Does NY Privilege Law Allow for Accountant/Client Confidentiality?
In Executive Management Services, Inc. et. al. v. Fifth Third Bank, Case No. 13-00582 (S.D. Ind., August 12, 2015), Defendant filed a Motion to Compel documents requested from third parties – Plaintiffs’ accountant and attorneys. The accounting firm and the law firm both claimed the documents and data were protected under privilege law. The accounting firm produced thousands of electronic files, and the law firm redacted responses but it did not file a privilege log. Defendant sought an order compelling the files and also requested the right to seek ESI searches of the accounting firm’s files in the future, as it agreed to limit the scope of its requests.
With regard to the accounting files, the court ordered the accounting firm to produce Plaintiffs’ records, as it applied New York privilege law, which does not maintain accountant/client privilege. However, the court denied Defendant’s request for future ESI searches without prejudice. The accounting firm asserted Defendant had not yet identified any search terms or document custodians, and the court found that Defendant’s request was not yet ripe.
The court then found that the privilege documents requested from the law firm were not “critical” to Defendant’s defense of the case and that Plaintiffs had not waived the attorney/client privilege, thus denying the Motion with regard to those records. Further, the court found that although the law firm failed to comply with the privilege log requirement, it did not do so in bad faith, and thus did not waive the privilege. However, the court did order that the law firm must produce a privilege log.
When asserting a privilege, a party must be sure to identify with specificity the privilege being asserted and how that document falls under the privilege. When objecting on the basis of privilege, parties should always produce a privilege log and make certain it is thorough and descriptive. Failure to do so could result in a waiver of the privilege.