The issue is clear - so that there is no issue - when private citizens like you or us, or a private business or other private entity hire an attorney, converse with the attorney and get advice from the attorney. Those kinds of communications are confidential. Only under the most extreme of cases, such that there are hardly any, can those communications be legally pried loose. (Or such has been the standard in this country.)
Now let's say you're a member of a city council, and you and the other council members agree to hire an attorney to look after the city's interests - not yours personally, but the city's.
Under the norms in open meetings and public records law, those communications are considered confidential between the city attorney and the city officials: The council and mayor, say, and whoever else they allow in. The people on whose authority the attorney was hired and on whose behalf the attorney is acting - that is, the residents of the city - typically are shut out. And if you suspect that from time to time, the advice the attorney is giving council members under such conditions may be aimed more at keeping the council members out of trouble, than at doing the same for the city - and those interests do not always perfectly coincide - you could be right.
Those are the kind of suspicions the Oregon Supreme Court will now leave to fester in the case of an attempt to more fully expose to public scrutiny the financial management of the Klamath County school district.