On December 19, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in Barry v. Clermont York Associates, LLC, 2014 NY Slip Op. 33335(U), holding that a client’s communications with an accountant regarding a lawsuit were not privileged.
in Barry, the court reviewed a referee’s report regarding disputed privilege claims. One issue the court addressed was whether communications between the plaintiff and an accountant were privileged. The court explained:
The attorney-client privilege shields confidential communications between an attorney and his client, made during the course of a professional relationship for the purpose of facilitating the rendition of legal services. The party asserting the privilege has the burden of proving each element of the privilege and that it has not been waived. Typically, the presence of a third-party destroys the privilege because confidentiality is lacking. However, where counsel needs assistance from other experts, the privilege extends to such third parties, hired as an agent of the attorney or client to facilitate the rendition of legal services. A party asserting a privilege based upon the Kovel exception has the burden of proving each element of the privilege and must produce contemporaneous proof of a Kovel agreement, such as a separate retention agreement or separate billing.
Accounting concepts can be highly complex — analogous to that of a foreign language for many attorneys. The presence of an accountant, whether hired by the lawyer or the client, is often necessary or at least highly useful for the effective consultation between attorney and client. However, if the advice sought is the accountant’s rather than the lawyer’s, the privilege does not apply. Consequently, if a client communicates first with his accountant and later consults his attorney on the same matter, there is no privilege.
Applying these principles to the case at bar, the privilege protects only documents containing [the accountant’s] communications from October 16, 2008 through June 10, 2010, when plaintiff was represented by [the counsel who engaged the accountant]. There is no contemporaneous proof of a Kovel agreement for communications with [the accountant] after June 10, 2010. Therefore, communications with [the accountant] following O’Shea’s termination fall outside the scope of privilege and must be disclosed.
(Internal quotations and citations omitted). The lesson here is clear. Litigation consultants should be hired by counsel and that engagement should be memorialized in a written engagement letter.