May a Corporation Withhold Privileged Documents From a Former Member of the Corporation’s Board of Directors?

October 9, 2002

A number of courts have dealt with an issue that might arise in connection with the recent rash of corporate failures and resulting lawsuits. May a corporation assert the attorney-client privilege in a lawsuit by a former member of the corporation’s board of directors—thus denying the former director documents to which the director had access while serving on the board? A Nebraska federal court has said yes, while a Delaware state court has said no. Milroy v. Hanson, 875 F. Supp. 646 (D. Neb. 1995); Kirby v. Kirby, Civ. A. No. 8604,1987 Del. Ch. LEXIS 463 (Del. Ch. July 29, 1987).

In Lane v. Sharp Packaging Systems , Inc., 640 N.W.2d 788 (Wis. 2002), the Wisconsin Supreme Court adopted the Nebraska approach and rejected the Delaware approach, finding that a corporation could deny a former director access to legal advice furnished to the board during the director’s tenure on the board. The Wisconsin Supreme Court also denied copies of billing records submitted by the company’s law firm during the director’s tenure, although he had been entitled to review the billing records while on the board.

Lawyers representing companies should be familiar with this debate, and be prepared to deal with this issue if the need arises.