## Facts

- Charles E. Rowe was the senior partner at a San Diego law firm, Rowe and Associates.
- Rowe suspected another firm attorney had mishandled client funds.
- Rowe directed two associate attorneys at the firm to investigate the suspected misconduct and gather information.
- Rowe also contacted the California State Bar seeking action against the suspected attorney.
- A federal grand jury investigating the suspected attorney subpoenaed the two associates and sought testimony about their conversations with Rowe.
- Rowe and the firm asserted attorney–client privilege, claiming the associates were acting as counsel to the firm concerning the firm’s legal and ethical exposure.
- After in camera examination, the district court rejected the privilege claim and ordered the associates to testify, stressing that the associates were not formally designated as the firm’s attorneys, did not bill the firm, and acted under Rowe’s direction.

## Issues

1. Whether a law firm and its senior partner may assert attorney–client privilege over confidential communications with firm associates when the associates are assigned to investigate internal misconduct for purposes of legal advice to the firm.
2. Whether attorneys’ internal fact-gathering undertaken to support legal advice constitutes “professional legal services” sufficient for the privilege to attach.

## Decision

- The Ninth Circuit reversed the order compelling the associates’ grand jury testimony.
- The court held that the associates functioned as in-house counsel to the firm for purposes of the investigation and related communications.
- The court concluded the communications were made to facilitate the rendition of legal services to the firm and were privileged.
- Administrative factors relied upon by the district court (lack of billing records, lack of express designation, junior status, direction by Rowe) were not controlling where the substance showed legal consultation.
- The court treated the privilege determination as a mixed question of law and fact and reviewed the applicability of the privilege de novo.

## Legal Principles

- Attorney–client privilege applies only to confidential communications made for the purpose of facilitating the rendition of professional legal services.
- For privilege purposes, there is no categorical distinction between inside counsel and outside counsel; the inquiry is functional.
- A law firm may be the “client” when it consults its own lawyers regarding the firm’s legal and ethical obligations and potential exposure.
- Lawyers’ investigative or fact-gathering work can be within the privilege when undertaken to enable counsel to provide informed legal advice to the client organization.
- Formalities such as billing practices, job hierarchy, or explicit labels do not determine whether an attorney–client relationship exists for privilege purposes.

## Conclusion

The Ninth Circuit held that a law firm could invoke attorney–client privilege to prevent compelled grand jury testimony about confidential communications between a senior partner and associates assigned to investigate suspected internal misconduct for the purpose of providing legal advice to the firm, and it reversed the district court’s order compelling testimony.


United States v. Rowe, 96 F.3d 1294 (9th Cir. 1996)