Let's talk about attorney-client privilege. Early on in your business, you may consider engaging the services of a lawyer. It's very important when you're communicating with a lawyer to understand how those communications will be kept confidential. The attorney-client privilege helps us understand that. So in this lesson, we'll discuss what is the attorney-client privilege? We'll walk through some examples. So you get a good understanding of some dos and do not when communicating with your lawyer. And finally, we'll talk about some exceptions to the attorney-client privilege. First, what is attorney-client privilege? Attorney-client privilege is a legal protection that keeps communications between the lawyer and his or her client confidential. Now, its very purpose of the attorney-client privilege is to promote open communication and candor and confidentiality between the lawyer and his or her client. Now, the whole point of that is so that the lawyer can give you good advice. As we've said, the lawyer, the best lawyer for you is going to be someone you trust and someone you feel comfortable being completely open and honest with, and that's needed. And so what the law does with attorney-client privilege, is it protects those communications from disclosure in order for you to be honest with your lawyer and for your lawyer to be able to give you the best advice. In order for this to work, you have to be completely open with your lawyer about your business venture, about your aspirations, about what you're doing in terms of getting your business set up. And the lawyer then can give you the best legal advice for your specific situation. Now, as a business owner for an early stage company, the attorney-client privilege is very important to understand for two reasons. One, it allows you to understand how best to get good advice from your attorney. And two, it helps you avoid inadvertently losing the privilege that comes with the attorney-client privilege. Let's go through a few examples. Meet Ann and Bob, they are our fellow entrepreneurs and they're going to go through some scenarios. We're talking to lawyers to help us understand exactly how the attorney-client privilege works. First up bob, he has a great business idea, he knows as any good entrepreneur will know that he should seek the advice of a lawyer to help get his business off the ground. And so Bob calls up a lawyer and ask for advice on how to get his business started. In this scenario Bob is the client, he's having a confidential conversation with the lawyer who he intends to hire to represent him. That communication is likely to be protected by the attorney-client privilege. The lawyer cannot share that with anyone without Bob's consent. Now, let's consider an example where Bob brings along a potential investor to his meeting with the lawyer. Bob wants to, one get the lawyers, get the lawyer to provide legal advice on how to get the business started. But he wants the investor to tag along to get a good sense for whether the business is going to be a good one or not. This is a typical situation when you have an early stage startup and you want to impress investors to try to attract capital. Now in this scenario, because Bob is the client, the investor is not the community. The lawyer is present when Bob is seeking legal advice from the lawyer. That conversation may not be privileged because as we've said, the attoney-client privilege protects communications between a lawyer and his or her client, not third parties. And so if you are thinking about having a confidential conversation with your lawyer, you want to be very careful about who you bring along to that conversation. If it's absent some agreement of confidentiality or some business partner arrangement, that conversation may not be protected by the attorney-client privilege. And nothing could prevent that potential investor from sharing the substance of your communication with the lawyer. Now let's talk about Bob and Ann. They're business partners and they want to form a company together. So they collectively contact a lawyer to discuss a partnership agreement and how to incorporate their business. In this scenario, both Bob and Ann are the clients and there's nothing wrong with the lawyer having two clients. However, every lawyer has an obligation not to represent one client's interests against another client's interest. So in this scenario, in terms of the partnership agreement Ann and Bob may have different interests. For example, one may bring a different set of capital to the partnership. Maybe the profits and losses in the partnership arrangement are not equal. Therefore, Bob and Ann interest may not be 100% align. In that scenario, Ann and Bob should seek separate counsel, separate lawyers to make sure that their individual interests are adequately protected. That's a good point to remember when you have multiple business partners. In terms of the partnership agreement, each business partners should probably seek separate representation from their own lawyer. To ensure that their business and their individual interests are best protected. Now, in terms of the question that Ann and Bob have around incorporating their business. They both of their interests are aligned there, and so the lawyer can help, them advise them on the best way to incorporate their business for their individual business objectives. So, example 4, Ann and Bob are co-founders of a company. They call OurCo, inc. The company hires a lawyer to advise them on legal issues. In this scenario, it's OurCo, Inc that hires the lawyer. And so OurCo, Inc is the client, not Ann and Bob in their individual capacities, not Ann and Bob as founders of the company, neither will employees of OurCo, Inc be the client. The client is actually the company itself, and that's who the lawyer owes responsibilities to. It's very important to understand this as a founder of a small company. Because the company is hiring the lawyer, the lawyer has to act in the best interests of the company and not necessarily the individual founders of the company. Let's talk about some exceptions to the attorney-client privilege. It's very important to know that the attorney-client privilege applies to legal advice, not business advice. And so if you're asking the lawyer to help you with a legal issue or to walk you through, legal ramifications of a course of action that you're that you want to take for your business. Those communications are likely to be protected by the attorney-client privilege. But if you're asking for general business advice or you're bouncing things off of your lawyer just as a general business practice. Those communications are likely not to be protected by the attorney-client privilege. Also crimes and illegal activity. If you're communicating with your lawyer about an ongoing crime or certain types of illegal activity. Those conversations in those communications may actually not be protected by the attorney client privilege. And then finally, as a young company, when you get advice from a lawyer, there may be this urge to kind of share what your lawyer has told you with others. The attorney-client privilege is owned by you as the client. But once you share that advice with others, it's no longer protected by the attorney-client privilege. It's a very important point to keep in mind. So the key takeaways here. When you're working with the lawyer, make sure you understand who is the client in that situation. Be very careful about including others in confidential communications with your lawyer. And when you're working with business partners, you want to consider separate attorneys for things like your partnership agreement. And finally, please know that there are exceptions to the attorney-client privilege for things like crimes and illegal activity.
