Work thoughtfully, carefully to protect privilege, work product

By Mark McGrath

The situation is a common one. During discovery in a civil action involving multiple defendants, it is revealed that counsel for the defendants conducted joint litigation-related activities among and between themselves. For example, counsel for the defendants might have exchanged joint communications, conducted witness interviews in tandem or circulated draft pleadings among themselves. Sensing a potential cache of relevant documents, counsel for the plaintiff requests all documents relating to the joint activities and communications.

Query: Are these materials discoverable?

The general rule is that attorney-client communications made in the presence of a third party constitute a waiver of the attorney-client privilege. For example, in State v. Murvin, the North Carolina Supreme Court held that a communication between an attorney and client that was made in the presence of a relative and friend of the client effected a waiver of the attorney-client privilege. Other cases have reached a similar conclusion. (Berens v. Berens holds that communications between an attorney and her client in the presence of a third party constitute a waiver of the privilege.)

Consistent with the law in most jurisdictions, the North Carolina courts have held that collaborative work product and communications between an attorney and client made in the presence of a third party do not constitute a waiver of the privilege or work product immunity if the client and third-party share a common legal interest or strategy in the proceedings at issue. Variously called the “common interest doctrine” or the “joint defense privilege,” the rule protects from waiver shared work product and communications between the attorney, a client and third parties who have a common legal interest.

The contours of the doctrine were outlined by the North Carolina Court of Appeals in Friday Investments v. Total Fitness, in which the court held that the attorney-client privilege extends to communications that pass from one party to the attorney of another party where a joint defense effort or strategy has been decided upon, agreed to, and undertaken by the parties and their respective counsels. Friday outlined a three-part test for determining whether shared communications and shared work product qualify for the doctrine. Joint activities and communications retain their privileged status and will not affect a waiver of the privilege when:

• The parties share a common legal interest.
• They agree to exchange information to facilitate legal representation of the parties.
• The shared information must otherwise be confidential. (Sessions v. Sloane and Nowak v. Metropolitan Sewerage District cite with approval the three-part test established by Friday.)

Parties seeking to obtain otherwise privileged material should flesh out in written discovery and depositions who was present during relevant conversations or who had access to work product to determine if someone outside of the attorney-client relationship participated in such activities. Targeting such an enterprise has the potential to reach a trove of relevant and critical evidence.

While there might be situations in which joint activities and communications are essential to conducting the litigation, the safer practice would be to remain within the traditional attorney-client relationship and avoid the sharing of work product and other privileged material with third parties. Cases addressing the common interest doctrine typically arise from scenarios where counsel proceeded with jointly conducted activities and participated in joint communications assuming that they would retain their privileged status. To avoid waiver of the privilege, counsel should remember that any joint communications or sharing of work product has the attendant risk that these actions will be deemed a waiver of the privilege by a reviewing court.

However, intertwined the relationship between parties might be, courts are likely to scrutinize closely any such relationship where discovery is directed to jointly conducted activities. Nothing is guaranteed. Courts have even scrutinized whether a parent-subsidiary relationship supports a claim of privilege or work product immunity under the common interest doctrine (SCR-Tech LLC v. Evonik Energy). Joint activities and communications should be avoided unless they are essential to conducting the litigation and should be undertaken judiciously.

If defendants wish to establish a joint defense or common interest relationship, counsel should consider entering into a written joint defense agreement to formalize the creation of a joint defense relationship. While there is some indication in the case law that a JDA is not dispositive on the issue (Caliber Packing & Equipment LLC v. Swaringen), execution of a JDA would certainly be viewed by the reviewing court as relevant, if not determinative, of whether materials and communications shared among parties retain their privileged status (Howard v. IOMAXIS LLC). Friday also observes that prudent counsel should always put a joint defense agreement in writing even though there is no requirement that the agreement be in writing.

In many, if not most, cases, an in-camera review will be desirable and necessary to flesh out discovery issues in joint defense and common interest scenarios. Parties should proceed with the understanding that joint communications and shared work product will likely pass before a judge to make the determination whether the doctrine applies.

Parties seeking production of materials arising in the context of a joint defense relationship should appreciate that a ruling in their favor would likely create an immediate right of appeal, as such decisions are deemed to impact a substantial right. Counsel should balance the desirability of obtaining such materials against the likelihood that a favorable decision could result in a detour to the Court of Appeals.

Remember, parties asserting the common interest doctrine or joint defense doctrine must possess a common legal interest, such as a common litigation strategy. Business relationships, however intimate, will generally not support assertion of the common interest privilege.

Finally, be mindful of the fact that under well-settled law, a party asserting privilege as a basis for withholding otherwise relevant materials bears the burden of establishing the existence of the privilege. In this regard, the deck is somewhat stacked in favor of the party seeking purportedly privileged communications and work product. Combined with the well-established principle that privileges will be construed narrowly, counsel should be cognizant of the inevitable fact that joint activities and shared work product will be closely scrutinized by a reviewing court and might one day see the light of day.

Mark McGrath is a lawyer with Paynter Law in Hillsborough, where he practices personal injury and medical malpractice litigation.