Max out joint defense agreements [MCLE]

Civil Procedure

February 2017

By J. Randolph Evans and Shari Klevens

In the past, litigation typically involved only one plaintiff and one defendant. Modern litigation, however, tends to be far more complex, involving multiple parties, parent corporations, affiliated entities, insurers and sometimes "angel" funders.

When a case involves multiple parties whose interests are aligned but who are not represented by the same attorneys, those parties may wish to communicate with each other in furtherance of their respective interests without risking a waiver of any applicable privileges or immunities. Clients and counsel can benefit from the options developed by courts, including by sharing a joint defense or common interest privilege to facilitate communications.

The requirements, scope and boundaries of the joint defense or common interest privilege can differ significantly depending on the jurisdiction. State and federal jurisdictions vary over whether they even recognize a joint defense or common interest privilege, as well as to what extent the privilege applies.

Nonetheless, sufficient common ground exists so that attorneys can maximize the chances that any individual court will recognize and give effect to claimed joint defense and common interest privileges and immunities. This usually occurs by means of a formal written agreement.

Some courts distinguish between the joint defense and common interest privilege, determining that the former is narrow and arises from actual litigation, while the latter is broader and does not require litigation to be pending. Many other courts use the terms almost interchangeably.

For most parties, the safer course may be to recognize the commonly accepted distinctions between the two privileges and then take steps to create enforceable protections for the communications that will be subject to the privilege.

Joint Defense Privilege

As a matter of logic, co-defendants usually share a common interest in defeating the plaintiff's claims. Particularly in situations where the co-defendants are not seeking to shift blame to each other, courts have recognized that the defendants might engage in a joint defense, sharing confidences and secrets (as well as expenses). In that context, their joint communications would generally be protected from discovery by the plaintiff, although those communications likely would not be protected in any subsequent disputes between the co-defendants.

Joint defense relationships also can be between co-plaintiffs and in the civil or criminal context. A joint defense can even extend to nonparties such as insurers of defendants.

Interestingly, the joint defense privilege is a misnomer because it is not actually an affirmative privilege; it is instead an exception to the rule on waiver. Generally, sharing privileged and confidential information with a third party constitutes a waiver of the privilege.

A party must usually show three things in order to maintain the privilege: (1) that the communications were made pursuant to a joint defense; (2) that the communications were made to further the goals of that joint defense; and (3) that the privilege was not otherwise waived (i.e., that the joint defenders are not sharing the communications beyond their limited group).

While some jurisdictions do not require a formal written agreement to recognize a joint defense privilege, documenting the scope, duration, boundaries and parties usually increases the likelihood a court will uphold the privilege.

What Interests Do the Parties Share?

A joint defense agreement that simply says that parties are co-defendants and want to share information may not be enough to protect the privilege. Some courts are skeptical of efforts to hide behind a privilege that has been waived and are reluctant to extend the privilege to third parties absent evidence that an extension is supported.

Courts generally focus on whether the interests of the co-parties are truly aligned. For example, in the World Trade Center litigation after 9/11, the U.S. District Court for the Southern District of New York refused to recognize the common interest privilege asserted by holders of leases at the WTC and the employees of the insurance broker that obtained coverage for the WTC. The court found that the common interest shared by the parties was largely commercial, not legal. The court concluded that simply sharing a desire to be successful in litigation is not a sufficient "common interest."

Other courts have interpreted a common interest more broadly, but the risk remains that courts can find the co-parties' interests are not sufficiently "joint" or "common" to recognize a joint defense agreement. Aligned parties are therefore encouraged to confirm in writing the common legal interests, including positions, defenses, and potential liabilities.

Address Duties

The joint defense agreement can also confirm what duties are owed to or claimed by the co-parties. Indeed, many attorneys will use the joint defense agreement to address risks, such as duties to non-clients who are parties to the joint defense agreement or a specific provision that the joint defense agreement shall not serve as a basis to disqualify another counsel. Because an implied attorney-client relationship is typically determined based on the reasonable perspective of the potential client, a well-drafted joint defense agreement can confirm that the parties agree there was no intended attorney-client relationship with co-parties for any purpose.

Joint Defense and Common Interest in California

A California Court of Appeal addressed the issue of joint defense and common interest in OXY Resources California LLC v. Superior Court, 115 Cal. App. 4th 874 (2004). The court in that case noted that the "joint defense privilege" and the "common interest privilege" had not been recognized by statute in California. The court therefore referred to them as the joint defense or common interest doctrines, rather than a privilege, "to avoid suggesting that communications between parties with common interests are protected from disclosure by virtue of a privilege separate from the attorney-client privilege, the work product doctrine, or any other statutorily recognized evidentiary privilege." The court concluded that the Joint Defense Agreement at issue "merely evidences an expectation of confidentiality necessary to avoid waiver by disclosure to someone outside the attorney-client relationship; it does not protect documents from disclosure, unless they contain or reflect attorney-client communications or attorney work product."

Common Interest Agreements

For courts that distinguish between "joint defense" and "common interest" protections, the former typically relates to parties in litigation and the latter does not. The concepts and predicates for an enforceable common interest agreement are substantially similar to those of the joint defense agreement. They include actual common interests sufficient to warrant an exception to the waiver rules for the attorney-client privilege.

Because the existence of common interests is not as obvious as in the litigation context, it is beneficial that clients and attorneys document the inception, duration, scope, boundaries, and termination of any common interest agreement. Provisions confirming the attorneys' duties, or lack thereof, are again helpful to prevent needless disputes including costly motions to disqualify.

Joint defense and common interest agreements can be effective tools to advance the interests of clients and reduce expense. The key is to get them right so that they do not themselves become the basis of litigation.

J. Randolph Evans is a partner in the Georgia office of Dentons US LLP.

Shari Klevens is a partner in the Washington, D.C. office of Dentons US LLP.

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