Legal invoices contain privileged and confidential information which is not subject to disclosure to the membership. As the court in the Laguna Sur case noted:
It is no secret that crowds cannot keep them [secrets]. Unlike directors, the residents owed no fiduciary duties to one another and may have been willing to waive or breach the attorney-client privilege for reasons unrelated to the best interests of the association. . . . "[o]ne can only imagine the sleepless nights an attorney and the Board of Directors may incur if privileged information is placed in the hands of hundreds of homeowners who may not all have the same goals in mind." (Smith v. Laguna Sur).
Analogous Case Law. There is no case law addressing the confidentiality of an association's legal invoices. There are, however, a pair of cases that provide guidance on this issue. They involve a citizen's access to legal invoices under California's Public Records Act (PRA). The PRA requires inspection or disclosure of governmental records to the public upon request, unless exempted by law. The ACLU sued Los Angeles County under the PRA seeking legal invoices from law firms retained by the County. The County defended that the invoices contained privileged attorney-client information.
The case made its way to the California Supreme Court which held that "the attorney-client privilege does not categorically shield everything in a billing invoice from PRA disclosure. But invoices for work in pending and active legal matters are so closely related to attorney-client communications that they implicate the heartland of the privilege. The privilege therefore protects the confidentiality of invoices for work in pending and active legal matters." The case was then remanded to the Court of Appeals which made rulings that invoices related to pending or ongoing litigation are privileged. It further found the that information in billing invoices which might be subject to PRA disclosure is limited to disclosure of fee totals. (County of Los Angeles v. ACLU.)
In Los Angeles County v. Superior Court, the court said that because legal invoices provide insight into litigation strategy or legal consultation, reveal the substance of legal consultation, and reveal clues about legal strategy, parts of invoices that describe the work performed fall directly in the ‘heartland’ protected by the privilege. Further, if “a legal matter remains pending and active, the privilege encompasses everything in an invoice, including the amount of aggregate fees… because, even though the amount of money paid for legal services is generally not privileged, an invoice that shows a sudden uptick in spending ‘might very well reveal much of [a government agency]'s investigative efforts and trial strategy.’”
Association Legal Expenses. Evern if associations were subject to the Public Records Act, the only information in attorney invoices subject to disclosure are fee totals, and then only after litigation has concluded. For those community associations subject to the Davis-Stirling Act and with a gross income exceeding $75,000, total legal expenses are disclosed in annual financial statements distributed to members.
Recommendation: Boards should consult legal counsel in the event a member were to request legal invoices and contracts for legal services.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.