Posted by David Swedelson
From time to time we hear from association clients that are in a dispute with owners over documents that the owner wants to inspect or copy. They often want copies of the attorney’s billing statements. The problem is that most attorneys are descriptive as to the nature of the services provided, and these narratives include confidential attorney-client privileged communications and are not for distribution.
In response to an owner’s request to review the association’s legal bills, it is appropriate for the Board to respond denying the request on the basis that the legal bills are subject to the attorney-client privilege, and that a member’s right to review association documents does not extend to documents subject to the privilege. Yes, the Civil Code does say that the owners are entitled to see the contract between the association and the attorney. But the retainer agreement is not a billing invoice. And the owner is entitled to documents showing what the attorney has been paid; but not the billing invoice.
Support for this position is found in the Court of Appeal decision in the case of Smith vs. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 641. In that case, the court discussed how, as a corporation, it is the association who is the client, not the individual members. The Court went on to deny homeowners their request to review the association’s attorney bills in that matter as the bills contained confidential information relating to the services being performed by the association’s legal counsel.
California Civil Code Section 1365.2 states, “Except as provided by the attorney-client privilege, the association may not withhold or redact information concerning the compensation paid to employees, vendors or contractors.” Civil Code Section 1365.2 specifically excludes documents which are subject to the attorney-client privilege from a member’s right of review. Attorney billing statements contain detailed descriptions of the work performed by the attorney. If they were revealed, such statements could be used against the association in any pending litigation or other matters. As the Laguna Sur Villas Community Assn. Court points out, unlike directors, residents owe no fiduciary duties to one another and may be willing to waive or breach the attorney-client privilege for reasons unrelated to the best interests of the association.
If you have comments, send them to David Swedelson at firstname.lastname@example.org