The More the Merrier: The Challenges of the Joint Defense
The lawyers should honestly evaluate the level of trust they have for each other.
The most common situation faced by property insurance lawyers is that of multiple carriers defending a claim involving a large loss. To defend such claims as effectively as possible, there must be an easy exchange of information among counsel for all of the carriers. In this context, a joint defense agreement or a joint counsel arrangement of some sort will help protect communications under attorney-client privilege and also facilitate all counsel working together. This article begins with a brief discussion of the joint defense privilege that is the cornerstone of any joint defense working arrangement. It then discusses ethical issues that come up in joint venture relationships and concludes with a discussion of the practical aspects of drafting joint defense agreements.
Joint defense privilege. According to the authors Richard A. Sheehy and William Sherwood in their article “Joint Defense Privilege and Its Ethical Implications” ( Defense Counsel Journal, volume 66, July 1999), the cornerstone of joint defense agreements is the existence of a joint defense privilege that “enables counsel for clients facing a common litigation opponent to exchange privileged communications and attorney work product in order to adequately prepare a defense without waiving either privilege.” The joint defense privilege flows from the attorney-client privilege and the work product doctrine—it is not a separate privilege. The privilege “expands application of the attorney-client privilege or the work-product doctrine to circumstances in which it otherwise might not apply” ( Griffith v. Davis, 161 F.R.D. 687, 692 (C.D. Cal. 1995)).
To establish a joint defense privilege, it must be shown that the communications were made in the course of a joint defense effort, that the statements were designed to further the effort, and that the privilege was not waived. Further, it is important that the communication be part of a joint defense effort and that the privilege must arise out of “the need for a common defense, as opposed to merely a common problem” ( Medcom Holman Co. v. Baxter Travenol Labs, Inc., 689 F. Supp. 841, 845 (N.D. Ill. 1988)).
It is possible to waive this privilege. The “mere existence of an agreement between parties to keep documents confidential is not, in itself, sufficient to protect them from discovery under the attorney-client privilege” ( Visual Scene, Inc. v. Pilkington Bros., PLC, 508 So. 2d 437, 442 (Fla. Dist. Ct. App. 1987)). Further, waiver of this joint defense privilege requires that all the parties participating in the joint defense assent to the waiver. In this way, the joint defense privilege presents an exception to the general understanding that a privilege is waived if information is disclosed to third parties. When the individual party having participated in a joint defense discloses protected information outside of the group, it only waives the privilege as to itself, not the group.
Finally, because the joint defense agreement flows from the attorney-client privilege and the work product doctrine, any exceptions that exist to the attorney-client privilege and the work product doctrine, such as the crime-fraud exception, would apply to the joint defense privilege as well.
Ethical issues. Joint defense agreements focus mainly on the issue of privilege. Privilege is the right to discuss a matter freely with certain people while keeping the matter from being discovered. A number of courts have held that communications among counsel for multiple parties are privileged. The courts have called this privilege the “common interest doctrine,” the “allied lawyer privilege,” the “joint defense privilege,” and many other names.
Curiously, although shared confidential communications enjoy some security under the common defense privilege, legal authorities do not generally assert that a lawyer owes an ethical duty of confidentiality to the clients of coordinating lawyers. The American Bar Association (ABA) was asked to address this ethical issue when an insurance defense lawyer, who had regularly participated in a joint defense consortium as counsel for an insurance company, was approached by a client who wanted him to file suit against other members of the consortium. In Formal Opinion 95-395, the ABA found that a lawyer who has represented only one of the parties in a joint defense consortium does not have an obligation to the other parties to the consortium “that poses an ethical bar to the lawyer thereafter taking on a related representation adverse to any of the other parties.”
Instead, the lawyer’s confidentiality obligation may exist elsewhere. Further, if there was a signed joint defense agreement, then under contract principles a lawyer who participates in a common interest agreement with other lawyers may have a contractual duty to the other lawyers pursuant to that agreement—and may thus be liable for breach of those duties even if he is not ethically barred from later pursuing other members of the consortium.
Drafting the agreement. Before even considering entering a joint defense agreement, the following three issues should be addressed. First, the lawyers should honestly evaluate the level of trust they have for the other lawyers. Do they trust them to do good work? Do they trust them to do their fair share of the work? Second, the lawyers should address the question of whether their client is a central focus of the litigation and, if so, whether it necessarily is in the client’s interest to allow other lawyers and less effective co-defendants to influence their defense strategy. Finally, and conversely, if their client is only a minor defendant, the lawyers must consider whether it is in the client’s ultimate interest to agree to and help pay for a strategy devised by the target defendants.
Assuming the above concerns have been addressed, attorneys should consider several points when drafting joint defense agreements. The agreement should emphasize that the parties wish to pursue their common interest without waiving any protection of attorney-client privilege or the work product doctrine. The parties should agree to adopt steps necessary to protect the pool of information and not to disclose it to outsiders without the consent of all parties to the agreement. No party should be obligated to share any information it has or to refrain from any negotiation with adverse parties, but the agreement may require notice if a settlement is reached. The parties should be barred from using shared information in any manner adverse to any of the other parties to the agreement. The agreement should explicitly state that the attorney-client privilege and work product protection extend beyond the withdrawal of a party from the agreement, and the parties may agree that all shared material should be returned upon withdrawing. Specific performance or injunctive relief should be specified as the appropriate remedies to compel performance with the terms of the agreement.
The agreement should demand all modifications be made in writing and should explicitly state that nothing in the agreement is intended to interfere with the attorney’s obligation to ethically and zealously advocate for the individual client. The parties should certify that counsel has explained the agreement to their clients and that they agree to abide by its terms. The agreement should address what experts the parties can share, who will do the work to prepare them and their testimony, and what happens to the expert if one member withdraws. The agreement should acknowledge that each party is represented exclusively by its own attorney. It should contain a waiver by the participating clients of any conflict of interest claim or right to disqualify against any attorney who receives confidential information pursuant to the agreement. Finally, the agreement should contain a statement describing the process for terminating participation in the agreement.
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