Massachusetts Court Reiterates that State’s View that Client Agents Normally Fall Outside the Attorney-Client Privilege Protection

September 22, 2010

Last week’s Privilege Point described a Delaware state court’s decision to apply Delaware law and protect a company’s communications with its investment banker Goldman Sachs. 3Com Corp. v. Diamond II Holdings, Inc., C.A. No. 3933-VCN, 2010 Del. Ch. LEXIS 126 (Del. Ch. May 31, 2010). The court honored the contract parties’ choice of Delaware law, although under Massachusetts law (where the communications took place) Goldman Sachs would be outside the attorney-client privilege.

In Dahl v. Bain Capital Partners, LLC, Civ. A. No. 07-12388-EFH, 2010 U.S. Dist. LEXIS 61640 (D. Mass. June 22, 2010), the court confirmed that Massachusetts follows the narrow (majority) view of a client agent’s participation in otherwise privileged communications. The court ultimately concluded that the attorney-client privilege did not protect communications between lawyers from Michaels’ stores and Michaels’ financial advisor JP Morgan. Among other things, the court rejected JP Morgan’s argument that its “feedback” helped Michaels’ lawyers properly advise their client – explaining that such “feedback” was “not enough to show that JP Morgan was necessary, or at least highly useful, in facilitating the legal advice.” Id. at *17.

Lawyers should remember that most states do not share Delaware’s broad view of the privilege as applied to investment bankers, financial advisors, and other client agents.