• Lawyers should be selective about what to disclose under a common interest agreement, panelists say
• An advanced waiver is the best way to avoid disqualification if a party defects
An “explosion of cases” in the last decade hasn’t completely clarified when parties with a “common interest” can agree to share information under the protections of the attorney-client privilege, a panel said May 31 at a recent American Bar Association conference.
Parties who have a common interest in pursuing an argument or defense in litigation may enter into a common interest agreement. The purpose is so that the parties and their lawyers can share legal strategies and information without giving up the protections of the attorney-client privilege.
Without a common interest agreement, an individual’s communications with his or her own lawyer would lose those protections if shared with a third party. Common interest agreements are often used when multiple defendants are accused of criminal conduct and the defendants, represented by separate lawyers, want to discuss a defense strategy that is in their collective interest.
But courts don’t always agree about when parties can use a common interest agreement, what the agreements have to say to be effective, and what the parties must do to ensure their attorney-client privileged information remains confidential.
A key element of the common interest doctrine is that the participants must have a common strategy, Alan J. Weil, a legal malpractice defense partner with Kendall Brill Kelly in Los Angeles, and panel moderator, said. Most courts say there must be a common legal interest, and not just a common commercial or financial interest.
Confidentiality is another requirement. But Weil clarified that the communications protected by the doctrine only cover the areas of common interest. The doctrine doesn’t create a new privilege. Rather it helps maintain an existing privilege and prevent the waiver of already privileged communications, he said.
Common interest agreements typically let a participant withdraw. But a party who withdraws can’t then unilaterally waive the privilege attached to communications from other parties to the agreement, Weil said. A party may only waive privilege to his or her own communications. If an email, for example, concerns the privileged communications of more than one party to the agreement, the email shouldn’t be disclosed unless all of the affected parties waive the privilege.
Unless the agreement provides otherwise, if the parties to the common interest agreement later end up in litigation against each other, there is no privilege attached to the communications the parties exchanged under the common interest agreement, Weil said. This is similar to the position in the Restatement Third of the Law Governing Lawyers, Weil said, which provides that two clients represented by the same lawyer can’t invoke the privilege against one another in a later dispute. But not all jurisdictions have adopted this approach.
Common interest agreements don’t need to be written and can be implied, Weil said.
Don’t ‘Open the Kimono’
When a lawyer represents multiple clients at a time, there are “absolutely no secrets” among those clients, Margaret A. Keeley, the co-chair of the lawyer liability practice group at Williams & Connolly LLP, said. The lawyer is obligated to share all relevant information with all clients.
But if there is a common interest agreement, Keeley said, the lawyer decides what to share with the common interest group. There is generally no obligation to share all information with everyone. And the lawyer has no duty of loyalty to the other members of the common interest agreement, Keeley said.
Weil added that lawyers “proceeding in a competent fashion” should only disclose what they aren’t afraid of possibly being disclosed later if another participant breaches the agreement. This isn’t the time for lawyers to “open the kimono,” Weil said.
In a joint representation, all conflicts must be waived by the affected clients, said Keeley. But in a common interest agreement, there can be unresolved conflicts within the group.
William T. Barker, senior counsel with Dentons who litigates and counsels clients on professional liability issues, said the most common type of common interest arrangement is called a coalition. A typical coalition is when there are multiple defendants in a criminal matter that had no pre-existing relationship, but now share a common enemy. There may be conflicts amongst them, but they want to cooperate to some extent in their defense.
The other kind of arrangement is a network. Those parties have a pre-existing obligation that binds them together, Barker said. A primary example is in liability insurance defense. Barker said most jurisdictions consider the insurance company to be a co-client of the lawyer defending the case, so communications between the lawyer and the insurer are protected.
Others consider the insurer to be an agent of the insured for the “purpose of managing the defense,” so the communications between the lawyer and the insurer also would be privileged, Barker said. The Restatements on the Law Governing Lawyers and on the Law of Liability Insurance both support the insurer sharing the privilege in these circumstances, Barker said.
It gets trickier, Barker said, when an insurer doesn’t handle the defense. This can happen with an excess policy or a reimbursement policy like directors and officers policies, or when an insured has a right to independent counsel. In those instances, that carrier isn’t providing a defense to the insured and can’t make decisions about the defense, but still needs to remain informed of the progress of the matter, Barker said. So it’s best to use a common interest agreement to protect the communications with the insured’s lawyer.
Barker warned that the insured’s lawyer should only share privileged information with the non-defending insurer that is relevant and that doesn’t conflict with the insured’s interests.
DQ & Other Obstacles
For a common interest agreement to be effective, all parties must be represented by a lawyer, Barker said. But the few cases on the issue are not unanimous, he said.
“[T]he courts frequently treat the common interest doctrine as an exception to the attorney-client privilege,” Jeffrey M. Smith, a professional malpractice lawyer with Greenberg Traurig in Atlanta said. If there is no lawyer, there can be no attorney-client privilege, he said.
Barker said that last August the ABA passed Resolution 102C, which said if parties have a pre-existing relationship, everyone shouldn’t need a lawyer for a common interest agreement to be effective.
Courts are divided on whether the common interest agreement can protect communications associated with a transaction, Barker said. Smith said that as of 2016, New York does not apply the common interest doctrine to transactional matters.
Keeley said that a motion to disqualify an attorney based on a prior common interest agreement must show an actual exchange in a prior matter of confidential information that is relevant to the current matter. The lawyer’s former representation must be substantially related to the current litigation. And the current client’s interests must be materially adverse to those of the common interest participant who is seeking protection.
To help avoid disqualification, Keeley recommended, use an advanced waiver that’s as specific as possible, and get it in writing. And it should specifically provide that the lawyer can use on cross-examination any confidential information obtained pursuant to the common interest agreement after the witness defects and testifies against the lawyer’s client.
The panel was part of the ABA’s 44th National Conference on Professional Responsibility, in Louisville, Kentucky.