The open meetings law requires all official meetings of public bodies to be open to the public. G.S. 143-318.10(a). However, government bodies can hold closed-door meetings, known as closed sessions, under certain limited circumstances. This post focuses on closed sessions for the purpose of preserving the attorney-client privilege and is Part 2 of a series examining each of the closed session purposes.

Purpose (a)(3): Attorney-Client Privilege

Under G.S. 143-318.11(a)(3), public bodies can hold closed sessions to consult with their attorneys in order to preserve attorney-client privilege. This subsection contains a couple of clear restrictions. First, general policy discussions, even those that involve an attorney, are not appropriate for closed session under this purpose. Furthermore, merely inviting an attorney does not justify holding a closed session. Finally, if a public body approves or considers a settlement in closed session, the terms of that settlement must be reported to the public body and entered into its minutes as soon as possible after the conclusion of the settlement.

The subsection also contains at least one specific authorization. The public body can consider and instruct its attorney on the handling of a settlement, judicial action, mediation, arbitration, or other administrative procedure.

Let’s walk through the statute.

“To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege which is hereby acknowledged.”

This type of closed session must be held to consult with an attorney employed or retained by the public body. A board member’s personal attorney does not satisfy this requirement, while a formally appointed or contracted city attorney or county attorney does. Additionally, the closed session must be for the purpose of preserving the attorney-client privilege, meaning that the discussion must center on matters within the scope of that privilege.

While North Carolina courts have yet to define the scope of the attorney-client privilege in the local government attorney context, guidance from the North Carolina Rules of Professional Conduct can be instructive. (For more details, see this blog). Under Rule 1.6 of the North Carolina Rules of Professional Conduct, attorney-client privilege covers information acquired while representing a client that relates to the representation of that client. As a result, permissible closed session discussions might include evaluations of whether certain proposed actions are legal, explanations of the legal differences between different ordinances, and conversations regarding potential claims or liabilities. See e.g., Multimedia Pub. Of N.C. Inc. v. Henderson Cty., 145 N.C. App. 365, 367, 372 (2001).

In contrast, information that legally must be disclosed to a third party may not fall within the attorney-client privilege and may be illegal to discuss in closed session using this purpose. H.B.S. Contractors, Inc. v. Cumberland Cty. Bd. of Educ., 122 N.C. App. 49, 53 (1996). In H.B.S. Contractors Incorporated, the court of appeals evaluated a board’s termination of a contract in a closed session held under the attorney client-privilege purpose. In its analysis, the court reasoned that an order terminating a contract had to be communicated to the contractor, someone outside of the attorney-client privilege. Therefore, the board’s final action terminating the contract was not proper in closed session under G.S. 143-318.11(a)(3).

Similarly, a closed session held under this exception likely should not include any person who is not within the attorney-client privilege. Otherwise, the public body risks waiving this privilege. Additionally, if the board’s only justification for closed session is attorney-client privilege and it waives this privilege, then the board also risks violating the open meetings law by entering closed session without statutory authorization.

“General policy matters may not be discussed in a closed session and nothing herein shall be construed to permit a public body to close a meeting that otherwise would be open merely because an attorney employed or retained by the public body is a participant.”

What is a general policy matter? There is little judicial guidance on this point, but at least one case has found that broad discussions of parliamentary procedure qualify as general policy matters. See Knight v. Higgs, 189 N.C. App. 696, 703 (2008). The court of appeals further described this distinction in Multimedia Publishing of North Carolina, Incorporated v. Henderson County. There, the court explained that “discussions regarding the drafting, phrasing, scope and meaning of proposed enactments would be permissible during a closed session. Discussions regarding their constitutionality and possible legal challenges would likewise be so included. But as soon as discussion moved beyond legal technicalities into the propriety and merits of proposed enactments, the legal justification for closing the session ends.”  136 N.C. App. 567, 575 (2000), disc. review denied, 351 N.C. 474 (2000). Taken together, local governments should assume that legal advice falls within this closed session purpose while non-legal practical or procedural advice does not.

Moreover, merely having the attorney in attendance or using the phrases “legal advice” or “attorney-client privilege” in a closed session motion is not enough to justify using this closed session purpose. The public body bears the burden of demonstrating that the closed session for attorney-client privilege purposes was warranted using objective evidence. Multimedia Pub., 136 N.C. App. at 576.  Courts will normally examine the closed session minutes and general account to determine whether there was objective evidence supporting entering closed session under this purpose. Multimedia Pub., 136 N.C. App. at 576. For that reason, closed session minutes and general accounts should record sufficient detail about the discussion to demonstrate that the public body sought and received legal advice from its attorney.

“The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, mediation, arbitration, or administrative procedure.”

This closed session purpose explicitly authorizes public bodies to instruct their attorneys on handling or settling claims, arbitration, litigation, mediation, judicial action, or administrative proceedings. The terms “claims” and “litigation” are not limited to specific threatened or pending claims or litigation. However, if the public body plans to discuss an existing lawsuit, the motion to go into closed session must identify the parties to the lawsuit. G.S. 143-318.11(c); Multimedia Pub., 136 N.C. App. at 577-78. The phrase “administrative procedures” in this purpose is limited to proceedings instituted under the Administrative Procedure Act. H.B.S. Contractors, Inc., 122 N.C. App. at 54.

“If the public body has approved or considered a settlement, other than a malpractice settlement by or on behalf of a hospital, in closed session, the terms of that settlement shall be reported to the public body and entered into its minutes as soon as possible within a reasonable time after the settlement is concluded.”

As described above, a public body can direct its attorney to settle a matter and can approve a settlement in closed session. After a settlement completely concludes, the terms of the settlement must be entered into the public body’s minutes. This rule is consistent with Section 132-1.3 of the North Carolina Public Records Act, which makes settlements public records. See e.g., Jackson v . Charlotte Mecklenburg Hosp. Auth., 238 N.C. App. 351 (2014). Note that settlements by or on behalf of a hospital are not subject to this requirement and are not public records under G.S. 132-1.3.

Practically speaking, when and how would this reporting and recording occur? The provision notes that the “settlement shall be reported to the public body.” The phrase “public body” likely indicates the public body as a whole, so the attorney likely must make their report to the board at a properly noticed and convened meeting. Could this report and discussion occur in closed session? Possibly. If the attorney wants to advise about what occurred during settlement or any legal implications of the settlement, that conversation can occur in closed session. The terms of the settlement could then be entered into that meeting’s closed session general account.

If the attorney is merely describing that a settlement occurred and reporting the terms of the settlement, without giving additional details, legal advice, or commentary, that conversation seems more appropriate for open session. The terms of the settlement would then be entered into the minutes for that open meeting.