Source: https://www.accdocket.com/articles/joint-client-privilege-corporate-entities.cfm
Timestamp: 2019-04-22 08:37:39+00:00

Document:
I n-house lawyers frequently advise related corporate entities. Given that companies within the same corporate family share similar goals and business strategies, the use of centralized in-house counsel can be both efficient and economical. To preserve the attorney-client privilege in the representation of related corporate entities, counsel should carefully consider the intricacies of the joint client privilege.
What is the joint client privilege?
In In re Teleglobe, the US Third Circuit provided the most comprehensive analysis of the joint client privilege in the corporate context.3 Recognizing that that "parent companies often centralize the provision of legal services to the entire corporate group in one in-house legal department," the court explained that when a company's in-house legal department represents both the parent and a subsidiary or subsidiaries on a matter of common interest, the corporate entities are in a joint client relationship with the legal department. Therefore, privileged communications between employees of corporate affiliates and centralized in-house counsel regarding a legal matter of common interest should generally be protected from disclosure.
It is important to recognize that the joint client privilege is distinct from other information sharing privileges — the common interest privilege and the joint defense privilege. The privileged information sharing doctrines are often confused, as they are similar, yet have certain distinct characteristics.
The joint defense privilege "protects communications between parties who share a common interest in litigation."5 The joint defense privilege is narrower than the common interest privilege as it only applies to actual litigation, but many courts use the terms "common interest" and "joint defense" interchangeably.
How does the joint client privilege work?
For the joint client privilege to apply to members of the corporate family, the party seeking to assert the privilege must show that the communication: (1) is covered by the attorney-client privilege, and that (2) the clients share or shared a common legal interest.
Common ownership or control between the clients can be used to demonstrate a common legal interest.11 The greater the level of control or ownership between the parties, the more likely that a common legal interest will be established.12 However, parties cannot simply "rely blindly and boldly on the 'affiliation of the various entities'" in asserting a common interest.13 Disputes over the existence of a common interest may require the disclosure of organizational charts and corporate formation documents.
While the above examples are helpful guides, each distinct lawsuit or transaction involving multiple corporate family members should be evaluated to determine how to best protect privileged documents from disclosure.
Recently, in Ambac Assur. Corp. v. Countrywide Home Loans, Inc., New York's highest court, examining the common interest (but not the joint client privilege), held that the common interest privilege did not apply to a transaction and only applies to pending or anticipated litigation.23 While there does not appear to be a litigation limitation on the joint client privilege, parties may attempt to stretch Ambac's holding to the application of the joint client privilege.
Consider the choice of law issues. Some jurisdictions may apply the privilege law of the state in which the action is pending. However, other jurisdictions may apply the law of the state that has the most significant relationship to the communication, which may not always be the forum state. Additionally, with cross-border communications among related corporate entities, be mindful of international law issues concerning the privileged nature of in-house counsel communications.
Consider whether a common or identical legal interest exists between the corporate family members throughout the course of communications. Because work associated with various projects and deals may be fluid, take steps to consider if legal interests continue to be aligned.
Avoid situations where common in-house counsel are on the same side of the transaction. Use separate counsel to represent the different sides of the transaction.
Always be mindful of the attorney-client privilege and its narrow scope.
1 See, e.g., In re Grand Jury Subpoena: Under Seal, 415 F.3d 333, 341 (4th Cir. 2005).
2 See Restatement (Third) of the Law Governing Lawyers § 75(1) (2000) ("If two or more persons are jointly represented by the same lawyer in a matter, a communication of either co-client that… relates to matters of common interest is privileged as against third persons….").
3 493 F.3d 345 (3d Cir. 2007).
4 Id. at 365; see also Restatement (Third) of the Law Governing Lawyers § 76(1) (2000).
5 In re Grand Jury Subpoena: Under Seal, 415 F.3d at 341.
6 In re Teleglobe Commc'n Corp., 493 F.3d at 359.
7 Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 57 N.E.3d 30, 37 (N.Y. 2016).
8 See, e.g., Rossi v. Blue Cross & Blue Shield of Greater New York, 540 N.E.2d 703, 706 (N.Y. 1989).
9 Spectrum Sys. Int'l Corp. v. Chem. Bank, 581 N.E.2d 1055, 1061 (N.Y. 1991).
10 Compare La. Mun. Police Empl. Ret. Sys. v. Sealed Air, 253 F.R.D. 300, 309-10 (D.N.J. 2008) (finding that substantially similar legal interests are sufficient); with Duplan Corp. v. Deering Milliken, Inc., 397 F. Supp. 1146, 1172 (D.S.C. 1974) (requiring identical interests).
11 In re Grand Jury Subpoena #£06-1, 274 F. App'x 306, 311 (4th Cir. 2008) ("Indeed, a number of courts have held that close corporate affiliation, including that shared by a parent and a subsidiary, suffices to render those entities "joint clients" or "co-clients," such that they may assert joint privilege in communications with an attorney pertaining to matters of common interest.").
15 Roberts v. Carrier Corp., 107 F.R.D. 678, 678-88 (N.D. Ind. 1985).
16 Polycast Tech. Corp. v. Uniroyal, Inc., 125 F.R.D. 47, 49-50 (S.D.N.Y. 1989).
17 SCR-Tech LLC v. Evonik Energy Servs. LLC, No. 08 CVS 16632, 2013 WL 4134602, at *5 (N.C. Super. Aug. 13, 2013).
19 In re Teleglobe Commc'ns Corp., 493 F.3d at 362.
20 Restatement (Third) of the Law Governing Lawyers § 75 (2000).
21 See, e.g., Neuberger, 230 F.R.D. at 411 n.20; Kincaid v. Wells Fargo Sec., LLC, No. 10-CV-808-JHP-PJC, 2012 WL 712111, at *2 (N.D. Okla. Mar. 1, 2012).
22 In re Teleglobe Commc'ns Corp., 493 F.3d at 363.
23 Ambac, 57 N.E.3d at 629.

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