New York State Court Recognizes a General Privilege Rule, But The S.D.N.Y. Carries It To An Astoundingly Impractical Extreme: Part I

March 16, 2022

Every lawyer knows that attorney-client privilege protection depends on a communication’s “primary” or “predominant” purpose. A handful of courts have been inching toward a more expansive view (which will be the subject of a future Privilege Point). But for now the “primary purpose” test applies in nearly every court.

In HK Capital LLC v. Rise Development Partners LLC, the court explained that “any communication that does not have any direct relevance to any legal advice, is collateral and not privileged.” , Index No. 512749/2021, 2022 N.Y. Slip Op. 50024(U), at *2 (N.Y. Sup. Ct. Jan. 6, 2022). The court applied that standard to two categories of documents. First, the court explained that “[i]t is well settled that ‘absent special circumstances,’ retainer agreements, a client’s identity, invoices and a payment of fees are not subject to the attorney-client privilege.” Id. Second, the court cited an earlier decision in noting that “a client cannot assert the attorney-client privilege as to documents in the lawyer’s possession if they were not prepared for litigation or for the purpose of seeking or imparting legal advice.” Id. (citation omitted).

Some clients don’t appreciate this basic principle – mistakenly thinking that any document a lawyer sends or receives (or is copied on) deserves privilege protection. About three weeks after the New York state court issued the HK Capital case, the Southern District of New York went wildly in the other direction. Next week’s Privilege Point will discuss that remarkable decision.