Aphelion Insider

On August 14, 2008, Acumen Legal Services filed a comprehensive motion to dismiss the lawsuit brought by Newman, McIntosh & Hennesey, LLP, a Maryland law firm, arguing that the court has neither subject matter nor personal jurisdiction.  NMH v. Bush, Acumen Legal Services (India) Pvt. Ltd., et al., Civ. No. 08-00787 (CKK) (D.D.C., Amended Cmplt. filed May 7, 2008).  As most readers will already know, NMH’s lawsuit claims that alleged, anti-terrorism, governmental interception of communications between the U.S. and any foreign terminus waives confidentiality, privilege, and Fourth Amendment privacy rights that otherwise may have applied to documents or information transmitted to overseas LPOs through the web or other electronic channels.  The memorandum in support of the motion to dismiss catalogues a broad array of serious defects in NMH’s pleading, including lack of standing; no causation, injury in fact, or actual case or controversy; parties in interest not served or named; no factual or legal support for the requested declaratory and injunctive relief; and insufficient contact with D.C. to support long arm jurisdiction.  In light of the length of this list of defects and the fact that NMH did not cure them when it amended its complaint, the motion seeks dismissal with prejudice.  And the motion also makes express what many followers of the case have concluded:  “NMH’s unwarranted focus on foreign competitors suggests that NMH is not genuinely interested in any comprehensive solution to any problem regarding waiver of attorney-client or Fourth Amendment privileges.”   Mem. in Support at 13. 

In late June, I prepared and published on the Aphelion website a white paper criticizing the lawsuit and NMH’s related requests to the Ethics Committees of the Maryland and D.C. Bars for advisory opinions.  That initial white paper focused on procedural and policy issues as a way of emphasizing that NMH’s lawsuit, if successful, would affect not only the LPO industry, but also every law firm with a foreign office and every client with business abroad requiring foreign legal counsel.  Most responses to that white paper contained a general theme: Showing that the requested relief will affect myriad other entities besides LPOs does not prove that the law should not have such effects, whether on LPOs or anyone else.  Accordingly, I have amended the white paper to address the substantive defects of NMH’s waiver claims.  And although the motion to dismiss beat me to the punch by a couple days, its focus on jurisdictional issues rather than failure to state a claim means that the amended white paper still contributes news as part of the ongoing consideration and discussion of the case.  You can download a pdf of the revised white paper, or read a text version below.

Electronic Surveillance and Offshore Legal Communications

August 19, 2008

The D.C. federal trial court and the D.C. and Maryland Bars have been asked whether anti-terrorist interception of communications between the U.S. and foreigners by the government ipso facto extinguishes the legal protection of every such conversation as confidential, privileged, or constitutionally private.  The question is posed by Newman, McIntosh & Hennesey, LLP, a Maryland law firm, in the context of advertising by a legal process outsourcing (LPO) firm to help with legal work using offshore lawyers and other support personnel.  But the lawsuit and requests for ethics opinions will affect the interests of every U.S. law firm with a foreign office and every U.S. business with overseas operations, contracts, or exports.  So the judicial rulings that NMH requests provide unambiguous notice that LPOs are not the only ones who should oppose NMH’s gamesmanship.   

The odd manner in which NMH, the plaintiff law firm, poses the question, along with legal doctrine and public policy, suggest that the tribunals should decline to answer or, if they say anything, to answer “No.”  

NMH alleges that it had to file the lawsuit and ethics requests to obtain “guidance” after receiving a solicitation from an LPO offering to help write briefs, review documents, and do related work at prices well below prevailing U.S. market rates.   NMH v. Bush and Acumen Legal Services, et al., Civ. No. 08-00787 (CKK) (D.D.C., Amended Cmplt. filed May 7, 2008; Motion to Dismiss filed Aug. 14, 2008).  LPOs can charge such low prices because they do much of their work overseas with Indian (or other foreign national) lawyers and support personnel using server and web based technologies.  The problem, according to NMH’s complaint, is that all messages between the U.S. and a foreign terminus are electronically monitored on a key word basis by U.S. and allied governments’ anti-terrorism programs.  NMH claims this surveillance negates any expectation that offshore legal conversations are private or confidential and, therefore, that any Fourth Amendment, privilege, or confidentiality protection is waived for information shared with an LPO.    

NMH’s lawsuit asks the D.C. federal court to issue a declaratory judgment against NMH itself (and against every other U.S. lawyer), an unusual tactic to say the least.  Just as unusually, the firm does not ask the ethics committees for permission to do anything, but rather to forbid D.C. and Maryland lawyers from transmitting client confidences or secrets to foreign nationals overseas.  These tactics are downright suspicious inasmuch as NMH concedes that it already knows the answer to its own question.  “The view of [NMH] is that electronic transmissions to LPOs located overseas would, if made by our litigation adversaries (to whom we have produced documents in the course of civil discovery) effect a waiver of our client’s Fourth Amendment rights and, if made by our law firm, effect a waiver of otherwise attorney-client privileged communications and cause a prohibited disclosure of client secrets and confidences.”    

As to NMH’s own actions, there is no need to seek input from a court or ethical committee.  If NMH truly believes that using an LPO will waive its clients’ privileges, confidentiality, or expectation of privacy, it simply should not use an LPO.  Indeed, that is exactly what NMH has apparently decided do.  So what case or controversy will a judgment decide and what injury will any remedy compensate?  As to the actions of NMH’s opposing counsel, NMH can seek a protective order in any case where it believes opposing counsel’s actions will waive a client’s rights with respect to particular evidence.  Either way, there is no need for an abstract declaratory judgment that would apply to every U.S. lawyer, every client, and all their communications with any foreign national living abroad, including any LPO employee.  There is likewise no need for ethics opinions that would advise every D.C. and Maryland court about the legal status of every communication between a U.S. firm or client and any foreign national, whether or not employed by a LPO firm.   

In fact, because NMH did not use the services offered by the defendant LPO, there are no allegations - nor could there be any — about specific documents, communications, or evidence that actually have been intercepted.   So there is no basis to decide whether any alleged interception resulted in disclosure to any person, let alone someone at NSA or other governmental office.  By the same token, there are no specific facts alleged about any particular interception by which to determine whether such interception would support a finding of waiver and, if so, the scope of permissible evidentiary use as a result of the waiver.  Without facts about specific interception of particular communications, there is likewise no basis to consider or decide whether another protection, such as the work-product doctrine, would nonetheless prevent further disclosure.  So it is not surprising that NMH fails to ask the court to declare anyone’s rights or resolve any particularized case or controversy.  Rather, NMH wants the court to “declare” forthrightly advisory opinions about what all “United States-based attorneys” must do whenever they transmit client data “to foreign nationals residing overseas.”

The firm asks for opinions on the following questions:  “[W]ill the electronic transmission of data to foreign nationals residing overseas waive Fourth Amendment protections with respect to the data transmitted?”   Will U.S. attorneys who transmit that data overseas be obligated to disclose the alleged waiver to, or obtain prior written waivers from, their clients?  Will litigation opponents who receive documents in litigation have to obtain similar waivers before transmitting that material overseas for review?   Similarly, NMH also asks the court to rule on  whether foreign nationals who even offer to provide overseas litigation support to U.S. businesses “must … disclose that any electronic transmission of data to a foreign national will waive Fourth Amendment rights” over the information. 

By their express terms, “declarations” of such advisory opinions would apply to, and adversely and drastically affect, every U.S. law firm with a foreign office and every U.S. business that engages in foreign commerce.  Every time a U.S. firm staffs a transaction, litigation, or arbitration with any employee in a foreign office, they will be transmitting confidential client information to or discussing it with a foreigner abroad.  U.S. businesses routinely hire foreign counsel to enforce their contractual rights and economic interests in the global marketplace.  If NMH is correct, whenever an American lawyer or business provides information to local counsel in a foreign country, the client’s secrets, privileges, and expectation of privacy about the underlying information will be waived - even if that information is necessary to prosecute a claim, recover damages, enforce a judgment, or enter a contract outside the U.S.

These procedural and pleading defects are significant if not insurmountable.  Just as importantly, however, NMH’s lawsuit suffers from doctrinal and policy weaknesses as a matter of substantive privilege law. 

On a fundamental level, the mere fact that a confidential, privileged, or otherwise protected communication has been viewed by or is known to a third party does not in and of itself mean that confidentiality necessarily has been waived or lost.  “Confidential Client Information” is “information relating to representation of a client, other than information that is generally known.”  Restatement Third, The Law Governing Lawyers § 59 (2000) (emphasis added).   By excluding only “generally” known information, the Restatement makes clear that “confidential” information can include communications that have become “known to some others.”  Id., comment d.   Even more to the point, the Restatement commentary provides a corollary, negative definition that information is “not generally known when a person interested in knowing the information could obtain it only by means of special knowledge or substantial difficulty or expense.”  Id.   The major factual premise of NMH’s lawsuit — near total interception of U.S.-foreign communications by the U.S. and its chief allies at an expense of money and resources that is derived from the shared resources of four sovereign governments — is the very definition of substantial expense and difficulty and the use of special knowledge.   NMH’s primary factual allegation is therefore inconsistent with its basic legal claim, namely, that such interception results in a loss of legal confidentiality across the board for communications between the U.S. and a foreign terminus.

Nor does the attorney-client privilege depend on excluding every foreseeable possibility that a communication might be heard by or delivered to a person outside of the protected relationship.  Rather, the privilege requires only that, in light of the circumstances that are “reasonably evident” to the communicators, they “reasonably believed” no outside person would learn the content of their discussion.  Rest. 3d § 71, comment c.   So, for example, “the presence of a surreptitious eavesdropper does not destroy confidentiality.”  Id.  For many communications, the interception alleged by NMH will not be known to the communicators (and, as discussed below, almost certainly not be known to apply to their particular conversation), rendering the interception surreptitious and their communication protectable by the privilege so long as it otherwise demonstrates an intention to maintain its secrecy.

For purposes of privilege, the intent of maintaining confidentiality must be analyzed practically, particularly where “exigent circumstances may require communications under conditions where ordinary precautions for confidentiality are impossible,” in which case the communicators need take only “reasonable precautions in the circumstances.”  Id. & Reporter’s Note.   The privilege will still apply “when the need for client-lawyer communications reasonably precludes more private arrangements.”  Id.  While arguments continue whether broad, warrantless governmental interception of the sort alleged by NMH is legal or constitutional or even right, it is undeniably another layer of exigent circumstance arising out of exigent circumstances.  In such situations, even when the communicators know they may be audited, case law and commentary have accounted for such circumstances and protected conversations within them.   Rest. 3d § 69, comment c & Reporter’s Note & § 71, comment c & Reporter’s Note. 

Even without exigent circumstances, interception alone, particularly mere mechanical interception and sorting, is insufficient to find a waiver or cause the loss of protections under the privilege.  “Waiver results only when a nonprivileged person learns the substance of a privileged communication.”  Rest. 3d. § 79, comment e & Report’s Note.  For instance, passing through airport security while carrying privileged documents can always be the vehicle by which a third party can acquire their contents, as might be the use of a third party vendor to duplicate or a messenger service to deliver such materials.  But none of these situations is considered a reason to waive the documents’ protections because such inspections, without more, do not rise to the level of yielding the substance of the inspected communications.  Similarly, press reports quoting government and NSA sources suggest that the volume of communications subject to interception would require an overwhelming human effort to sort, translate them into readable material, and prioritize them usefully.  According to the Baltimore Sun, “an estimated 95 percent of the information gathered is discarded without being translated into an understandable form.”   Among the papers NMH submitted to the ethics committees of Maryland and D.C. is a law journal Comment asserting that if interception-network machines do not find key words within intercepted communications, those messages are deleted from the system and are no longer examined by either machines or persons; that the majority of communications are discarded without ever being seen by humans; and that only a small percentage of communications get analyzed by NSA. 

The legal and constitutional questions about the alleged interception are also relevant to whether the privilege is lost or waived.  Unlawful intrusion into a privileged relationship is routinely held not to waive the protection of embodying communications.   Many argue that the warrantless governmental interception is unlawful, not only under the constitution, but also under the statute whereby NSA was created.  That law is “the exclusive means by which electronic surveillance …. and the interception of domestic wire, oral, and electronic communications may be conducted.”   18 U.S.C. § 2511.   To the extent that communications with both a domestic and foreign participant are considered “domestic” communications, that statute would preclude the interception of such communications pursuant to the executive orders purporting to authorize the warrantless interceptions upon which the NMH bases its lawsuit.  In that case, the same statute, like many other statutes authorizing surveillance for police or security purposes, expressly protects the privileged character of intercepted communications.  18 U.S.C. § 2517(4) (”No otherwise privileged wire, oral, or electronic communication intercepted in accordance with, or in violation of, the provisions of [Chapter 119. Wire and Electronic Communications Interception and Interception of Oral Communications] shall lose its privileged character.”).   Whether the alleged interceptions are unlawful or conducted pursuant to the statute, in either case, the privileged nature of captured communications is preserved.

Given these procedural, pleading, and substantive faults, an astonishing change in law and public policy would be needed to justify the judicial and ethical opinions that NMH wants to be applied in the abstract to every U.S. lawyer and client and to every communication between or about them that includes a foreign national outside the U.S.  As a more practical matter, however, reasonable public policy should take account of the fact that the money at stake in LPO and offshore legal services is dwarfed by the value of global commerce involving U.S. businesses and their lawyers who must communicate with foreign nationals abroad about confidential information necessary to protect their legal and commercial interests.  Indeed, if NMH succeeds in its gambit, the biggest losers will not be the LPOs.