The Nevada Supreme Court recently reviewed Nevada law regarding the attorney client privilege and it declined to recognize a new exception to the privilege known as the fiduciary exception. This article reviews the scope and exceptions to the attorney-client privilege in Nevada and briefly discusses the recent case. The case could be important to any person with an interest in a trust either as a trustee or as a beneficiary and to attorneys representing trustees and beneficiaries.
The attorney-client privilege is codified in Nevada Revised Statutes Chapter 49, Sections 49.035 – 49.115. Generally, the attorney-client privilege allows a client to prevent any person from disclosing confidential communications made by the client to an attorney while seeking legal assistance. However, there are five exceptions to the general rule that may require a party to a communication to disclose the contents of an otherwise protected communication to a third party. The exceptions to the privilege are:
In Canarelli v. District Court, 136 Nev. Adv. Op. 29 (2020), issued on May 28, 2020, the Nevada Supreme Court declined to recognize a sixth exception to the attorney-client privilege rule known as the fiduciary exception even though other jurisdictions have recognized it.
In Canarelli, a beneficiary of a trust was dissatisfied with the manner in which the trustee was administering the trust. He threatened suit against the trust and the trustee. Upon receipt of a notice of the possible claim by the beneficiary, the trustee had two conversations with his attorney of which the trustee kept notes. Later, after filing suit, the beneficiary sought the trustee’s notes. The trustee asserted the documents were protected by attorney client privilege. In response, the beneficiary asked the court to recognize a fiduciary exception. The beneficiary argued that under the fiduciary exception to the attorney-client privilege, a trustee cannot shield his communications with his attorney because beneficiaries under a trust have a common interest along with the trustee in the administration of the trust and therefore are entitled to access to a trustee’s communications with an attorney regarding trust issues.
First, the Nevada Supreme Court reviewed the underlying facts and determined the trustee’s notes qualified for protection under the attorney-client privilege. Then, it declined the beneficiary’s request that it recognize the fiduciary exception to the privilege. The exception would be a new exception in Nevada, and the court stated that because Nevada has expressly codified its exceptions to the attorney-client privilege, recognition of any new exception should be done only by the legislature.
The Canarelli opinion provides an excellent overview of the attorney-client privilege in Nevada. More importantly, however, by refusing to recognize the fiduciary exception to the attorney-client privilege, the Nevada Supreme Court made clear that a trustee’s communications with attorneys in Nevada are protected from disclosure to beneficiaries of the trust. This ruling is important to both trustees and beneficiaries. Trustees now know they can communicate with their attorneys on matters regarding the administration of a trust without concern that those communications would have to be disclosed to the trust beneficiaries. Likewise, beneficiaries now know that if they think a trustee is not properly administering a trust, they cannot rely on the trustee’s communications with his attorney to prove their case.
If you have any questions about the administration of your trust, please do not hesitate to reach out to us to discuss your legal options. This firm is committed to keeping client information protected through the attorney-client privilege when applicable.
Written by Sam H. Bruketta and John F. Murtha