The Common Interest Doctrine is used often in
insurance and reinsurance-related disputes. As policyholder and claimant
lawyers continue to aggressively pursue communications between insurers and
reinsurers about their claims, those seeking to preclude disclosure often turn
to the common interest doctrine to assert this as an exception to waiver of the
attorney-client privilege.
Many courts have extended the common interest
doctrine to include any common legal advice and strategy and not just legal
advice and strategy on current or anticipated litigation. New York has just
chosen not to do so.
In Ambac Assur. Corp. v.
Countrywide Home Loans, Inc., No. 80, 2016 N.Y. LEXIS 1649 (NY Jun. 9, 2016), the
New York Court of Appeals (New York’s highest court) reversed a decision of the
Appellate Division, First Department, and held that under the common interest
doctrine, an attorney-client communication that is disclosed to a third party
remains privileged if the third party shares a common legal interest with the
client who made the communication, the communication is made in furtherance of
that common legal interest, and any such communication relates to litigation,
either pending or anticipated. It is the latter litigation requirement that the
court, by majority decision, kept in place, even in the face of commentators
and other courts expanding the common interest doctrine exception beyond
litigation.
The decisions is a necessary read for anyone
interested in attorney-client privilege and anyone having to address the need
to share attorney-client privileged communications with third parties in the
context of a common legal interest. The majority ultimately concluded that the
benefits of expanding the common interest doctrine beyond litigation were
outweighed by the substantial loss of relevant evidence was well as the
potential for abuse. The majority invited the New York Legislature to consider
the alternative arguments made by the dissent if it wished to expand the
doctrine beyond litigation.
The dissent concluded that the attorney-client
privilege exception to discovery served individual and societal goals of
furthering the proper administration of justice by encouraging the free flow of
information essential to legal representation. Because it has never been
limited to client communications involving pending or anticipated litigation,
it made little sense to limit the common interest doctrine exception just to
litigation. The dissent would extend the attorney-client privilege (through the
common interest doctrine) to communications related to confidential
communications made for purposes of seeking legal and regulatory advice to
complete a merger.
The ramifications under New York law to insurance and
reinsurance disputes are many. The Court of Appeals has now made it crystal
clear that the exception to waiver of the attorney-client privilege through the
common interest doctrine will not apply unless the privileged communication
shared is in furtherance of a shared common legal interest and relates to
pending or anticipated litigation. Where discovery is sought concerning
communications between cedents and reinsurers about underlying losses and there
is no litigation pending or anticipated, those communications, under New York
law, will not be shielded from discovery.
On the flip side, in commercial
litigation involving failed mergers or other corporate transactions, including
insurance and reinsurance transactions, attorney-client privileged
communications shared with third parties will not be shielded from disclosure
unless those communications relate to pending or anticipated litigation. What
this means is that under New York law, before any attorney-client communication
is shared with a third party, consideration must be given to whether that
communication will be discoverable in the future.
No comments:
Post a Comment