Restat 3d of the Law Governing Lawyers, § 76

• Restatement of the Law 3d, Law Governing Lawyers
• Chapter 5- Confidential Client Information
• Topic 2- The Attorney-Client Privilege
• Title B- The Attorney-Client Privilege for Organizational and Multiple Clients
• § 76 The Privilege in Common-Interest Arrangements

(1) If two or more clients with a common interest in a litigated or nonlitigated matter are represented by separate lawyers and they agree to exchange information concerning the matter, a communication of any such client that otherwise qualifies as privileged under §§ 68-72 that relates to the matter is privileged as against third persons. Any such client may invoke the privilege, unless it has been waived by the client who made the communication.

(2) Unless the clients have agreed otherwise, a communication described in Subsection (1) is not privileged as between clients described in Subsection (1) in a subsequent adverse proceeding between them.

Comment:

a. Scope and cross-references. This Section states the common-interest attorney-client privilege. The rule differs from the co-client rule of § 75 in that the clients are represented by separate lawyers. Subsection (1) applies only if the other conditions of §§ 68-72 are satisfied, except it qualifies the requirement of § 71 that the communication be in confidence. Subsection (2) modifies the normal rules of waiver (see §§ 78-85) with respect to subsequent adverse proceedings between the clients.

b. Rationale. The rule in this Section permits persons who have common interests to coordinate their positions without destroying the privileged status of their communications with their lawyers. For example, where conflict of interest disqualifies a lawyer from representing two co-defendants in a criminal case (see § 129), the separate lawyers representing them may exchange confidential communications to prepare their defense without loss of the privilege. Clients thus can elect separate representation while maintaining the privilege in cooperating on common elements of interest.

c. Confidentiality and common-interest rules. The common-interest privilege somewhat relaxes the requirement of confidentiality (see § 71) by defining a widened circle of persons to whom clients may disclose privileged communications. As a corollary, the rule also limits what would otherwise be instances of waiver by disclosing a communication (compare § 79). Communications of several commonly interested clients remain confidential against the rest of the world, no matter how many clients are involved. However, the known presence of a stranger negates the privilege for communications made in the stranger's presence.

Exchanging communications may be predicated on an express agreement, but formality is not required. It may pertain to litigation or to other matters. Separately represented clients do not, by the mere fact of cooperation under this Section, impliedly undertake to exchange all information concerning the matter of common interest.

d. The permissible extent of common-interest disclosures. Under the privilege, any member of a client set--a client, the client's agent for communication, the client's lawyer, and the lawyer's agent (see § 70)--can exchange communications with members of a similar client set. However, a communication directly among the clients is not privileged unless made for the purpose of communicating with a privileged person as defined in § 70. A person who is not represented by a lawyer and who is not himself or herself a lawyer cannot participate in a common-interest arrangement within this Section.

e. Extent of common interests. The communication must relate to the common interest, which may be either legal, factual, or strategic in character. The interests of the separately represented clients need not be entirely congruent.

Illustration:

1. Lawyer One separately represents Corporation A and Lawyer Two represents Corporation B in defending a products-liability action brought by a common adversary, Plaintiff X. The two lawyers agree to exchange otherwise privileged communications of their respective clients concerning settlement strategies. Plaintiff Y later sues Corporation A and Corporation B for damages for alleged defects involving the same products and attempts to obtain discovery of the communications between Lawyer One and Lawyer Two. The communications exchanged between the lawyers for Corporation A and Corporation B are privileged and cannot be discovered.

Unlike the relationship between co-clients, the common-interest relationship does not imply an undertaking to disclose all relevant information (compare § 75, Comment d). Confidential communications disclosed to only some members of the arrangement remain privileged against other members as well as against the rest of the world.

f. Subsequent adverse proceedings. Disclosing privileged communications to members of a common-interest arrangement waives the privilege as against other members in subsequent adverse proceedings between them, unless they have agreed otherwise. In that respect, the common-interest exception operates in the same way as the exception for subsequent adverse proceedings as between co-clients (see § 75, Comment d). Disclosing information does not waive the privilege with respect to other communications that might also be germane to the matter of common interest but that were not in fact disclosed.

There is no waiver between the members exchanging a communication if they have agreed that it will remain privileged as against each other in subsequent adverse proceedings.

g. Standing to assert the privilege; waiver. Any member of a common-interest arrangement may invoke the privilege against third persons, even if the communication in question was not originally made by or addressed to the objecting member.

In the absence of an agreement to the contrary, any member may waive the privilege with respect to that person's own communications. Correlatively, a member is not authorized to waive the privilege for another member's communication. If a document or other recording embodies communications from two or more members, a waiver is effective only if concurred in by all members whose communications are involved, unless an objecting member's communication can be redacted.

REPORTER'S NOTE

See generally C. Mueller & L. Kirkpatrick, Modern Evidence § 5.15 (1995); P. Rice, Attorney-Client Privilege in the United States §§ 4.35-4.38 (1994); 2 J. Weinstein & M. Berger, Evidence P503(b)(6) (1986); C. Wolfram, Modern Legal Ethics § 6.4.8 (1986). See, e.g., Revised Uniform Rules of Evidence, Rule 502(b)(3) (1974) (privilege applies to a communication by a client "or his representative or his lawyer or a representative of the lawyer to a lawyer or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein ..."); Proposed Federal Rules of Evidence, Rule 503(b)(3) (1973) (privilege applies to communication by client "or his lawyer to a lawyer representing another in a matter of common interest"). For criticism of extensive application of the privilege to representatives of lawyers and clients, see 24 C. Wright & K. Graham, Federal Practice & Procedure §§ 5482-83 (1986).

The Proposed Federal Rule and the Revised Uniform Rule differ significantly; this Section departs somewhat from each. The Proposed Federal Rule apparently would not extend the common-interest rule to communications by a lawyer's or client's agent assisting in communication between the parties, but it was not limited to pending litigation. The Revised Uniform Rule apparently did contain the latter limitation but not the former. This Section contains neither limitation.

Comment b. Rationale. Terms such as "joint defense"--less frequently, "common defense"--are sometimes applied to the principle in the Section. Either term can be misleading, perhaps connoting that disclosure can occur only between co-defendants, and perhaps then only if they are actually involved in pending litigation. Although joint defense of a pending lawsuit is a common situation in which courts have applied the doctrine, its rationale and the Section apply equally to two or more separately represented persons whatever their denomination in pleadings and whether or not involved in litigation (Reporter's Note to Comment d, infra). A preferable term is "common interest" because it includes, as do the decisions, both claiming as well as defending parties and nonlitigating as well as litigating persons. E.g., Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co., 654 F.Supp. 1334, 1365 (D.D.C.1986). The term also distinguishes this Section from the somewhat different rules that apply to co-clients under § 75. On situations in which common-interest arrangements are commonly employed, see ABA Formal Opin. 95-395 (1995) (citing Restatement).

Comment c. Confidentiality and common-interest rules. On the general principle that protects exchanged communications when third persons attempt to gain access or introduce them in evidence, see, e.g., United States v. Melvin, 650 F.2d 641, 645-46 (5th Cir.1981) (recognizing general rule, but finding it inapplicable because undercover government agent who was not member of common-interest arrangement was permitted to attend multi-defendant meeting with their lawyers); Hunydee v. United States, 355 F.2d 183, 185 (9th Cir. 1965) (lawyer for one prospective tax-evasion indictee informed lawyer for another that client was guilty; latter cannot testify to admission); Continental Oil Co. v. United States, 330 F.2d 347 (9th Cir.1964) (privilege extends to summaries of parties' testimony before grand jury that were exchanged between lawyers for parties); In re Grand Jury Subpoena Duces Tecum Dated November 16, 1974, 406 F.Supp. 381, 388-89 (S.D.N.Y.1975) (memoranda exchanged between lawyers for several individuals implicated in fraud schemes involved in Securities Exchange Commission investigation and civil actions). The common-interest doctrine stands in contrast to the rule that, in the absence of an agreement based on such an interest, communications between a person and a lawyer for another person are not privileged. E.g., Government of the Virgin Islands v. Joseph, 685 F.2d 857, 862 (3d Cir.1982) (no privilege for admission of guilt by unrepresented person to lawyer for person accused of crime).

Comment d. The permissible extent of common-interest disclosures. On coverage of agents, compare, e.g., Revised Uniform Rules of Evidence, Rule 502(b)(3) (1974), with, e.g., Proposed Federal Rules of Evidence, Rule 503(b)(3) (1973), both quoted in Reporter's Note, supra. On applying the doctrine to co-plaintiffs, see, e.g., Sedlacek v. Morgan Whitney Trading Group, Inc., 795 F.Supp. 329, 331 (C.D.Cal.1992). On applying the doctrine to nonlitigation situations, see, e.g., Schachar v. American Academy of Ophthalmology, Inc., 106 F.R.D. 187, 191-92 (N.D.Ill.1985) (dicta), and authorities cited.

The exchanged communication must itself be privileged. The doctrine does not create new kinds of privileged communications aside from client-lawyer and similar types of communications that are privileged under §§ 68-72. E.g., In re Grand Jury Testimony of Attorney X, 621 F.Supp. 590, 592-93 (E.D.N.Y.1985) (common-interest privilege inapplicable when first lawyer communicates to lawyer for another member information that first lawyer obtained in nonprivileged way). On the applicability of the work-product immunity to disclosure of common-interest materials, see § 91, Comment b.

Comment e. Extent of common interests. On the general requirement of the presence of common interests, see, e.g., United States v. American Tel. & Tel. Co., 642 F.2d 1285, 1299 (D.C.Cir.1980); Loustalet v. Refco, Inc., 154 F.R.D. 243, 247-48 (C.D.Cal. 1993). The fact that clients with common interests also have interests that conflict, perhaps sharply, does not mean that communications on matters of common interest are nonprivileged. E.g., Eisenberg v. Gagnon, 766 F.2d 770, 787-88 (3d Cir.), cert. denied, 474 U.S. 946, 106 S.Ct. 342, 88 L.Ed.2d 290 (1985), and authorities cited (correspondence between lawyers for insurer of law firm, law firm, and member of firm in attempt to develop common position privileged despite conflicts). Illustration 1 is based on Lemelson v. Bendix Corp., 104 F.R.D. 13 (D.Del.1984) (manufacturers' exchange of privileged settlement information cannot be discovered by patent holder in latter's action against manufacturers for conspiracy to violate antitrust laws by unified opposition to holder's licensing claims). The fact that information is exchanged about parallel lawsuits, rather than about the same litigation, does not remove the privilege. E.g., United States v. A.T. & T. Co., 642 F.2d 1285 (D.C.Cir.1980). Interests may converge on nonlitigated issues as well. E.g., United States v. United Technologies Corp., 979 F.Supp. 108 (D.Conn.1997) (exchanges among 5 aerospace companies that formed consortium to break General Electric's dominance in the small-engine market).

Conversely, of course, the fact that clients have common interests does not provide a basis for forced disclosure of information in the absence of an agreement to do so. E.g., Vermont Gas Systems, Inc. v. United States Fidelity & Guar. Co., 151 F.R.D. 268, 277 (D.Vt.1993) (common interest of insured and insurer in defeating EPA superfund claims no basis for forced disclosure of privileged communications of insured with separately retained lawyer in suit by insured for declaratory judgment that claims are within policy coverage in light of uncertainty over coverage and adversity of interest on question).

Comment f. Subsequent adverse proceedings. E.g., Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 90 F.R.D. 21, 29, 32-33 (N.D.Ill.1980) (dicta) (waiver with respect to communications actually exchanged in later litigation between parties to common-interest arrangement); In re Grand Jury Subpoena Dated November 16, 1974, 406 F.Supp. 381, 393-94 (S.D.N.Y.1975). The court in Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co., 654 F.Supp. 1334, 1365-66 (D.D.C.1986), erroneously held that a party who exchanges some privileged communications with another member waives the privilege with respect to all privileged communications relevant to the matter. The court, in effect, applied the co-client rule (§ 75(2)) to a common-interest situation. That is not the law under the privilege, but the court may have been correct that waiver of the privilege was an implied term of the insurer-insured relationship that existed between the parties, perhaps stemming from the cooperation clause of the policy. Several insurance cases have reached a result consistent with Independent Petrochemical, but based on the cooperation obligation of the insured. E.g., Truck Ins. Exchange v. St. Paul Fire & Mar. Ins. Co., 66 F.R.D. 129, 134-36 (E.D.Pa. 1975), and authorities cited.

As with the corresponding point under the co-client privilege, see § 75, Reporter's Note to Comment d, no authority has been found for dealing with the enforceability of agreements among members of a common-interest arrangement that the privilege shall be preserved, even in subsequent adverse proceedings between them. The approach taken in Subsection (2) and in Comment f is consistent with the theory of the privilege for such arrangements and with the basis for removing the privilege in subsequent litigation.

Comment g. Standing to assert the privilege; waiver. E.g., Interfaith Housing Delaware, Inc. v. Town of Georgetown, 841 F.Supp. 1393, 1400-02 (D.Del.1994) (reviewing decisions); Western Fuels Ass'n v. Burlington No. R.R., 102 F.R.D. 201, 203 (D.Wyo.1984), and authorities cited (waiver by the member who initiated privileged communication; even if other members neither waived nor concurred in client's waiver); Duplan Corp. v. Deering Milliken, Inc., 397 F.Supp. 1146, 1191 (D.S.C.1974) (no waiver by one member, without concurrence of other members, of privileged communications originally made by another member); Ohio-Sealy Mattress Mfg. Co. v. Kaplan, 90 F.R.D. 21, 29 (N.D.Ill.1980) (no waiver by one member with respect to own communications if contained in document reflecting communications of other, nonwaiving members).

See generally § 75, Comment e, and Reporter's Note thereto.