It is generally understood that communications between clients and lawyers are privileged and that the substance of those conversations may not be divulged to third parties except in the rarest of circumstances.  In the employee benefits world, however, plan sponsors and fiduciaries are often surprised to learn that this cardinal rule does not always apply.  In fact, many communications between plan fiduciaries and plan counsel must be divulged to plan participants and beneficiaries.

The reason for different treatment of the attorney-client privilege in employee benefits matters is the so-called “fiduciary exception,” pursuant to which communications between an attorney and a plan fiduciary are not shielded from disclosure to plan participants.  There are two explanations for the exception:  first, because the participants, rather than the plan fiduciaries, are viewed as the “real” clients of plan counsel; and second, because plan participants are entitled to disclosure of all information pertaining to the administration of their claims for benefits.

While the fiduciary exception doctrine is well established, its application may differ depending on the particular facts and circumstances presented.  This article highlights ten principles that generally are determinative of whether the exception will apply.