In the 2021 case of Holley v. Gilead Sciences, Inc., the United States District Court for the Northern District of California was confronted with a claim of waiver of the attorney-client privilege when a lawyer’s communications to the client landed in a business document. After overcoming a hurdle of federal–state choice-of-privilege laws, the Court addressed the issue of whether legal-advice communication remains privileged if ultimately embedded in a business-related document.
In Holley, a putative class claimed that Gilead Sciences, Inc. timed its development of a HIV drug to avoid losses when the patent on an existing drug expired. Gilead produced documents authored by its Development Committee, which consisted of non-lawyer types such as toxicologists. In-house Gilead IP lawyers were assigned to the project and the at-issue documents contained these lawyers’ legal advice regarding patent expiration and exclusivity periods. Gilead redacted the legal-advice portions of these business documents, and the class plaintiffs moved to compel their disclosure.
The court had to determine whether the attorney–client privilege protected lawyer’s advice that appears in business documents shared with non-lawyers.
Ordinarily, disclosure of privilege communications to third persons is a waiver of the privilege. California’s privilege statute, however, states that a party does not waive the privilege if it is disclosed to third persons to whom disclosure is reasonably necessary to further the purpose of the legal advice.
The communication still must pertain to legal advice because the privilege does not cover a lawyer’s business-related communications. However, if the communications primarily contain legal advice, then the lawyer may share them with non-lawyer business persons to facilitate the implementation of that advice.
The court found that waiver of the privileged communications was because the redacted information was shared to assist with Gilead making a business decision rather than for legal purposes was not a persuasive argument.
The court ruled that the Gilead lawyers did not waive the privilege because of the Development Committee’s inclusion of the lawyer’s advice in its documents. However, the court further held the lawyer still had to prove that the at-issue communications, in fact, included legal advice regarding Gilead’s patent expirations and exclusivity periods.
The court advised that “the first relevant inquiry is whether the document contains a discussion of legal advice or strategy of counsel.”
Gilead won some of its privilege arguments and lost some. The point taken in this ruling is the meticulous detail with which the court analyzed each document and the legal-advice subparts in each parsing the documents sentence by sentence.
The point of the decision in Holley is that a lawyer does not waive a legal-advice communication because a business person includes that advice in a business-strategy document. But the in-house lawyer must always prove the legal-advice component down to the most minute detail. Thus, before an attorneys’ advice is embedded in communications to be given to third parties it is imperative that you go over the communications with your attorneys to analyze each document to assure attorney-client privileged communications are not inadvertently disclosed in such communications.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
