## Facts

- Georgia-Pacific Corporation (GP) agreed to sell certain assets to GAF Roofing Manufacturing Corporation and G–I Holdings, Inc. (collectively, GAF).
- Before the asset-purchase agreement was executed, GAF’s in-house environmental counsel reviewed proposed terms, met with GP’s environmental lawyers about environmental issues, and gave negotiating recommendations to a senior GAF executive and to other in-house counsel.
- Although the parties signed the asset-purchase agreement, closing was conditioned on later execution of a separate environmental remediation and indemnification agreement.
- That later agreement was to be negotiated after GAF conducted an environmental audit and the parties agreed on the environmental conditions to be included.
- A dispute arose concerning GP’s obligation to remediate a particular hazardous condition.
- GAF’s in-house environmental counsel met with GP’s environmental lawyers about the dispute and then reported to GAF management about what was discussed.
- The environmental lawyers continued communications and scheduled another meeting, but GAF terminated the agreement before that meeting occurred.
- GP sued GAF for breach of contract.
- During discovery, GP deposed GAF’s in-house environmental counsel.
- The witness asserted attorney-client privilege and refused to answer questions about (1) negotiating recommendations he gave GAF management before execution of the agreement and (2) negotiating strategies he recommended after the later meeting with GP’s counsel.
- GP moved to compel answers to those deposition questions.

## Issues

1. Whether communications from a corporation’s in-house counsel to management about negotiating recommendations and negotiating strategy are protected by the attorney-client privilege when the communications are directed to business bargaining decisions rather than legal advice.
2. Whether GP was entitled, on a motion to compel, to obtain deposition testimony about those recommendations and strategies.

## Decision

- The court addressed the dispute as a discovery ruling on GP’s motion to compel deposition testimony.
- The court recognized that the attorney-client privilege can apply to communications involving in-house counsel, but only when the communication is for the purpose of seeking or providing legal advice and is kept confidential.
- The court treated in-house counsel’s role in contract negotiations as potentially mixed, requiring attention to whether the communication was legal in character or instead reflected business bargaining judgment.
- The court concluded that negotiating recommendations and negotiating strategies are not protected merely because they were made by a lawyer; to the extent the testimony would reveal business or negotiation guidance (as distinct from legal analysis), it was discoverable.
- The motion to compel was granted in part and denied in part, requiring answers on nonlegal negotiation advice while preserving protection for communications that were genuinely legal advice.

## Legal Principles

- The attorney-client privilege protects confidential communications between attorney and client made for the purpose of obtaining or providing legal advice.
- The privilege is construed narrowly, and the party asserting it bears the burden to show it applies to the specific communication at issue.
- For in-house counsel, a court looks to the purpose and content of the communication; legal advice is protected, but ordinary business advice is not.
- Communications about negotiating posture, bargaining tactics, or commercial recommendations are not automatically privileged simply because they are communicated by counsel.
- When legal and business considerations appear together, the court focuses on whether the communication’s main purpose was legal advice, rather than business negotiation direction.

## Conclusion

In this discovery dispute arising from a failed asset sale conditioned on later agreement about environmental remediation and indemnification, the court held that in-house counsel’s communications about negotiating recommendations and strategy were not privileged simply due to counsel’s participation; only communications whose primary function was legal advice remained protected, so GP could compel testimony about nonlegal negotiation guidance while privileged legal analysis was withheld.


Georgia-Pacific Corp. v. GAF Roofing Manufacturing Corp., 1996 U.S. Dist. LEXIS 671 (1996)