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IN RE A GRAND JURY SUBPOENA DUCES TECUM

February 19, 1975

In the Matter of a GRAND JURY SUBPOENA DUCES TECUM

Robert L. Carter, District Judge.


The opinion of the court was delivered by: CARTER

ROBERT L. CARTER, District Judge.

A Special Grand Jury began some time in or about July, 1974, an investigation into the activities of the International Controls Corp. (ICC) and Investors Overseas Services (IOS). In the course of the investigation subpoenas duces tecum, dated July 9, 1974, and August 15, 1974, *fn1" were served on Hogan and Hartson (H&H), a law firm with offices at 815 Connecticut Avenue, N.W., Washington, D.C. H&H had been corporate and litigation counsel for ICC beginning in 1966. It continued as corporate counsel until November 22, 1972, and as litigation counsel until March 16, 1973.

 In 1971, the Securities and Exchange Commission undertook an investigation of ICC and certain of its officers in respect of their dealings with IOS. ICC and Robert Vesco were named as respondents. Between 1966 and 1973, Vesco held various executive positions with ICC -- director, president, chief executive officer and chairman of the board. The SEC investigation extended over a period of approximately twenty months and focused primarily on ICC's and Vesco's relationships and dealings with IOS. H&H represented Vesco, as a respondent, as well as ICC, in the SEC investigation. H&H also represented certain other ICC directors, officers and employees of ICC when these persons were called to testify as witnesses in the course of the SEC investigation. All of H&H's legal fees for these various representations were paid by ICC.

 The SEC investigation resulted in a civil action being brought in this court by SEC against ICC, Vesco and various other ICC directors, officers and employees. H&H represented ICC in this litigation, but Vesco was represented by other counsel. The civil suit in respect of ICC terminated on March 16, 1973, in a consent decree providing for permanent injunction against ICC and the appointment of Special Counsel and Directors. The ICC also agreed to waive "any attorney-client privilege directly or indirectly relating to the issues in this action."

 The Grand Jury Subpoenas

 The Grand Jury subpoenas, insofar as relevant to this controversy, required H&H to produce in the firm's possession "[all] original or file copy records, memoranda and correspondence relating to the collection, review, delivery and production of all documents during 1971 and 1972 in connection with the SEC's investigation" of ICC and Vesco.

 Assertion of Attorney-Client Privilege

 On March 20, 1973, four days after the consent decree as to ICC was agreed upon, Arthur Liman, a member of the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison, Vesco's counsel in the civil action brought by SEC against Vesco and others, advised H&H that Vesco had not waived his attorney-client privilege in respect of communications between H&H and Vesco.

 In compliance with the July 9 subpoena, H&H produced a great mass of documents. On August 16, 1974, H&H advised the United States Attorney by letter that certain of the documents ordered produced were being withheld because they were arguably within the attorney-client privilege as to those persons whom H&H had represented in the SEC investigation who, unlike ICC, had not waived the attorney-client privilege.

 On September 30, 1974, H&H advised Liman of the Grand Jury subpoenas and that it had withheld various documents which in the firm's judgment were arguably covered by the attorney-client privilege pursuant to H&H's representation of Vesco in the SEC investigation. Copies of the documents withheld were enclosed in the September 30th letter.

 On October 11, 1974, H&H were notified by Williams, Connolly & Califano (WCC), a law firm in Washington, D.C. and currently counsel for Vesco, that Vesco asserted the attorney-client privilege, as well as any other available privilege, in respect of each and every document withheld. In addition, WCC requested H&H not to respond further to the Grand Jury subpoenas until WCC had been afforded the opportunity to review the documents, determine whether production was in fact required by the subpoenas and if required, to determine whether the documents could be withheld pursuant to the attorney-client privilege and any other claims Vesco might wish to assert.

 H&H, taking the view that in respect of a subpoena addressed to it, that the firm could not delegate responsibility to others to decide what should be produced or what was protected under the attorney-client privilege, responded negatively to WCC's request. H&H was then advised personally by Vesco to submit all subpoenaed documents to WCC prior to producing them for Grand Jury scrutiny.

 The Instant Proceedings

 On December 20, 1974, this proceeding, to require H&H to produce for grand jury use the documents which H&H had withheld, was instituted. The documents were marked as Exhibits 1-6, and surrendered to the custody of the court for its in camera inspection. *fn2" The matter was set down for hearing on January 3, 1975, and the parties were ordered to advise WCC of the ...


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