No matter where your community is located, how big your community is, or what type of community you live in (condominium, townhome, single family, etc.), legal issues, and the need for legal advice, arise.  Consequently, the board of directors should be aware of the attorney-client privilege and the protection it provides to associations regarding nondisclosure of certain communications.  However, like with most things in life, there are certain exceptions to the attorney-client privilege rule.  This article will explain the basis of the attorney-client privilege, which communications are covered under the privilege, who is covered under the privilege, and how the privilege is waived.

What is the attorney-client privilege?

The attorney-client privilege is an important part of an attorney-client relationship and encourages full and frank communications between an attorney and his or her clients.  The attorney-client privilege covers communication (oral or written) between privileged persons (an attorney and his or her client) made in confidence (the communicating person reasonably believes that the communication will not be shared with nonprivileged persons) for the purpose of obtaining or providing legal advice or assistance regarding the client’s rights and obligations.

In the context of associations, an attorney-client communication is a confidential communication between the association’s legal counsel and the board or, sometimes, the board’s representatives.  It should be noted that an association’s attorney represents only the corporate entity—not the individual board members, not the board as a whole, not the community manager, not the association’s management company, and not the individual homeowners.  Thus, communications between an association’s attorney and an owner who is not also a board member would not constitute attorney-client privileged communication.

What communications are covered under the attorney-client privilege?

Not all communications are covered by the attorney-client privilege.  Communications with an attorney involving general business advice or utilizing the attorney’s services in any nonlegal role generally do not qualify as attorney-client communications.  The attorney-client privilege extends only to confidential communications between the client and attorney in the course of gaining counsel, advice, or direction concerning the client’s rights or obligations.  Essentially, the client must be seeking advice on a specific issue in the community or general legal advice concerning the community.

Who is covered by the attorney-client privilege?

As stated above, the corporate entity (the association) is the entity that establishes the attorney-client relationship.  Because the corporate entity is not a living, breathing human, it cannot individually communicate with an attorney.  Thus, under Colorado law, the corporate entity communicates through its board of directors.  Any communication between an attorney and a member of a board of directors—assuming it is for the purpose of gaining counsel, advice, or direction concerning the association’s rights or obligations—may be considered a privileged attorney-client communication.

However, most associations govern with the assistance of community managers.  While it is clear that direct communications between the board of directors and the association’s counsel are privileged communications, the law is not entirely clear on where communications with community managers fall.

Based on the above, it is good practice to adopt an attorney-liaison policy that clarifies the association’s position that the manager and management company are acting on behalf of the association and the same privilege of confidentiality applies to communications between the association’s attorney and the association’s manager and management company.

How is the attorney-client privilege waived?

While the attorney- client privilege is beneficial to an attorney-client relationship in that it allows for open and frank discussion, it is not iron-clad and may be waived.  A waiver of the attorney-client privilege occurs when (1) a third party (such as a homeowner who is not a board member) is present during discussion or copied on an email; (2) the association voluntarily abandons the privilege by disclosing attorney-client information to a third party; or (3) the association impliedly abandons the privilege through its actions.

Finally, the attorney-client privilege belongs to the association and may only be waived by the board.  An association’s attorney may not waive the attorney-client privilege, barring a few specific circumstances.

Overall, the attorney-client privilege is a valuable tool that facilitates candid discussions between attorneys and their clients and encourages the free flow of advice.  However, the attorney-client privilege analysis is a difficult and complicated one, and board should consult with the associations’ legal counsels prior to taking any action that could waive the privilege.
For more information on the attorney-client privilege, please contact a Altitude Community Law attorney at 303.432.9999.

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