Article on the Fiduciary Exception to the Attorney-Client Privilege

David L.J.M. Skidmore & Laura E. Morris (Warner Norcross& Judd LLP) recently published an article entitled, Whose Privilege Is It, Anyway? –The Fiduciary Exception to the Attorney-Client Privilege, 27 Prob. &Prop. 21 (September/October 2013). Provided below is the beginning of their introduction:

Imagine that a legal dispute has arisen between a trusteeand a trust beneficiary regarding trust administration.  The beneficiary claims the trustee hasbreached its fiduciary duties by certain actions and omissions.  In discovery, the beneficiary questions whythe fiduciary did what it did.  The fiduciaryrefuses to provide this discovery, citing the attorney-client privilege.

Will the fiduciary’s assertion of privilege be upheld by thecourt?  It depends on whether thejurisdiction recognizes the fiduciary exception to the attorney-client privilege.  In general, the fiduciary exception providesthat a fiduciary cannot shield communications with an attorney from the beneficiarieswhen the legal services were related to administration (rather than defendingthe fiduciary against charges of misconduct) and the legal services were paidfor with assets of the fiduciary entity. This article will consider the origins of the fiduciary exception, thereasons for and against recognizing the exception, and the current status ofthe exception in federal and state jurisdictions.