Court Recognizes a Valid Joint Representation in an Unusual Setting

April 21, 2010

Some companies seeking to communicate with each other without waiving the privilege enter into “common interest” agreements, but they must then wait until some later court decision to see whether the agreement avoided a waiver (by which time it is too late). Another alternative is for the companies to enter into a joint representation – in which they hire the same lawyer to represent them. That arrangement can cinch privilege protection, but carries other risks (the possibility of having to share communications with both clients, and the possibility of the lawyer’s withdrawal if acute adversity develops).

In Oppliger v. United States, Nos. 8:06CV750 & 8:08CV530, 2010 U.S. Dist. LEXIS 15251 (D. Neb. Feb. 8, 2010), the IRS sought documents from a third party which had entered into a business transaction with the allegedly delinquent taxpayer. Although that transaction resulted in a dispute between the companies, the third party and the taxpayer claimed that they had hired the same lawyer to represent them – so the privilege protected their communications. The United States argued that “it defies logic to find a common interest existed between two parties who had ‘adverse interests’ and were on opposite sides of a civil dispute.” Id. at *13. The third party and the taxpayer acknowledged that one party to the transaction had accused the other of breaching the purchase agreement, but they claimed that they had “sought joint counsel, agreed to joint representation, and ultimately resolved the potential problem between them through a settlement agreement.” Id. at *14. Surprisingly, the court agreed with the third party and the taxpayer, and found a valid joint representation (meaning that their communications deserved privilege protection).

It is admittedly quite a stretch for the same lawyer to represent such obviously adverse clients, but courts’ recognition of such a joint representation’s effectiveness should remind companies to consider that possibility, in addition to a common interest arrangement.