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Attorney Client Privilege—Does Subject Matter Waiver Apply?

Posted in ACC News, In the House, In the News, In-House Practice

Last week, the Illinois Supreme Court answered the question of whether subject matter waivers should apply to attorney-client privilege, and subsequently, calmed the concerns of ACC and others by rejecting forced disclosure of attorney-client communications. Each day, companies and individuals seek the advice and counsel of lawyers through conversations and communications they assume are confidential and protected through the attorney-client privilege. In the case Center Partners v. Growth Head GP, LLC, plaintiffs sought from the defendants all legal advice the defendants received from their own counsel regarding relevant business negotiations. To support this request, the plaintiffs argued that the defendants had shared among themselves some portions of that advice during negotiations, so they “waived” any privilege protection against the disclosure more broadly.

ACC and its Chicago Chapter, along with outside counsel, filed an amicus brief, joined by the Illinois State Bar Association, which made clear that applying this sort of rule would undermine the attorney-client privilege and disrupt business negotiations. The Illinois Supreme Court agreed, finding that, were they to adopt the plaintiffs’ approach, companies might not involve their lawyers in commercial negotiations. Instead, allowing parties to a business negotiation to share some, but not all, legal advice “lubricates business deals and encourages more openness in transactions.” Of the ruling, Thomas McGarry, chair of the Lawyers Professional Liability Practice at Hinshaw & Culbertson LLP, said, “Our Supreme Court reaffirmed the resilience and reliability of the attorney-client privilege. This is a victory for the public’s confidence in the legal profession.”

The Illinois Supreme Court is an example for other jurisdictions around the country. No state supreme court had forced disclosure of attorney-client communications, as the plaintiffs had suggested, though a number of lower courts had toyed with doing so. “The Illinois Supreme Court’s decision is significant because, as the first state supreme court to consider this important issue, it thoughtfully explained the reasons for the subject matter waiver doctrine and why misusing it to disrupt business negotiations would be a bad idea,” said ACC’s vice president and chief legal strategist, Amar Sarwal.

With this resounding decision, the Illinois Supreme Court has signaled to other courts that the privilege is an important tradition in our country, whether the legal advice is for putting together wills for a middle class family or interpreting draft contracts for a multimillion dollar business transaction.

 

 

Zenneia McLendon