The Perils of Oversharing: Can the Attorney-Client Privilege Be Broadly Waived by Partially Disclosing Attorney Communications during Negotiations?

Acme Co. and Biz Corp. enter into negotiations to purchase the assets of Collaborative, Inc. One of these assets is the equity of a partnership that serves as general partner of Partnership, L.P. As part of that process, Acme Co. and Biz Corp. negotiate the terms of the purchase transaction, and in doing so, disclose their respective attorneys' views concerning the legal implications of the transaction, the tax implications of the partnership structure, the legal significance of the contracts under negotiation, and the rights and obligations of the panies to the transaction. Following the asset purchase, Partnership, L.P. sues Acme Co. and Biz Corp. for breach of fiduciary and contractual duties. During discovery, Partnership, L.P., tiiough not a party to the asset purchase transaction, seeks to compel communications that Acme Co. and Biz Corp. shared among each otiier in negotiating to purchase the assets of Collaborative, Inc. Partnership, L.P. also seeL· production of otiier, non-disclosed privileged communications, arguing that by discussing legal issues during negotiations, Acme Co. and Biz Corp. waived the attorney-client privilege with respect to all attorney-client communications concerning the purchase transaction. If sustained, the requested production would include over 1,500 documents that would otherwise be privileged. Is the court likely to order disclosure of this information? The answer is unclear. As courts continue to navigate the application and scope of the subject-matter waiver doctrine outside of litigation, attorneys and their clients must proceed cautiously to avoid inadvertent waiver. Most clients believe that if they discuss something with their attorneys, those discussions are unquestionably confidential and subject to me attorneyclient privilege. Attorneys know that the attorney-client privilege has limits, but rely on the basic premise that attorneyclient communications are privileged unless the client waives that privilege. Less understood, however, is the developing subject-matter waiver doctrine, which, if broadly applied, can undermine both the scope and fundamental nature of the privilege. Until recently, the subject-matter waiver doctrine has not been invoked outside the context of testimonial disclosures. More and more, however, parties are claiming that partial disclosure of attorney-client communications in the context of real estate transactions and patent disputes, for example, should similarly result in waiver of the privilege as to related subject matter. This article provides background on the subject-matter waiver doctrine, outlines the various ways different jurisdictions have applied the doctrine to communications and intentional disclosures made outside the litigation context, and provides guidelines for applying the doctrine1 using as a case study Center Partners, Ltd. v. Growth Head GP, LLC,2 a case pending in the Illinois Supreme Court which will provide the first opportunity for a State high court to weigh in on this developing area of the law. I. Background A. The Attorney-Client Privilege To understand the subject-matter waiver doctrine, it is important to first revisit the legal underpinnings of the attorney-client privilege. The attorneyclient privilege is one of the oldest privileges known to the common law. The privilege ensures that a client may provide information to his or her attorney, in confidence, with the knowledge that such information is protected, and neither the client nor the attorney may be forced to disclose the information that has been shared to their judicial adversaries.3 Indeed, an attorney's ability to advise a client is directly dependent upon that client's willingness to engage in such full and frank discussions. In this vein, the attorney-client privilege serves both the immediate needs of the individual client and public ends by ensuring sound and fully-informed legal advice and advocacy. The privilege extends bom to information relayed by the client to the attorney, and to advice and communications from the attorney to the client, made for the purpose of securing legal advice. …