Applying The Joint Client Privilege To Related Corporate Entities

Co-authored by Heather N. Bennett, General Counsel of the Real Estate Investing and Servicing Group, Starwood Property Trust

In-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?

The joint client privilege, also referred to as the co-client privilege, is an exception to the rule that the attorney-client privilege is waived when privileged information is shared with a third party.1 The joint client privilege, if properly applied, can protect against disclosure of communications between employees of affiliated companies and a centralized in-house legal team.2

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.

What the joint client privilege is not

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 common interest privilege allows separate attorneys representing different clients with common legal interests to share information between the attorneys while preserving the privilege. The privilege does not apply to communications between the separate clients. As observed in In re Teleglobe, the common interest privilege "only applies when clients are represented by separate counsel. Thus, it is largely inapplicable to disputes that revolve around corporate family members' use of common attorneys (namely, centralized in-house counsel)."4

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