Draft Settlement Agreements Receive Attorney-Client Privilege Protection

September 20, 2000

Courts sometimes have trouble deciding whether to apply the attorney-client privilege to draft documents ultimately intended to be revealed beyond the attorney-client relationship. Of course, the document that is ultimately revealed rarely if ever deserves attorney-client privilege protection, but there are differing considerations when assessing the privilege that might apply to earlier drafts of the document—which have not themselves been shared outside the attorney-client relationship.

On one hand, the drafts might reflect a lawyer’s legal advice, or be sent to the lawyer for purposes of obtaining the lawyer’s advice. On the other hand, the privilege arises only if there is an expectation that the communications will remain confidential and not be shared with others—a doctrine that might not apply with equal force to draft documents.

Although not every court agrees, the most logical way to approach this issue would be to subject any portion of any draft (that is not ultimately disclosed) to the standard attorney-client privilege tests to see if it deserves protection. Under this approach, all or some portion of drafts would merit protection to the extent that they constitute communications from a client to a lawyer for purposes of seeking legal advice, or communications from the lawyer reflecting legal advice.

The Southern District of New York recently took this approach. See N.V.Organon v. Elan Pharmaceuticals, Inc., No. 99 Civ. 11674 (JGK) (RLE), 2000 U.S. Dist. LEXIS 5629, at *5-6 (S.D.N.Y. April 27, 2000). The court found that drafts of a settlement agreement exchanged between a lawyer and client after settlement talks with the adversary deserved privilege protection. Among other things, the court noted that the drafts were only exchanged between the lawyer and the client, that the lawyer and client independently “exchanged information which [was] memorialized in the drafts” and that “there is no indication that the client intended for the communications to not be confidential.”

Lawyers and clients preparing and sharing draft documents should be familiar with applicable law governing the possible protection for those drafts. If the drafts reflect the client’s request for legal advice or the lawyer’s providing of such advice, it normally makes sense to memorialize this in contemporaneous correspondence or memoranda.