Court Adopts Confusing Standard in Dealing with a Possible Implied Waiver

December 2, 2009

As indicated in last week’s “Privilege Point,” companies impliedly waive the attorney-client privilege by justifying some action because they relied on “advice of counsel.” Can a company explain to the fact-finder that it discussed its action with its lawyer — without triggering such an implied waiver?

In Aristocrat Leisure Ltd. v. Deutsche Bank Trust Co. Americas, No. 04 Civ. 10014 (PKL), 2009 U.S. Dist. LEXIS 89183, at *46 (S.D.N.Y. Sept. 28, 2009), United States District Judge Leisure dealt with defendant bondholders’ “wish to inform the jury of the fact that counsel was consulted on the subject matter underlying this litigation” — which the court noted was “a fact that in and of itself is not privileged.” Inexplicably, the bondholders also “represented that they will not argue that they relied on privileged advice rendered by counsel in opposing [plaintiff’s] claim that their actions were unreasonable.” Id. at *45-46. Although one would think that the bondholders were hoping to gain some advantage by pointing to a lawyer’s involvement, the court refused to find an implied waiver — although the court “caution[ed] the Bondholders not to sidestep this ruling by imparting to the jury the actual content of the legal advice provided by counsel, or by arguing that an individual Bondholder’s actions were reasonable because they relied on an opinion of counsel.” Id. at *48.

Most courts would either (1) prohibit a litigant from even mentioning its discussions with a lawyer about its action or (2) find that the litigant impliedly waived the privilege by pointing to a lawyer’s advice in an obvious effort to gain some advantage. Few if any courts attempt to “thread the needle” by allowing the reference without finding a waiver.