.S. 554, 563 (1989).  The crime-fraud exception does not apply to communications concerning crimes or frauds that occurred in the past.  Zolin, 491 U.S. at 562.  In cases where the communications at issue were made for the purpose of covering up past misconduct or obstructing justice, however, the privilege may be waived because these activities constitute a continuing offense.  The crime-fraud exception may apply even where the lawyer is unaware of the client’s intent to use the lawyer to further a crime or fraud.  See, e.g., In re Grand Jury Subpoena v. United States, 870 F.3d 312, 319-20 (4th Cir. 2017).  Where a court finds that the crime-fraud exception applies, the court will apply waiver only to communications that were made in furtherance of the crime or fraud, and not to communications that merely relate to the crime or fraud.  See, e.g., United States v. White, 887 F.2d 267, 271 (D.C. Cir. 1989).

Work Product Protection:  Like the attorney-client privilege, the work product doctrine does not apply where a client has consulted a lawyer for the purpose of furthering an ongoing or future crime or fraud.  See, e.g., In re Grand Jury Proceedings, 102 F.3d 748, 752 (4th Cir. 1996); RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 93.  The crime-fraud exception to the work product doctrine is limited to work product created to further the crime or fraud.  See, e.g., In re Grand Jury Matter #3, 847 F.3d 157, 166 (3d Cir. 2017).  
 

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The work product doctrine is procedural rather than substantive law.  As a result, in federal court, the work product protection is established by the Federal Rules of Civil Procedure and by federal common law.  The work product doctrine was established in Hickman v. Taylor, 329 U.S. 495 (1947).  The doctrine has been codified regarding documents and tangible things by Rule 26(b)(3) of the Federal Rules of Civil Procedure. For intangible work product, such as oral communications relating to litigation, the doctrine is defined by Hickman and its progeny.
 
Rule 26(b)(3)(A-B) provides:

(3) Trial Preparation: Materials.

(A) Documents and Tangible Things. Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). But, subject to Rule 26(b)(4), those materials may be discovered if:

(i) they are otherwise discoverable under Rule 26(b)(1), and
(ii) the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means.

(B) Protection Against Disclosure.  If the court orders discovery of those materials, it must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation.

The work product doctrine is in some respects both broader and narrower than the attorney-client privilege.  The work product doctrine is broader than the attorney-client privilege in that it protects a wider array of information than just communications between client and attorney.  The doctrine is narrower because, unlike the attorney-client privilege which is absolute if not waived, the work product doctrine is a qualified immunity that allows for discovery where a party seeking access establishes adequate reasons.

The doctrine divides work product into two general types:  opinion work product (sometimes referred to as “core” work product) and ordinary work product (sometimes referred to as “fact” work product).  Opinion work product is material that contains “mental impressions, conclusions, opinions, or legal theories of a party’s attorney or other representative concerning the litigation.”  Opinion work product is provided heightened protection and is discoverable, if at all, only upon a showing of extraordinary need.  See, e.g., Upjohn Co. v. United States, 449 U.S. 383, 401 (1981).  Some courts afford opinion work product “nearly absolute immunity.”  See, e.g., In re Grand Jury Proceedings, G.S, F.S., 609 F.3d 909, 916 (8th Cir. 1977).  

Ordinary work product is work product that is not opinion work product.  A party seeking the production of ordinary work product bears the burden of showing that “substantial need” and “undue hardship” warrant discovery of the work product. To prove need and hardship, courts require a party seeking production to show why the desired materials are relevant and that prejudice will result from the non-disclosure of those materials.

Just as the attorney-client privilege protects communications, but not underlying facts, the work product doctrine protects actual documents and things prepared by a party or a party’s representative, not the underlying facts reflected in the work product.
 

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In Couch v. United States, 409 U.S. 322, 335 (1973), the U.S. Supreme Court held that “no confidential accountant-client privilege exists under federal law, and no state-created privilege has been recognized in federal cases.”  As a result, in federal court proceedings in which federal common law applies, that is, matters arising under federal question jurisdiction, there is no accountant-client privilege. However, many states have enacted statutes that provide for an accountant-client privilege.  In federal proceedings grounded on diversity jurisdiction, applicable state law may recognize the accountant-client privilege.

Note: Since 1998, a federal statute has established a limited privilege for accountant-client communications for “federally-authorized tax practitioner[s]” providing “tax advice.”  See 26 U.S.C.A. § 7525.  The statute protects communications between a taxpayer and a federally-authorized tax practitioner to the extent the communications would be considered privileged if they were between a taxpayer and an attorney.
 

Many states have statutes that prohibit discovery of information exchanged during mediation.  Local federal court rules may also impose these prohibitions.  The Alternative Dispute Resolution Act of 1998 requires each U.S. district court to adopt at least one alternative dispute resolution process and requires that the district courts adopt local rules that prohibit the disclosure of communications exchanged during the court-sponsored dispute resolution.  28 U.S.C.A. § 652(a), (d). Where ADR is court-sponsored, the court may issue a protective order specifying the rules that will govern confidentiality.  A party seeking disclosure of confidential mediation communications governed by a protective order must demonstrate: (1) a special need for confidential material, (2) resulting unfairness from a lack or discovery, and (3) that the need for the evidence outweighs the interest in maintaining confidentiality. See, e.g., In re Teligent, Inc., 640 F.3d 53, 58 (2d Cir. 2011).  Where a mediation is conducted without court involvement, the question is whether there is a common law mediation privilege.  The courts that have addressed the question are split.  Compare Acqis, LLC v. EMC Corp., 109 F.Supp.3d 352 (D. Mass. 2015) (applying the mediation privilege and collecting case law); with Rocky Aspen Mgt. 204 LLC v. Hanford Holdings LLC, 394 F.Supp.3d 461, 464-65 (S.D.N.Y. 2019) (the heightened test articulated in In re Teligent does not apply to discussions between parties without court involvement).  Even where a court recognizes a common law privilege, the precise scope of the privilege is not clear.

Pursuant to Federal Rule of Evidence 408, evidence of conduct or statements made during settlement negotiations is not admissible as evidence.  However, the rule affects admissibility, not discoverability.  The privilege for settlement negotiations goes further and precludes even discovery of statements made in the context of settlement negotiations.  Most courts that have considered the issue have refused to recognize a settlement negotiation privilege.  See, e.g., In re MSTG Inc., 675 F.3d 1337, 1342-48 (Fed. Cir. 2012).  The Sixth Circuit Court of Appeals and some district courts have recognized the privilege.  See Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976 (6th Cir. 2003).  Many courts that reject the settlement negotiation privilege do, however, impose a particularized showing of need in order to obtain discovery of information exchanged during settlement negotiations.