Careful attention must be paid to the attorney-client privilege and the risk of waiver when lawyers for a parent corporation work on projects where an affiliate is a joint client. This article addresses how to maximize the parent’s control of privileges in these circumstances and minimize the risk of waiver.
Generally, in-house corporate counsel may advise an affiliate corporation without undermining the attorney-client privilege. When the interests of a parent and subsidiary begin to diverge, however, privilege questions arise. In re Teleglobe Communications Corporation from the 3rd Circuit involved litigation arising from a parent company’s decision to cease funding its subsidiaries, which led to the subsidiaries filing for bankruptcy and suing the parent. During the litigation, the subsidiary corporation sought production of privileged documents containing legal advice provided to the parent and the subsidiaries prior to the termination of funding by the parent. Teleglobe held that the subsidiaries might be entitled to discover this otherwise privileged information because a joint-client relationship may have arisen. Whether a parent and its subsidiaries have jointly agreed to seek legal advice from counsel is a question of fact that must be examined on a case-by-case basis.