Last week’s Privilege Point described S.D.N.Y. Judge Lewis Liman’s conclusion that a company waived privilege protection for legal advice it received from its counsel by disclosing the advice to its financial advisor China Renaissance, which assisted defendant in a corporate transaction. Ayrton Cap. LLC v. Bitdeer Techs. Grp., No. 24-cv-5160 (LJL), 2025 U.S. Dist. LEXIS 41000 (S.D.N.Y. Mar. 7, 2025). Judge Liman also addressed defendant’s argument that China Renaissance advisors were the “functional equivalent” of its own employees, so there was no waiver.
Judge Liman quoted an earlier opinion concisely summarizing the demanding circumstances under which a third party can satisfy the “functional equivalent” standard to avoid a waiver: “the consultant exercised independent decision-making on the company’s behalf; possessed information held by no one else at the company; served as a company representative to other third parties; maintained an office at the company or otherwise spent a substantial amount of time working for it; and sought legal advice from corporate counsel to guide his or her work for the company.” Id. at *6 (citation omitted).
Not surprisingly, Judge Liman held that China Renaissance’s advisors did not satisfy that standard — also ominously noting that “[t]he Second Circuit has not explicitly adopted the ‘functionally equivalent’ exception, and most decisions reject the assertion of privilege based on the exception.” Id. at *6-7.