The Common Interest Doctrine — Courts’ Disagreements and a Warning: Part II

March 8, 2023

Last week’s Privilege Point described two courts taking the opposite position on whether the common interest doctrine could protect from waiver otherwise privileged communications among common interest agreement participants without a lawyer’s involvement. A more dramatic risk might deprive one or more of the participants of their lawyer’s services in a later dispute among them.

In Kragel v. Virgin Islands Water & Power Authority (WAPA), a wrongful termination plaintiff moved to disqualify WAPA’s defense counsel. Civ. No. 2021-78, 2022 U.S. Dist. LEXIS 230474 (D.V.I. Dec. 22, 2022), magistrate judge’s decision approved, 2023 U.S. Dist. LEXIS 10053 (D.V.I. Jan. 19, 2023) (Sánchez, C.J.). He argued that he had shared confidential information with that lawyer pursuant to a joint defense agreement (JDA) in an earlier case against WAPA and him as co-defendants (in which he had represented himself). He noted that WAPA’s lawyer could use that confidential information against him in the current case to gain an “unfair tactical advantage.” 2022 U.S. Dist. LEXIS 230474, at *13. Notably, the court acknowledged that “a lawyer who receives confidential information from a nonclient pursuant to a JDA may owe a duty of confidentiality to the nonclient [arising] from the lawyer’s fiduciary or contractual obligation to the nonclient party, rather than an ethical duty.” Id. at *19. But the court ultimately rejected plaintiff’s disqualification motion, concluding that “vague allegations as to the types of information disclosed [in the earlier case] and how it might be used to his detriment are insufficient” to disqualify WAPA’s lawyer. Id. at *28 (footnotes omitted).

No court requires a written common interest agreement. But wise lawyers recognize the wisdom of such an agreement — and include a prospective consent provision to avoid (or at least minimize) this disqualification risk. Ironically, this means that perhaps the most important provision in such a JDA does not focus on current commonality — but rather on future adversity.