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Journal of Legal Studies Education Volume 29, Issue 2, 297–312, Summer/Fall 2012 What Business Students Should Know About Attorney–Client Privilege Robert Draba and Brent Marshall* I. Introduction On December 27, 2001, Martha Stewart sold shares of stock in ImClone Systems, Inc. (“ImClone”), a company that develops biologic medicines. The next day, ImClone announced that the Food and Drug Administration had rejected the company’s application for approval of a cancer-fighting drug, and its stock price declined. Early in 2002, various government agencies and a congressional sub- committee initiated investigations into Stewart’s December 27 sale of stock. On June 23, 2002, Stewart composed an e-mail containing her account of her sale of ImClone stock. She sent this e-mail to an attorney who was one of the lawyers representing her in her dealings with the government. The following day, Stewart forwarded a copy of that e-mail to her daughter, Alexis Stewart, without making any changes to it. 1 On August 21, 2003, the government asked the court to decide whether the e-mail that Martha Stewart sent to her attorney and then forwarded to her daughter was protected from discovery either by the attorney–client privilege or the attorney work-product doctrine. While the court held that the e-mail was protected from discovery as attorney work product, it was not protected by the attorney–client privilege. 2 The court also observed that Stewart’s June 23 e-mail to her attorney was clearly protected by the attorney–client privilege until she waived the privilege by disclosing the We are attorneys with the U.S. Department of Justice, Washington, DC. The views expressed herein are ours and are not purported to reflect those of the U.S. Department of Justice. 1 United States v. Stewart, 287 F. Supp. 2d 461, 462–63 (S.D.N.Y. 2003). 2 In pertinent part, the court held that Martha Stewart’s e-mail was prepared in anticipation of litigation and would not have been prepared in substantially similar form but for the prospect of that litigation. Therefore, it was protected attorney work product. Id . at 466–68. C 2012 The Authors Journal of Legal Studies Education C 2012 Academy of Legal Studies in Business 297
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298 Vol. 29 / The Journal of Legal Studies Education e-mail to her daughter. The rule is that disclosure to a third party of one’s communication with an attorney eliminates whatever privilege the commu- nication may have originally possessed. There is no exception to this rule for family members. 3 The case of Martha Stewart illustrates how easily the attorney–client privilege can be waived. Had Stewart understood the simple concept of third- party waiver, she probably would not have shared that e-mail with her daugh- ter. The Stewart case also illustrates that courts expect businesspeople to know something about the rules of attorney–client privilege.
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  • Fall '16
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