In an acquisition context, an acquirer will frequently need information to assess risk associated with litigation, regulatory or other issues relating to the target company. In many circumstances, access to the target’s attorneyclient privileged information would greatly facilitate that process. In some cases, access to privileged information is the only meaningful way in which the buyer can effectively assess certain risks. Even in the absence of pending litigation or regulatory proceedings, sharing legal analysis of matters such as the target’s tax reporting positions or intellectual property rights can be important. Legal assessments of “antitrust risks” associated with a combination can also be of great mutual value to the parties. Assessments of risk contingencies can also be crucial to an evaluation of the sufficiency of reserves taken on the target’s financial statements.
One common method for addressing the need to share attorneyclient privileged content without defeating that privilege is for the acquirer and the target to rely on a “common interest” privilege. However, navigating the intricacies of the common interest privilege requires care in order not to create the risk of inadvertent waivers of the attorney client privilege. A recent New York appellate decision provides fresh guidance to parties hoping to successfully claim the common interest privilege.