A trial court has ordered disclosure of father-son communications despite the assertion of a common interest privilege in alleged anticipated litigation. ABA Litigation Section leaders acknowledge the risks involved with including third parties in litigation, one of which can be waiver of a privilege.
In TGT, LLC v. Joseph Meli, a limited liability company brought a proceeding to enforce a $7,860,000 judgment against an individual and his business in connection with an alleged fraud scheme involving ticket sales to Broadway and live-music events. The company moved to compel the former attorneys for the individual to respond to the company’s judgment enforcement subpoena. A New York trial court granted the company’s motion to compel in part, directing the law firm to produce a disclosure statement of the individual’s assets, and to produce the law firm’s engagement letters and common interest agreements. Because the law firm had produced a privilege log with over 700 entries, many of which asserted the common interest privilege as to communications between the individual and his father, the court adjourned the motion for additional briefing on the common interest privilege.
The law firm asserted that the common interest privilege applied to communications with the individual’s father because the father and son shared a common legal interest in reasonably anticipated litigation. Specifically, the law firm argued that the son, as owner of the assets at the time of the engagement, and the father, who was trustee of a trust and the son’s attorney-in-fact for the purposes of transferring assets held by third parties into the trust, shared a common legal interest because they “reasonably anticipated follow-on criminal-court litigations” that would enforce certain forfeiture orders and judgments. The law firm argued that that type of litigation would “necessarily bind” the father and son to “the same positions as they were both acting to fund the same trust.”
The court noted that generally, communications made in the presence of third parties are not privileged from disclosure because they are not deemed confidential. However, an exception may apply for those with a “common interest”; disclosure is privileged between co-defendants, co-plaintiffs, or persons who reasonably anticipate they will become co-litigants, because such disclosures are deemed necessary to mount a common claim or defense.
The court ultimately held that the law firm failed to meet its burden of establishing a common interest between the father and son because litigation was not reasonably anticipated merely because both men shared the same goal with respect to funding the trust, and where the criminal case against the son had concluded. The court explained that a “common problem”—as opposed to the need for a common defense—was not enough to trigger the protection.
“A good rule of thumb is to document a common interest privilege,” states Joseph V. Schaeffer, Pittsburgh, PA, Co-Chair of the Litigation Section’s Pretrial Practice & Discovery Committee. “You want to try and make sure you have your theory first and then communicate. You do not want to assert a privilege and then think about how to document that retroactively, which may have been the case here. When you involve a third party in litigation, you increase the risk of waiver, which is why you want to be careful and thoughtful as to whether the third party needs to be included in communications” adds Schaeffer.
“While including a third party may be common practice in certain kinds of cases, it is never a good idea and will result in the waiver of the privilege absent the circumstances required for one of the extensions to the privilege to apply,” offers Jeanne M. Huey, Dallas, TX, Co-Chair of the Section’s Ethics & Professionalism Committee. “To avoid any inadvertent waiver of the privilege by the client—who may want to overshare or include third parties in otherwise privileged conversations—it is important to discuss the specifics of the attorney-client privilege at the start of any representation and to include a written description in every fee agreement,” warns Huey.
