Here is a horrible but true story:

The company's general counsel, who also has the title of vice president of business affairs, is meeting with members of the company's acquisition team.

They use the speakerphone to call the in-house counsel for the target company. No answer. The General Counsel leaves a voicemail message, hits the button to end the call, and returns to discussing confidential matters with the rest of the company's team -- specifically, and damningly, whether company employees have stolen trade secrets from the target company.

One problem: The telephone line was not disconnected, and the group's conversation was recorded by the other party's voicemail.

Bigger problem: The California Court of Appeal holds that the recorded conversation represents an “uncoerced disclosure” of information, for which the attorney-client privilege was waived.

The case is Jasmine Networks, Inc. v. Marvell Semiconductor, Inc., decided April 8, 2004 (117 Cal. App. 4th 794).

It represents a cautionary tale for corporate counsel and corporate clients.

 Normally, in-house counsel would be considered to have the same ability to claim attorney-client privilege as outside counsel. Doctrines associated with the privilege, such as the client's control of the privilege and the doctrine that an inadvertent disclosure by the attorney does not represent a waiver of the privilege absent the client's intent to waive, normally would also be considered to apply

 In Jasmine, however, the Court held that the attorney was also the client, capable of waiving the attorney-client privilege:

The opinion has generated great consternation among the Association of Corporate Counsel, the in-house bar association. They have written to the California Supreme court as amicus curiae to support the petition for Supreme Court review of the case.

They note that many general counsel hold the title “vice president” and are therefore potentially to be considered corporate “officers,” but it would be inaccurate to presume that holding a corporate office, by itself, means that an attorney is acting in a business decision making capacity for the company rather than as the client's counsel.

Potentially, the Court's decision could put in-house counsel at a disadvantage compared to outside brethren, in terms of protection of privilege rights, since they would be at greater risk of having an inadvertent disclosure ruled a waiver.

As we all know, general rules that grow out of peculiar and difficult fact situations can be difficult to follow. A speakerphone conversation that somehow becomes recorded on voicemail is a one in a million chance occurrence. It is also an event that, once an attorney hears of it, will cause the attorney to take the extra second to ensure that the line is truly cleared.

But other, more likely, slips could just as easily occur. Many attorneys and non-attorneys have received an email addressed to a number of parties and, after formulating a response intended for only one of the recipients, hit a “Reply to All” key that sent the message to unintended recipients.

Regardless of how the courts ultimately settle the rules on inadvertent disclosures, the first rule for attorneys, in-house or outside, is to watch out for all digital communications such as voicemails and emails: they are easily duplicated and they can live forever.

Bruce Dravis is a partner at Downey Brand LLP operating primarily in the firm's Sacramento and Roseville offices, specializing in corporate, securities and business law. His column appears in The Daily Journal on the third Monday of each month.