Does a Company Waive the Attorney-Client Privilege by Sharing Protected Documents During Settlement Negotiations?

October 13, 2010

In a number of ways, the law favors settlements (by rendering inadmissible any statements the parties make during negotiations, etc.). Does the law favor settlements by allowing one negotiating party to avoid waiving the privilege by sharing protected documents with the other side?

Although not every court agrees, most courts still find a waiver in that setting. In Medimmune, LLC v. PDL Biopharma, Inc., No. C08-00590 JF (HRL), 2010 U.S. Dist. LEXIS 86390 (N.D. Cal. July 26, 2010) (not for citation), plaintiff Medimmune argued that defendant PDL had waived the privilege by sharing protected documents while settling litigation with another company. The court found a waiver. The court specifically rejected PDL’s argument that the company “never intended to waive the privilege” – holding that “[a]ll indications . . . are that PDL’s lead negotiator had the full authority to do what he did” when sharing the privileged communications. Id. at *10. The good news for PDL is that the court did not find a subject matter waiver.

Business clients and their lawyers should remember that disclosing privileged communications can waive the privilege even if they disclose them during legally favored settlement negotiations.