In this timely post, White Collar Crime Prof Peter Henning notes a recent Fourth Circuit decision that bears on an increasingly knotty issue in this post-Enron era of criminalizing business — that is, an employee’s waiver of the attorney-client privilege for statements made during a conference with an employer’s attorneys.

In this particular case, the employees contended that their employer’s lawyers led them to believe that they had entered into an attorney-client relationship with the employer’s lawyers so that the employer’s subsequent waiver of the privilege did not affect their personal right to maintain the confidentiality of their statements made to the lawyers. At the outset of the employees’ interviews with the employer’s lawyers, each of them received the following reassurance — er, I mean “warning” — from the employer’s lawyers:

“We represent the company. These conversations are privileged, but the privilege belongs to the company and the company decides whether to waive it. If there is a conflict, the attorney-client privilege belongs to the company. We can represent [you] until such time as there appears to be a conflict of interest, [but] . . . the attorney-client privilege belongs to [the employer] and [the employer] can decide whether to keep it or waive it.”

As Professor Henning notes, the second part of the above instruction is incorrect in that a client under a valid joint representation continues to hold the privilege and another party to that joint representation cannot waive it unilaterally. At any rate, after completing its investigation, the employer waived its attorney-client and attorney work product privileges in attempting to obtain a deferred prosecution agreement and avoid the fate of Arthur Andersen (see also AIG, Berkshire Hathaway and KPMG for recent examples of this dubious corporate trend).

At any rate, the Fourth Circuit rejected the employees’ argument that they had entered into an attorney-client relationship with the employer’s lawyers by reasoning essentially that a statement that the employer’s lawyers “can” represent the employees is not the same as actually representing them.

Thus, employees beware. Even though the assertion of the Fifth Amendment privilege in connection with an employer’s internal investigation will likely result in the employee being fired, the alternative could be far worse — that is, your employer giving prosecutors of questionable judgment your statements to use in prosecuting you for an alleged crime that you performed while performing your job for your employer.

The sad case of Jamie Olis is a stark example of the damage to employees’ lives and their families that can result from an employee unwittingly waiving his attorney-client privilege.