When a small town lawyer represents both the husband and wife in estate planning, it is easy to see how either client has a claim on the lawyer’s estate planning files. However, applying this principle to the corporate world can have surprising (and sometimes unfortunate) results.
The Troutman Sanders law firm represented both its long-time client The Southern Company and Southern’s subsidiary when Southern divested itself of the subsidiary – which became known as Mirant. When Mirant went into bankruptcy, its trustee sought the production of otherwise privileged communications between Troutman and Southern (the firm’s other jointly represented client). Troutman resisted the discovery, but lost. In In re Mirant Corp., No. 03-46590-DML, 2005 Bankr. LEXIS 1139, at *10 (Bankr. N.D. Tex. June 15, 2005), the court noted that “[i]t is well established that, in a case of a joint representation of two clients by an attorney, one client may not invoke the privilege against the other client in litigation between them arising from the matter in which they were jointly represented.”
Companies hoping to save money by having the same law firm represent both them and others (executives, former executives, or even subsidiaries about to be divested) should remember this.