For attorneys who practice community association law, there has been ongoing discussion at national HOA/condo legal events about whether a community manager is covered by the attorney-client privilege. In general the attorney-client privilege shields communications between an association and its attorney for materials prepared in anticipation of litigation or trial. Such communications usually lose their privilege if made in the presence of a third party. The concern has been that if legal communications that would otherwise be privileged are between the attorney and manager or if a manger is copied on a legal communication to the association, does that waive the privilege?
Such concerns increased following a December 2015 case from the Fourth District Court of Appeals in Florida. In Las Olas River House Condominium Association v. Lorh, the court ordered further hearings to determine whether the sharing of information with an association manager waived the attorney-client privilege. Some attorneys have even recommended that community managers be excluded from meetings with the association attorney or that the community manager not be copied on e-mails related to litigation.
So what’s the advice in North Carolina? Like many legal issues, the answer depends on a number of facts. Was the communication related to litigation or anticipated litigation? Were others copied on the communication? Was the communication privileged in the first place?
A case from the NC Court of Appeals last month may give additional guidance on the issue. While Berens v. Berens (April 19, 2016) was not a community association case, the Court gave guidance on factors that could lead to a third party, such as a community manager, falling within the attorney-client privilege.
In Berens the Petitioner engaged a friend as an agent to participate in attorney meetings. Opposing counsel argued that the presence of this third party “friend” waived protections of attorney- client privilege and that any communications or materials should be discoverable. Without getting into too many details here (the full case can be read at https://appellate.nccourts.org/opinions/?c=2&pdf=33291), the court ruled that with the right circumstances a party’s agent is also covered by the attorney client privilege. For communications between an attorney and a party to be considered privileged, there must be:
- an attorney-client relationship at the time of the communication
- the communication was made in confidence,
- the communication relates to a matter for which the attorney was professionally consulted,
- the communication was in the course of giving or seeking legal advice.
While the court noted that communications between an attorney and client can be waived if a third party is involved, that is not the case if the third party was an agent for such communications. In Berens the Court took note of the fact that there was written contract between the party and her friend which created an agency relationship and stated that the friend would be involved in legal matters.
What does this mean for community managers in North Carolina? The attorney-client privilege has never meant that all e-mails and correspondence between an attorney and the association and/or its community manager are protected communications. Materials prepared in the ordinary course of business—and have nothing to do with potential litigation—are not protected. However, if a community manager is an agent of the association and a party to communications that relate to litigation, the privilege should remain. If your community manager has a written contact with the association, it may be worth considering the Berens case and what language could help protect the association in the event it is later claimed that a communication with the manager waived the protections of the attorney-client relationship.