Privilege Protections for Accountants

Publication Source: New York Law Journal

While there is no New York statutory privilege that protects from disclosure communications between accountants and their clients, there are circumstances under which accountants will be encompassed within the attorney-client privilege and/or work product protection. Counsel who wish to shield communications to, from or involving accountants should, therefore, carefully consider the applicability of both the attorney-client privilege and work product protection before, during and after the communications occur. A recent decision of the Nassau County Supreme Court, Commercial Division, provides useful guidance in determining the circumstances under which the attorney-client privilege may protect communications with accountants as well as differentiating between the attorney-client privilege and the work product doctrine as applied to accountants.

In Delta Financial Corp. v. Morrison, 2006 WL 2085469 (N.Y. Supp. July 26, 2006), Justice Ira B. Warshawsky was asked to decide whether communications involving a company's accountant were cloaked by the attorney-client privilege. In Delta, the corporate plaintiff sought to withhold from disclosure numerous e-mails and corresponding attachments between and among plaintiff's general counsel and senior vice president, its executive vice president and chief financial officer, its outside counsel, and its accountants. Defendants claimed that plaintiff was not permitted to withhold the communications under the attorney-client privilege because disclosing them to plaintiff's accountants constituted a waiver of the privilege. Plaintiff, on the other hand, argued that the privilege was not waived because the accountants were providing assistance to plaintiff's counsel in its rendering legal advice to plaintiff.

Justice Warshawsky first noted that the CPLR establishes three categories of protected materials -- 'privileged matter, which is afforded absolute immunity from discovery, CPLR 3101(b); attorneys' work product, which is also afforded absolute immunity, CPLR 3101(c); and trial preparation material, which is subject to disclosure only on a showing of substantial need and undue hardship in obtaining the substantial equivalent of materials by other means [CPLR 3101(d)(2)].'

The court then focused exclusively on the attorney-client communication privilege in determining the question before it.

Read the full article in the attached PDF.

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Kevin Schlosser is a Shareholder at Meyer, Suozzi, English & Klein, P.C., where he is Chair of the Litigation and Alternative Dispute Resolution Department which has a full roster of available private judges from virtually all disciplines of law. Mr. Schlosser also authors the popular blog, “New York Fraud Claims,” which analyzes the latest developments concerning civil fraud claims under New York law.

Reprinted with permission by the New York Law Journal.