6.11 "NEED TO KNOW" STANDARD FOR COMMUNICATIONS
6.1101 Introduction. Along with the Upjohn standard and the control group standard discussed above, courts analyzing privilege protection in the corporate context sometimes deal with what normally is called the "need to know" standard. That standard focuses on the role of employees who participate in communications, are present during otherwise privileged communications, or receive pre-existing privileged communications. Those employees with a "need to know" generally will be considered inside the privilege protection in those settings, while employees without a "need to know" usually will not.
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Unlike the Upjohn standard, the "need to know" standard focuses on lawyer-to-client communications in the corporate context rather than on the employee's possession of facts the lawyer needs to advise the corporate client. The "need to know" refers to an employee's need to know a lawyer's advice. In focusing on communications going in that direction, the "need to know" standard matches the "control group" standard. However, employees with a "need to know" do not necessarily make important corporate decisions like those employees within the protected "control group." In fact, lower-level employees might well have a "need to know."
Courts disagree about the exact scope of the "need to know" standard. They also disagree about the specificity of evidence corporations must present on that issue.
6.1102 Relevance of "Need to Know" Standard. Determining the impact of a corporate employee's status as inside or outside privilege protection in some respects matches the analysis for client agents. However, the unique privilege issues arising in the corporate context add other factors as well.
Communications to and from an employee without a "need to know" could be an indicia that the communication primarily related to business rather than legal matters. Chapter 15 of this book discusses that issue. The presence of such an employee in an otherwise privileged corporate communication might abort the privilege. Chapter 19 of this book discusses that issue. Disclosing a pre-existing privileged communication to such an employee could waive the privilege. Chapter 26 of this book discusses that issue. An employee outside the "need to know" group might not have the power to waive a corporation's privilege. Chapter 24 of this book discusses that issue.
6.1103 Relationship to the Upjohn Standard. The "need to know" standard differs from both the majority Upjohn standard and the minority "control group" standard (discussed above).
The Upjohn standard focuses on the employee's possession of facts that the lawyer needs before the lawyer can give advice to the corporate client. It therefore protects core privileged communications, which are client-to-lawyer communications of facts to the lawyer. Even a first-day lower-level employee might fit the Upjohn standard if that employee has facts the lawyer needs. The first-day employee might or might not need the lawyer's advice to perform her job. That requires a different analysis than analyzing that employee's possession of facts that the lawyer needs.
Although employees meeting the Upjohn standard usually have obtained those facts during the course of their duties, that is not necessarily required. For instance, an assembly-line worker might witness an incident in the lunchroom. If the company's lawyer needs the assembly-line worker's recollection of what he or she saw, that communication will deserve privilege protection under Upjohn. In fact, even former corporate employees can be within the Upjohn standard.
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In contrast, the "need to know" standard focuses on the employee's need to receive the lawyer's advice in order to perform his or her job. 205 Thus, the "need" refers to the lawyer's advice, not to the lawyer's recipient of the employee's facts.
Unlike Upjohn, the "need to know" standard focuses on the lawyer-to-client communication. In many situations, corporate employees will be within the Upjohn standard but not meet the "need to know" standard. For instance, an assembly-line worker who witnessed a lunchroom incident can engage in a privileged communication with the company's lawyer about what he or she saw, but probably has no "need to know" the lawyer's impressions or advice about the incident.
On the other hand, an employee might meet the "need to know" standard but not have any facts that the lawyer needs. For instance, a new salesperson might need legal advice about avoiding antitrust issues during discussions with competitors but does not have any factual information the lawyer needs. In that situation, the lawyer-to-client communications will deserve protection to the extent that they reflect confidences that the lawyer acquired from somewhere else within the corporation. Chapter 17 of this book discusses that issue.
To make matters more complicated, properly analyzing the "need to know" standard might require determining whether an employee simply needs instructions or needs to know the legal basis for those instructions. For instance, an assembly-line worker does not need to know the reason why he or she must add a safety guard when making a chain saw, while the plant manager almost surely has a need to know that the company is adding this expensive process to decrease product liability litigation. In contrast, a lower-level salesperson probably needs to know why he or she should never discuss prices with a competitor's lower-level salesperson he or she might meet in the lobby of a customer.
6.1104 Relationship to the "Control Group" Standard. The "need to know" standard also differs from the "control group" standard. Although courts seem not to have really discussed the distinction, it seems fair to say that the corporation's "control group" consists of those within the company who make decisions for the company. These are the employees who act on the lawyer's advice and can bind the company by taking actions based on that advice.
The "need to know" standard appears to be broader than that, at least as defined in the Restatement and in those few courts who have tried to articulate a general definition of the term.
First, the "need to know" standard focuses more on the employee's need for legal advice to do his or her job rather than to make decisions for the corporation. For instance, a human resources employee has a "need to know" a lawyer's latest analysis of the labor laws. The employee needs this advice so he or she can perform his or her daily functions, not to set policy or make some grand decisions for the corporation. In 2007, a New York state court recognized this justifiable principle.
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[T]he privilege protects from disclosure communications among corporate employees that reflect advice rendered by counsel to the corporation. . . . This follows from the recognition that since the decision making power of the corporate client may be diffused among several employees, the dissemination of confidential information to such persons does not defeat the privilege. 206
One would think that courts would protect and even nurture such an inclusive and collaborative corporate culture. 207 It is therefore not surprising that those courts examining the "need to know" standard normally find that it encompasses a larger group of employees than the "control group" standard.
Second, the "need to know" standard seems to be matter-specific rather than general. For instance, a salesperson might "need to know" the corporation's antitrust lawyer's advice before attending a meeting, even though he or she would not fall within the "control group." In contrast, an employee at the same level of the corporate hierarchy as the salesperson but involved in manufacturing almost surely would not have...
