In a case of first impression, the Appellate Division, First Department, recently held in a malpractice action, Stock v. Schnader Harrison Segal & Lewis, that communications among “attorneys who have sought the advice of their law firm’s in-house general counsel on their ethical obligations in representing a firm client” during the representation of that client are “not subject to disclosure”—even where “the consultation at issue…might have extended to whether [the firm]…was potentially liable…for malpractice.”1 The court unanimously reversed the trial court’s decision, thereby joining the highest courts of Massachusetts and Georgia, among others, in declining to apply the fiduciary and “current client” exceptions to the attorney-client privilege.

Malpractice Claim

According to the First Department, Schnader Harrison Segal & Lewis LLP originally represented plaintiff Keith Stock in negotiating his separation agreement with his former employer. “Unbeknownst to” Stock, his employment “termination triggered the acceleration of the ending dates of the exercise periods of certain stock options granted to him,” and “the firm did not negotiate an extension of the truncated exercise periods.” After learning that “all of his vested stock options,” allegedly “worth more than $5 million,” had expired, Stock (still represented by Schnader Harrison) sued his former employer in federal court and commenced a FINRA arbitration against the plan administrator.2

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