Do Communications Between a Corporate Parent and Subsidiary Waive the Privilege?

June 20, 2001

In nearly every situation, corporate lawyers have an incentive to honor (if not emphasize) the distinction between members of their client’s corporate family—parents, subsidiaries, etc. However, does this approach mean that communications from one to the other are outside the attorney-client relationship for purposes of waiving the attorney-client privilege?

Fortunately, most courts find that communications between a parent and subsidiary are not to a “third party,” and therefore will not waive the privilege. For instance, the court in Cary Oil Co. Inc. v. MG Refining & Marketing, Inc., No. 99 Civ. 1725 (VM) (DFE), 2000 U.S. Dist. LEXIS 17587, at *17 (S.D.N.Y. Dec. 6, 2000) noted that “[t]he plaintiffs cite no New York case holding that a subsidiary waives its privilege by making disclosures to its parent corporation. There is no such waiver in federal-question cases.”

This general rule might not apply with equal force to subsidiaries that are less than wholly owned, so corporate lawyers must remain vigilant in protecting the privilege whenever one corporate family member communicates with another.