Attorney-Client Privilege in M&A Deals: Preserving and Controlling the Privilege

Description

Attorney-client privilege issues abound in M&A transactions due to the disclosure of sensitive information between prospective deal parties during due diligence and negotiations as well as the disclosure of deal-related documents to financial advisers and other third parties. Counsel advising deal parties must provide guidance on sharing information without waiving the privilege.

Delaware and New York case law apply the common interest doctrine--that information shared to promote a shared legal interest is privileged--to varying degrees. Counsel must understand the criteria and how courts may apply the doctrine if litigation arises after a deal is consummated.

Delaware generally recognizes that information shared with financial advisers is privileged if there is an expectation of confidentiality. Other states including New York take a more limited view. Counsel should consider steps to protect such information before retaining an investment bank or another adviser.

Regarding the question of who controls the privilege relating to deal negotiations, the New York Rule articulates an exception to the general rule that the attorney-client privilege transfers to new management at closing. Under the New York Rule, the privilege is retained by the seller after the consummation of the transaction. Care should be taken to draft choice of law provisions that yield the desired result.

Listen as our authoritative panel of attorneys examines current issues surrounding the attorney-client privilege in the context of M&A deals, including who holds the privilege, how it can be waived, and how to shield information. The panel will discuss their insights and best practices to preserve and control the privilege.