Delaware Federal Court Declines to Protect Communications Between a Plaintiff and its Litigation Financing Companies

September 29, 2010

A recent Privilege Point noted a Delaware state court’s broad view of the attorney-client privilege – protecting communications between a company and its investment banker Goldman Sachs. A more recent Delaware federal court decision took a much narrower view of the attorney-client privilege.

In Leader Technologies, Inc. v. Facebook, Inc., Civ. A. No. 08-862-JJF, 2010 U.S. Dist. LEXIS 63507 (D. Del. June 24, 2010), plaintiff Leader Technologies (represented in the litigation by King & Spalding) argued that it shared a common interest with its litigation financing companies – allowing Leader to have safely shared privileged communications and work product with those companies. The magistrate judge rejected the argument, and found a waiver. The district court upheld this finding.

Not every court would reach this conclusion (especially in the work product context), but the decision serves as a warning to companies financing their litigation through third parties.