Should Transactional Parties’ Choice of Laws Provisions Affect the Choice of Privilege Law?

June 22, 2011

State courts, and federal courts sitting in diversity, must undertake a choice of laws analysis in determining which attorney‑client privilege law to apply. Courts take widely varying approaches to this issue, but an increasing number of courts have applied the privilege law chosen by transactional parties.

In Pownell v. Credo Petroleum Corp., Civ. A. No. 09-cv-07540-WYD-KLM, 2011 U.S. Dist. LEXIS 35869, at *4 (D. Colo. Mar. 17, 2011), the court applied Colorado privilege law in an employment case – noting both that the suit involved alleged violations of Colorado law, and that the applicable employment agreement contained a provision indicating that “‘the legal relations hereby created between the parties hereto shall be governed by and construed under and in accordance with the internal laws of the State of Colorado.'” About one month later, the District of New Jersey applied New York privilege law in an insurance dispute, noting that “the Agreements contained a choice of law provision specifying New York law for substantive issues.” Munich Reinsurance Am., Inc. v. Am. Nat’l Ins. Co., Civ. A. No. 09-6435 (FLW), 2011 U.S. Dist. LEXIS 41826, at *51 (D.N.J. Apr. 18, 2011).

There seems to be a growing trend in which courts point to transactional agreements’ choice of laws provisions in determining the applicable privilege law. Companies should consider this when negotiating agreements.