Protection of Work Product Shared With Outside Auditors

It is common for companies to share attorney work product with their outside auditors. In particular, auditors often request materials such as descriptions and summaries of ongoing litigation, minutes of meetings of special litigation and other committees, tax opinions, and reports regarding internal investigations. Practitioners who have not had to deal with this issue recently may operate under one of two misconceptions regarding the protection afforded to attorney work product that is shared with auditors: One camp may assume that any documents shared with an outside auditor automatically lose whatever protection they may have had; the other may believe that while attorney-client privilege is waived, the documents are still securely protected by the work product doctrine. The truth lies somewhere in between.

While courts have long held that the attorney-client privilege is waived under such circumstances, the law in the U.S. Court of Appeals for the Second Circuit is not settled as to whether such disclosure abolishes the protection of the attorney work product doctrine. Even though the majority of decisions within the Second Circuit hold that disclosure to auditors does not destroy work product protection, the lack of binding Second Circuit precedent and an apparent intra-circuit split leave the issue far from certain.