A most basic precept of the law is the attorney-client privilege. A litigant being able to speak freely and completely with his or her counsel without the fear of the conversation being revealed has been a cornerstone of American jurisprudence.
Although the concept of the attorney-client privilege is recognized in ERISA matters, it is modified by the fiduciary exception. Most communications between fund counsel and a fund are directed to a plan administrator with rarely any communication directed to participants and/or beneficiaries. However, it is those participants and the beneficiaries who are the clients. The fiduciaries and administrators are not the “client” personally but only in their representative roles.
In addition, the subject matter of the communication determines the privilege and if disclosure to plan participants and beneficiaries (the “client”) is required. The subject matter dealing with a fiduciary function is neither privileged nor protected from disclosure to participants and beneficiaries. Fiduciary functions include plan management or administration. In contrast, communications relating to settlor functions (including plan design, amendments, or modification) do not require disclosure to participants or beneficiaries.
Specific procedures should be established by fund counsel to minimize errors involving communications with fund administrators or trustees. If a participant or beneficiary files a lawsuit and the cause of action involves a fiduciary function, communications between the plan administrator and other fiduciaries and counsel may have to be disclosed in litigation.