Do Two Circuit Court Decisions Signal a Sea Change in the Common Interest Doctrine?

August 29, 2007

Starting with the need for criminal co-defendants to confidentially plot a common strategy, courts developed what initially was called the “joint defense” doctrine and later became known as the “common interest” doctrine. This doctrine allows the disclosure of privileged communications to third parties without causing a waiver. One of the traditional (and nearly unanimously recognized) prerequisites is the pendency or reasonable anticipation of litigation.

Two circuit court decisions have taken a dramatically different approach. In United States v. BDO Seidman, LLP, Nos. 05-3260 & 05-3518, 2007 U.S. App. LEXIS 15796 (7th Cir. July 2, 2007), the Seventh Circuit agreed with BDO that the common interest doctrine applied to its communications with the law firm Jenkens & Gilchrist in connection with the IRS’s investigation of tax shelter fraud. Among other things, the Seventh Circuit held that “communications need not be made in anticipation of litigation to fall within the common interest doctrine.” Id. at *24. Approximately two weeks later, the Third Circuit held that what it called the “community-of-interest privilege” could apply “in civil and criminal litigation, and even in purely transactional contexts.” Teleglobe Commc’ns Corp. v. BCE Inc. (In re Teleglobe Commc’ns Corp.), No. 06-2915, 2007 U.S. App. LEXIS 16942, at *38 (3d Cir. July 17, 2007).

Although it is too early to tell if this approach will gain widespread acceptance, it would dramatically alter privilege law, and open up many more opportunities for companies to share privileged communications without triggering a waiver.