The Court Determines That a Joint Attorney, Sued By Only One of His Joint Clients, Cannot Withhold Communications From the Other Joint Client Based on Attorney Client Privilege
In Newsome v. Lawson, No. 14-842-RGA-MPT, Dist. Court, D. Del. (2017), Plaintiff sued Defendants alleging breach of attorney fiduciary duty, attorney malpractice, aiding and abetting breach of fiduciary duties, and aiding and abetting illegal distributions. Plaintiff issued discovery requests which led to discovery disputes.
The portion of the discovery disputes currently before the court is whether Defendants have improperly asserted privilege to withhold certain documents from production. The magistrate judge found that an adverse-litigation exception was inapplicable, because Plaintiff was suing the joint attorney and not the other joint client. The magistrate judge said it would eviscerate attorney/client privilege for that one party who has nothing to do with the action, who has not waived its rights, who has not waived anything at all, who is not involved in the lawsuit.
This court examined the magistrate judge’s decision to hold that neither the adverse-litigation exception nor the breach of duty exception were proper grounds to compel Defendants’ production of privileged documents from the joint representation of Mahalo USA and Mahalo Canada. Other courts addressing similar scenarios have reached different conclusions: A joint client suing only the joint attorney may compel disclosure of privileged documents from the joint representation.
The parties dispute whether the adverse-litigation exception applies when a joint client sues the joint attorney but not the other joint client. In lawsuits between a joint client and the joint attorney, courts that have addressed the issue relied on the adverse-litigation exception to compel disclosure of the privileged communications from the joint representation, saying the adverse-litigation exception is not limited to lawsuits between former joint clients. It applies equally to lawsuits between one of the joint clients and the joint attorney. Rules governing the joint client privilege are premised on an assumption that joint clients usually understand that all information is to be disclosed to all of them. As a result, a joint attorney may not withhold from one joint client privileged communications from the joint representation, even if the other joint client refuses to consent to the disclosure.
The court ruled that the adverse-litigation exception applies to lawsuits between one joint client and the joint attorney, thus a joint attorney cannot withhold from one joint client privileged communications within the scope of the common interest involved in the joint representation.