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Road to Reform

April 2013

By: James C. Milton

Lawyers, legislators, and business interests are joining forces on a much-needed update to the Oklahoma statute on attorney-client privilege.

Oklahoma law limits attorney-client privilege when applied to corporate entities. The privilege applies only to the corporation's so-called control group. It protects attorney communications only with the officers and agents responsible for directing corporate action in response to legal action.

The control group is too limiting. Imagine a charitable foundation with a governing board and an executive director. The executive director may lack the authority to direct corporate action without board approval. It's unclear if the executive director belongs to the control group. The attorney providing legal advice may be concerned about whether the privilege covers communications with the executive director, even though that official is in the best position to communicate with legal counsel.

More than 30 years ago, the U.S. Supreme Court rejected the control group test. It said the attorney-client privilege "exists to protect not only the giving of professional advice to those who can act on it, but also the giving of information to the lawyer to enable him to give sound and informed advice." As a substitute, the U.S. Supreme Court adopted the Upjohn rule, which extends the privilege to any corporate employee whose job responsibilities include speaking with the entity's attorneys.

By 1997, 14 states had adopted the Upjohn rule. More have followed. In 1998, Texas adopted the Upjohn rule as part of the Texas Evidence Code.

With this legislation, Oklahoma will join the ranks of states adopting the reform, recognizing that corporate entities make and execute decisions with a wide variety of corporate employees.

This proposal began in the Oklahoma Bar Association Civil Procedure and Evidence Code Committee. With representatives from plaintiffs' and defense bar, commercial lawyers, the judiciary, and academics, the committee avoids politically controversial proposals. The committee approved the proposal in late 2012, followed by approval from the OBA Board of Governors and House of Delegates.

The proposal started this legislative term as House Bill 1086, and was unanimously approved by the House in February. This month, the proposal found a new home as a committee amendment to Senate Bill 951. On April 22, the proposal was again unanimously approved by the House. The proposal should continue its course throught the Legislature, with near univeral support.