The History of the Common Interest Privilege
The common interest privilege is an extension of the attorney-client privilege. In other words, the common interest privilege is not a stand-alone privilege wholly separate and apart from the attorney-client privilege. Instead, the common interest privilege is basically an expanded version of the attorney-client privilege. As such, a quick refresher is in order.
Attorney-client privilege. Readers of this article are surely familiar with the basic elements of the attorney-client privilege: confidential communications between an attorney and a client for the purpose of giving or receiving legal advice are generally privileged against discovery in litigation. This privilege is widely regarded as the oldest and most venerable of all privileges, and courts respect the boundaries of the attorney-client privilege when it comes to discovery disputes.
Along with familiarity with the basic elements of the attorney-client privilege, readers also know that courts will find that the attorney-client privilege has been waived under many circumstances. Perhaps most frequently, the privilege can be waived if the communication is shared with a third party, i.e., someone other than the attorney and the client. For example, if a privileged email between an attorney and a client is later forwarded by either the client or the attorney to a third party, then any privilege is typically waived. The result of waiver is that the email is subject to discovery by adversaries and might be admissible at trial. Depending on the importance of the communication in question, such waiver can result in great harm to a case.
Because there can often be a need for lawyers to include outside individuals as part of their “team” for the purpose of providing the client the best and fullest representation, the law has created many exceptions to the rule that the sharing of an otherwise privileged communication can destroy the privilege. For example, when a third party is necessary to convey legal advice (such as an accountant helping to translate dense financial information for the benefit of the client, or a Russian translator communicating with a non-English-speaking client), many jurisdictions refuse to find that engaging in communications or sharing documents with such a third party results in waiver. And when a third-party contractor is the “functional equivalent” of an employee, communications among an entity, the entity’s attorney, and the entity’s “functional” employee typically remain privileged.
Co-client and joint defense/plaintiff privileges. More importantly for purposes of this article, courts have also recognized the “co-client” or “joint client” privilege, which extends the attorney-client privilege to include additional parties without the risk of waiver. Where multiple clients retain the same attorney(s) to represent them, communications among the multiple clients and the shared attorney(s) remain insulated from discovery. In this way, each additional client of the same attorney is not considered a third party who can trigger waiver and thereby destroy the privilege.
Building upon the co-client privilege, the next extension of the privilege was to add not only more clients to the equation but also more attorneys. The “joint defense” privilege allows one group of clients and their counsel to communicate with another group of clients and their separate counsel—all without allowing their common adversary (the plaintiff) to discover those communications. The joint defense version of the attorney-client privilege applies during live litigation, as to both defendants in the same case and defendants in related, but separate, cases.
Like the co-client version of the attorney-client privilege, the joint defense version appears to have originated in criminal law, though both the co-client and joint defense variants of privilege now apply in civil litigation as well.
In addition, at least some courts recognize a “joint plaintiff” version of this extended privilege as well, which applies where plaintiffs are pursuing related litigation, whether in the same or different courts.
Common interest privilege. Taking the logic one step beyond the joint defense privilege brings us to the heart of this article: the common interest privilege allows one group of clients and their counsel to communicate confidentially with another group of clients and their separate counsel—but this time without the requirement of active litigation (in most courts, at least). The validity of an assertion of a common interest privilege might not be tested until litigation arises, but the allegedly privileged communications can occur long before any such litigation arises or is even anticipated.
Terminology varies across jurisdictions. When encountering different courts’ discussions of the co-client, joint defense/plaintiff, and common interest privileges, attorneys might find that the nomenclature varies from one jurisdiction to another. Some judges might use one or more of these terms relatively loosely, without strictly distinguishing among them. This is not surprising because these extensions of the attorney-client privilege are relatively new in the case law and the courts are still working through the fine distinctions.
Regardless of the specific terminology used by a given court, it seems that all jurisdictions recognize each of these extensions of the attorney-client privilege. Practitioners should simply take care to apply the terminology favored by the pertinent jurisdiction, while recognizing that other courts might use a somewhat different (and perhaps even inconsistent) vocabulary.
What Is a Sufficiently “Common” Interest?
To assert a valid claim for common interest privilege protection, one must establish the fundamental elements of any attorney-client privilege claim. This article will presume readers’ familiarity with those elements. But there are also additional requirements to bear in mind specific to the common interest flavor of privilege. To unpack the common interest privilege, it is useful to analyze each term, starting with the meaning of “common.”
The case law varies regarding the precise meaning of “common.” At the most restrictive end of the spectrum, some cases indicate that a common interest means an identical interest. But other cases state that something less than identical interests can suffice to trigger the privilege. In fact, some courts at the most liberal end of the spectrum have recognized that the common interest privilege can apply even where the parties invoking the privilege have adverse interests in some respects.
One oft-litigated scenario in this area is the situation of arm’s-length transactions, such as mergers and/or acquisitions (M&A). Some courts on the restrictive end of the spectrum have held that premerger negotiations between separate entities are not protected by the common interest privilege. These courts reason, with some persuasive force, that the companies are engaged in a zero-sum game in obtaining the best deal for themselves at the other’s expense, and therefore cannot share a common interest. But other courts have found that premerger negotiations between separate entities can be protected as privileged. A seminal opinion in this line of cases reasoned that shielding communications between prospective buyers and sellers from discovery encourages frank communications, thereby reducing unwelcome surprises after acquisition and ultimately diminishing the risk of subsequent litigation.
The common interest privilege has been tested in cases beyond the M&A context as well. For example, in the Visual Scene case from Florida, a plaintiff distributor of glass sued three defendants because the glass was allegedly defective. Two of the defendants were involved with manufacturing the glass, while the third defendant processed the glass.
The defendant processor attempted to shield some of its communications with the plaintiff against discovery by one of the defendant manufacturers. The defendant manufacturer argued, with at least some superficial appeal, that the plaintiff and the defendant processor could not claim a joint privilege because they were literal adversaries on opposite sides of the “v.” in litigation. The trial court agreed, ruling that discovery was permissible.
But upon issuing an extraordinary writ of certiorari, the appellate court reversed the trial court, finding that the communications were privileged from discovery. The appellate court held that the plaintiff and the defendant processor shared a common interest in showing that the defendant manufacturer was liable for the plaintiff’s damages (if any). To be sure, communications between the plaintiff and the defendant processor on many other issues were probably not privileged because those two parties were actively litigating against each other regarding the defendant processor’s alleged liability. The plaintiff actually “freely conceded [that] its interests in this litigation are opposed to” those of the party with whom it claimed a mutual privilege. On any contested issues, no privilege could exist between the two parties.
Yet, in a carefully written opinion, the court recognized that parties can share a common legal interest as to one or more issues while not sharing any such interest as to other issues. “To extend the common interests privilege to parties aligned on opposite sides of the litigation for another purpose is not inconsistent with any policy underlying the attorney-client privilege and merely facilitates representation of the sharing parties by their respective counsel.” Insofar as the plaintiff established that it suffered damages, both it and the defendant processor shared an interest in proving that the defendant manufacturer was liable for some (if not all) of the damages. This is a common situation: codefendants are often in the position of jointly denying that the plaintiff was harmed by anyone at all, but also arguing in the alternative that any harm was caused by the other defendant.
The court’s reasoning in Visual Scene presumably would have extended equally to communications between the plaintiff and the defendant manufacturer regarding a common legal theory of liability against the defendant processor. Likewise, the two defendants presumably would have been able to invoke a joint defense privilege to shield their communications against the plaintiff. Thus, in litigation involving more than two parties, it is conceivable that overlapping alliances can form, each of which is protected by a joint defense or common interest privilege—even though the members of each privileged group are otherwise opponents.
The court likewise found that the work product exchanged between the plaintiff and the defendant processor was protected from discovery. While the analysis for privilege and work-product protections is not identical in all respects, the result should be the same in this situation:
So long as transferor and transferee anticipate litigation against a common adversary on the same issue or issues, they have strong common interests in sharing the fruit of the trial preparation efforts. Moreover, with common interests on a particular issue against a common adversary, the transferee is not at all likely to disclose the work product material to the adversary.
It appears that the holding in Visual Scene is representative of many other courts. Visual Scene itself cited decisions from various federal courts, including the U.S. Courts of Appeals for the Third, Seventh, Ninth, and D.C. Circuits. Similar cases can be found in many other courts across the country.
What Is a Sufficiently “Legal” Interest?
Just as a communication must relate to a “common” interest among the clients and attorneys, the communication must also relate to a “legal” interest. This requirement is not unique to the common interest version of the attorney-client privilege, as all attorney-client communications should be legal in nature to warrant protection from discovery. But this element often takes center stage in disputes over common interest claims, and so it deserves some analysis here.
Communications often are not either purely legal or purely not legal in nature. The messy nature of the real world requires courts to determine whether the legal nature of the communications is salient enough to trigger protection. The majority view appears to be that the legal nature of the communications must predominate over other interests, such as business or personal interests, in order for the privilege to apply. The minority view takes a more expansive view of the privilege, not requiring that the communications be predominately about legal interests.
As for what types of legal interests qualify, compliance with particular laws is an easy example of a purely legal interest. Other situations, where both legal and commercial interests are intertwined, present closer calls. The more imminent that litigation appears, the more likely it might be that the attorney’s advice is predominately legal in nature.
Notably, in most jurisdictions, the parties do not need to reasonably anticipate litigation in order to qualify for the common interest privilege. Indeed, “reasonable anticipation of litigation” is usually an element of the work-product doctrine but not the attorney-client privilege. Yet a notable exception is New York, which recognizes the common interest privilege only where litigation is reasonably anticipated.
Who Can, and Cannot, Communicate Directly?
The common interest privilege only applies where each separate client group has its own attorneys. If a group of clients and their attorneys communicate with an unrepresented party, then there can be no common interest privilege. In that situation, the unrepresented party is simply a third party who destroys the privilege and creates waiver.
Some courts have even suggested that communications qualify for common interest privilege protection only where the attorneys communicate with each other. If the clients directly communicate with each other, or if the attorneys for one client group communicate directly with the other client group, the privilege might not survive. However, at least one case has indicated that the common interest privilege can apply to communications between an attorney from one client group and a client represented by another attorney who is not actually a party to the communication.
The Common Interest Privilege in the Insurer/Insured Context
How does this common interest privilege relate to the “common interest doctrine” in the insurer/insured context? In answering this question, it is important to distinguish between the common interest privilege, which is the subject of this article, and the common interest doctrine, which often arises in coverage disputes.
The common interest doctrine is typically invoked in two related circumstances. First, when disputes arise between an insurer and an insured as to coverage of an underlying settlement or judgment in favor of a third party, the insurer often seeks discovery of materials shared between the insured and its counsel in the underlying case. Insurers often argue that there is a common interest between the insurer and the insured in the underlying litigation such that the insurer is entitled to the defense counsel’s materials.
Second, and conversely, the insurer and the insured might jointly argue that their common interest against the third-party claimant is a defensive shield against discovery by that claimant of communications among the insurer, the insured, and their counsel. Accordingly, the common interest doctrine can be invoked both offensively (as a sword by the insurer against the insured) and defensively (as a shield by the insurer and the insured jointly against the third-party claimant).
The common interest doctrine is distinct from the common interest privilege because in the former scenario there are not necessarily two separate groups of clients and their respective counsel working toward a common goal in the underlying case. Instead, there is often just one attorney (or group of attorneys) working on behalf of the insured (though often paid by the insurer).
As a technical matter, then, the common interest doctrine appears more reminiscent of the co-client scenario because the single attorney/firm (arguably) represents the interests of both the insured and the insurer against the common third-party adversary. In this vein, some courts have recognized that third-party claimants are not entitled to communications exchanged among the insured, its counsel, and the insurer. Thus, the insurer is often not considered a third-party interloper that destroys the privilege.
Conversely, some courts have recognized that, in a coverage dispute, insurers are entitled to discover at least some of the insured’s counsel’s materials from the underlying case. This is not a surprise when viewed through the lens of the attorney-client privilege: when two clients share an attorney, the communications between those clients and counsel are not privileged if a dispute subsequently arises between the clients. Of course, there is often a fundamental question as to whether the defense attorney is representing just the insured or both the insured and the insurer.
Certain issues, such as whether defense counsel is retained independently by the insurer, along with who paid counsel and whether the insurer reserved rights when providing a defense, can determine whether the insurer and the insured had a common interest, allowing the insurer discovery of the insured’s litigation materials. When and to what extent the insurers are entitled to such information varies from jurisdiction to jurisdiction. (The complexities of the tripartite relationship among insurer, insured, and defense counsel sweep well beyond the scope of this article.)
In sum, the common interest attorney-client privilege and the common interest doctrine can overlap in litigation and are in a sense related, but practitioners should be sure to avoid conflating these separate lines of cases.
Practical Application Considerations
To increase the odds that a court will honor a claim of the common interest privilege, the following pointers can help.
Consider memorializing an agreement among client groups and their counsel to prove that they share a common legal interest. Just as it is always good practice to have a written engagement letter to establish and clarify any attorney-client relationship, a written agreement can provide evidence to a court that the parties believed that they shared a common legal interest subject to privilege. Such an agreement does not automatically grant privilege protections to any given communication, but it might help tip the scale in a judge’s mind for close calls. The agreement can contain details about the nature of the common interest, including the legal questions that predominate, and call for coordination among the various clients and counsel.
To avoid potential waiver in most (if not all) jurisdictions, it is also a best practice to ensure that the attorneys in a common interest group handle all communications. The parties themselves should not directly communicate with each other and probably should not communicate directly with the other parties’ attorneys either. Allowing the parties to engage in communications might create a waiver by definition. And, in any event, it is always wise to leave attorneys in charge of any privileged communications because attorneys are usually more careful with such communications.
When attorneys communicate with each other subject to a common interest defense privilege, they should also be in the habit of marking their communications as such. Just as attorneys and clients often state that their confidential communications are subject to the attorney-client privilege—sometimes doing so in the subject line of an email or header of a letter or memorandum—common interest counsel should take the same precautions. Of course, a court is not bound to uphold a claim of privilege simply because the attorneys wrote “subject to common interest privilege” on a document. And the absence of such language is not necessarily fatal to a subsequent privilege claim. But including such language in a communication can help support a claim of privilege because such claim will not appear to be merely revisionist, wishful thinking by a litigator.
Finally, remember that the attorney-client privilege is usually a creature of state, not federal, law. While the fundamentals of the attorney-client privilege are long settled and uniform among jurisdictions, there are important differences among forums regarding the relatively novel common interest privilege. As noted earlier, New York has adopted a particularly narrow version of the common interest privilege by including the requirement of anticipated litigation, and other jurisdictions disagree about the meaning of “common,” among other issues. Therefore, it is always imperative for a practitioner to look for precedent in the controlling jurisdiction and, failing that, look for persuasive case law or secondary authorities (like the Restatement) elsewhere. Currently, there is sparse case law in both the courts of last resort in most states and the federal circuit courts of appeal. As such, the precise contours of the common interest privilege are not fully settled across the country, and future cases will be needed to bring further clarity to this area of the law.
Conclusion
The common interest attorney-client privilege often causes confusion among both attorneys and courts because jurists often mix up this privilege with similar doctrines. But by focusing on the essential elements of the privilege, taking care to review case law in the pertinent jurisdiction, and employing some of the pointers in this article, a lawyer can make the most of the privilege and shield potentially damaging documents from production in litigation.
