By Jeremy Vermilyea

All businesses want to save money.  And they don’t want to spend money on lawyers if they don’t have to.  But using your advisors is about more than the bill.  There are a number of protections that come with making the call to your attorney.  Those protections can turn out to be very important if a dispute gets bigger, or goes farther than the business originally anticipates.  Here is a case in point:

A contractor’s sub has a jobsite accident that results in damage to a third party.  The third party files an administrative claim with the state agency that oversees such matters.  The claim leads to an investigation by the state agency.  The agency issues a citation to the prime contractor.

Stop.  Call your attorney.

In our story, the contractor does not call the attorney, because the contractor’s principal is certain the accident was not the contractor’s fault and therefore there can be no liability, so an Administrative Law Judge (“ALJ”) is sure to overturn the citation.  So the contractor decides to appeal – on its own – the citation by the agency.  The principal undertakes an internal investigation, soliciting e-mails and other documents from the contractor’s employees as well as other external persons who may have knowledge about the accident.  The principal conducts extensive research, takes voluminous notes, lays out a strategy for the conduct of the hearing on the citation, argues the matter to an ALJ, and loses.

The fact of losing the hearing is not that notable or unusual.  Every case or claim has a winner and loser, and the outcome may not have been any different if an attorney had gotten involved at the beginning. 

But the ALJ’s decision is not the end of our story, because the third party, who has received an award from the agency, has determined that the award is not sufficient to cover the damage she suffered.  So the person sues the prime contractor and other subcontractors in court for the difference between what the person believes are her true damages and the amount that she was awarded by the state agency.  Then, she demands copies of all the contractor’s records relating to the accident, including all notes, e-mails, diagrams, photos, post-its, and any other scintilla of information or data in the contractor’s possession relating to the work or the accident.

Remember all the strategizing the principal did?  And all the questions he asked of his employees?  And the answers those employees gave – some of which were very damaging to the contractor’s position?  All of that information is discoverable, meaning it must be turned over to the other side.

“Why?” you may be asking.  The answer is because the contractor did not engage its attorney at the beginning of the investigation, or at the latest when the contractor received the notice of the citation from the agency.  Had the attorney been engaged in the investigation, the interviews of company employees, the internal document gathering, and the development of the strategy for the initial agency-level hearing, much of the information sought by the other party in the lawsuit would be protected by either the attorney-client privilege or the attorney work-product doctrine.

The attorney-client privilege is a legal concept that protects certain communications between a client and his or her attorney and keeps those communications confidential.  That means that anything said to the attorney by the contractor, its principal or employees is generally confidential and cannot be discovered by the other side unless the privilege is waived.

The attorney work-product doctrine is similar to, but broader than, the attorney-client privilege.  The work-product doctrine protects materials that are prepared in anticipation of litigation.  So, internal communications that are in response to questions or requests from the attorney in the above scenario are likely protected from discovery.  The “bad news” responses from the contractor’s employees are likely protected (although if the employees are deposed they must give accurate answers – the information or impression itself is not protected, only the communication about it to the attorney or at the attorney’s direction).  The “road-map” to the hearing that the contractor prepared?  Also protected by the work-product doctrine (assuming the contractor prepared such a document if he’d hired counsel), so long as it is prepared at the direction of the attorney.

So, the moral of the story is that what may appear at the outset to be a cost-effective way to approach a dispute could turn out to be disastrous strategy costing a great deal more in terms of potential damages than what the attorney’s fees might add up to.  The point is not to suggest that you, the client, should not investigate and do everything you can to get at the truth of the matter.  The point is to avail yourself of the protections the law provides so that you can get at that truth more fully and without handing the keys to the company to the other side.

There is an old adage in the law:  “The attorney who represents himself has a fool for a client.”  The same can be said of the contractor who represents himself.  Contractors are very good at building things and at managing business risk.  Lawyers (or at least most of us) are lousy at building things.  Lawyers hire contractors to do remodels or build new homes for a reason – we trust that work to the experts.  It is a wise contractor who understands that the reason he has a relationship with his attorney is to enable him to entrust his legal problems to someone better suited to addressing those problems and managing legal processes than is the contractor himself.