Can a NC public body go into closed session with its lawyer to discuss a contract negotiation, not just litigation?

Plain-English summary

In 1994, the NC General Assembly rewrote the closed-session exception for attorney consultations in the Open Meetings Law. The previous version was narrow; it covered judicial proceedings. The new version was broader; it referenced "the attorney-client privilege." The question was how much broader. Could the Stokes County Board of Education close a session to talk with its lawyer about a proposed third-party contract, or did the privilege exception cover only litigation-adjacent matters?

Attorney Fredrick G. Johnson, representing the Board, asked the AG. Chief Deputy AG Andrew A. Vanore, Jr. and Chief Counsel John R. McArthur answered yes: the privilege exception covers contract negotiations and any other discussion that falls within the common-law attorney-client privilege.

The textual argument was straightforward. The new G.S. § 143-318.11(a)(3) authorizes closed session "[t]o consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged." A separate sentence then says the body "may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, or administrative procedure." A textualist reading could try to limit the closed session to claims, judicial actions, and administrative procedures. The AG rejected that reading. The "claim, judicial action, or administrative procedure" language was an enumeration of specific authorities, not a limit on the general privilege grant.

The legislative history sealed it. David Lawrence of the UNC Institute of Government had tracked the bill's evolution in his September 1994 Local Government Law Bulletin. The original HB 120 only covered judicial proceedings. The committee substitute added contract negotiations. The floor amendment added the general "attorney-client privilege" language for the first time, expressly to reach beyond litigation and contract matters. The final Senate committee version retained the broad privilege language. The conclusion, in Lawrence's words, was "inescapable that the language allowing closed sessions for matters within the privilege was intended to reach beyond discussions of litigation and contract matters."

The AG did note an important limit. The exception is bounded by the common-law privilege itself, not by the public body's preference for secrecy. To invoke (a)(3) lawfully, the public body needs all four privilege elements: (1) an attorney-client relationship between the body and the attorney, (2) the discussion concerns legal advice given in the course of the professional employment, (3) the communication is confidential, and (4) the privilege has not been waived. If any element is missing, the privilege does not exist and (a)(3) cannot be used to go into closed session. General policy discussions, even with the lawyer present, do not qualify; the statute expressly says so.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. § 143-318.11 has been amended several times since 1994, and additional NC appellate decisions have clarified the scope of (a)(3). The basic principle (closed session permitted for privileged matters, bounded by common-law privilege elements) has been consistently followed.

Background and statutory framework

The NC Open Meetings Law. N.C.G.S. § 143-318.10 et seq. requires public bodies to conduct their business in open session. Closed sessions are exceptions, and the legislature has enumerated specific permitted purposes in § 143-318.11(a).

The 1994 rewrite. Before 1994, the attorney consultation exception was narrow. The 1994 amendments broadened it substantially. The opinion is essentially a contemporaneous interpretation of how broad.

The four common-law privilege elements. Standard NC law treats the attorney-client privilege as requiring: (1) attorney-client relationship; (2) the communication concerns legal advice in the course of professional employment; (3) confidentiality; (4) no waiver. The AG used this framework to draw the line.

General policy discussions are not privileged. § 143-318.11(a)(3) itself says "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." This guardrail prevents the privilege exception from swallowing the open-meetings rule.

Reporting settlements. The statute also requires that if a public body considers or approves a settlement (other than a hospital malpractice matter) in closed session, the terms must be reported to the body and entered into its minutes "as soon as possible within a reasonable time after the settlement is concluded." This sunshine requirement balances the privilege carve-out.

The Lawrence Bulletin. The Institute of Government (now UNC School of Government) publishes guidance to NC local governments. David Lawrence's bulletins on open meetings were the standard reference; the AG explicitly relied on his September 1994 piece for the legislative history.

Common questions

Q: Can a public body close a session to talk with its lawyer about a personnel decision?

A: A personnel matter usually qualifies under a different exception (§ 143-318.11(a)(6)). Mixing personnel and privilege is fine if both exceptions apply, but the body should not use the privilege exception as a back door for personnel discussions that fall outside (a)(6).

Q: What about land acquisition discussions?

A: § 143-318.11(a)(5) covers real estate. If the discussion is about negotiating an acquisition (price, terms, strategy), (a)(5) applies; (a)(3) can apply additionally if the lawyer is giving legal advice protected by the privilege.

Q: Can a public body discuss general budget policy in closed session because the lawyer is present?

A: No. The statute expressly prohibits closing a meeting just because the lawyer is participating. The discussion must concern legal advice within the privilege.

Q: Must the body record what was said in closed session?

A: NC law requires minutes and a general account; the level of detail for privileged discussions is constrained by the privilege itself. The body should consult its attorney on minute-taking practices.

Q: What if a member of the body leaks the closed-session discussion?

A: A leak may waive the privilege for that discussion. The body's other members and the lawyer can also be sources of waiver. Confidentiality is one of the four privilege elements.

Q: Can a public body discuss a proposed RFP in closed session?

A: Routine procurement policy is generally not privileged. Legal advice about a specific bid challenge or contract dispute may be.

Citations from the opinion

• N.C.G.S. § 143-318.11(a)(3)
• David Lawrence, "1994 Changes to the Open Meetings Law," UNC Institute of Government Local Government Law Bulletin No. 64 (Sept. 1994)
• 97 C.J.S. Witnesses § 283

Source

• Landing page: https://ncdoj.gov/opinions/open-meetings-law-permissible-closed-meeting-discussions-between-the-attorney-and-client/

Original opinion text

I reply to your October 24 letter requesting advice on whether the Stokes County Board of Education lawfully discussed in closed session matters concerning attorney-client privileged communications. The communications involved a proposed contract between the Board of Education and a third party. Put another way, must the closed session discussions between a public body and its attorney be limited to potential or actual lawsuits.

For reasons which follow, we concur with your conclusion that a public body may go into closed session with its attorney to discuss any matters otherwise included within the attorney-client privilege, including a discussion regarding the validity of a proposed contract and the respective rights and obligations of the contracting parties.

One of the permitted purposes for which a public body may go into a closed session is:

"To consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged. 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. The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, or administrative procedure. If the public body has approved or considered a settlement, other 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."

N.C.G.S. §143-318.11(a)(3).

It could be argued that the specific mention of "a claim, judicial action, or administrative procedure" in (a)(3) limits the use of the attorney-client privilege to those specific matters. We do not, however, consider this to be the better argument. We believe the language that "[t]he public body may consider and give instructions to an attorney concerning . . . a claim, jurisdiction, or administrative procedure" indicates legislative intent not to limit this exception to advice on those three matters. The legislative history of this particular provision also supports this conclusion. As very ably put by David Lawrence in his recent Local Government Law Bulletin, Number 64 (September 1994) publication, "1994 Changes to the Open Meetings Law", at page 6: "In its original version, in HB 120 as introduced, the provision read as follows:

to permit a public body to receive advice from an attorney employed or retained by the public body with respect to a judicial proceeding in which the public body has a direct interest.

The original bill was then modified in committee, and the committee substitute read as follows:

to permit an attorney employed or retained by the public body to provide legal advice with respect to (i) the public body's rights and obligations pursuant to an existing or proposed contract to which the public body is or will be a party; or (ii) a pending, threatened, or contemplated judicial proceeding in which the public body has a direct interest.

In the first of these it is clear that discussions with attorneys were limited to judicial proceedings, and in the committee substitute's version, such discussions were limited to judicial proceedings and to contract negotiations.

The bill was amended on the House floor, however, and the engrossed bill that reached the Senate had the following provision:

to preserve the attorney client privilege between the attorney and the public body [emphasis added], or to permit an attorney employed or retained by the public body to provide legal advice with respect to (i) the public body's rights and obligations pursuant to an existing or proposed contract to which the public body is or will be a party; or (ii) a pending,threatened, or contemplated judicial proceeding in which the public body has a direct interest.

The floor amendment left the language of the committee substitute in place but added, for the first time, the provisions (italicized above) that deal with matters within the attorney-client privilege. The conclusion is inescapable that the language allowing closed sessions for matters within the privilege was intended to reach beyond discussions of litigation and contract matters.

The language was changed once again in the Senate committee, so that the Senate committee substitute contains the language of the ratified session law:

to consult with an attorney employed or retained by the public body in order to preserve the attorney-client privilege between the attorney and the public body, which privilege is hereby acknowledged . . . The public body may consider and give instructions to an attorney concerning the handling or settlement of a claim, judicial action, or administrative procedure.

Although the language is modified, the purpose seems to be for clarification rather than to make substantive changes, and this version continues the separation between discussions within the attorney-client privilege and discussions of claims and litigation. Therefore it is clear that attorney-client discussions, within the privilege, need not be restricted to claims, judicial actions, or administrative procedures."

For the reasons stated by Mr. Lawrence, we believe that the legislature intended to allow a public body to go into closed session with its attorney to discuss the legalities of a proposed contract.

N.C.G.S. §143-318.11(a)(3) does not, however, permit a public body to close a meeting for any discussion with an attorney. The exception is limited by the scope of the attorney-client privilege as defined by the common law. Thus, there must be an attorney-client relationship between the public body and the attorney; the communications that are the subject of the closed session must concern legal advice in the course of the professional employment; the communications must be confidential; and the public body must not have waived the privilege. See generally, 97 C.J.S. Witnesses, § 283. If any of these requirements are not present, the privilege does not exist and exception (a)(3) may not be used by a public body to go into closed session. We understand from your request that all of these requirements were present in the discussion you recently had with the Stokes County Board of Education in closed session.

Should you have any questions, please feel free to contact us.

Andrew A. Vanore, Jr., Chief Deputy Attorney General

John R. McArthur, Chief Counsel