10.03. Attorney-Client Privilege with Joint Clients [Restatement § 75]

There are a couple of situations where special rules regarding the attorney client privilege have developed. These are situations where ordinarily the attorney client privilege would be waived (because the communications are made to third parties), but as a matter of policy, courts have held that these are exceptions to the ordinary rule. The first is the situation where more than one client hires the same lawyer to pursue a similar matter. There are a number of reasons that multiple clients might hire one lawyer including cost, strategy, or to lessen the possibility of conflict that another lawyer could insert into the representation. In these situations, all clients will discuss the matter with the common lawyer. There is no confidentiality between co-clients. In other words, if one client communicates with the common lawyer the presumption is that the disclosing client consents to the lawyer telling the other co-clients about the communication to develop a legal strategy to assist in the common defense. All of these communications are protected by the attorney-client privilege.^[1]

As a policy matter, this rule makes sense. We want co-clients to communicate fully with the lawyer so the lawyer can develop the best strategy for all co-clients. The issue is the scope of the privilege when the commonly represented clients have a falling out.  Can one of the former co-clients use privileged information against the other co-client?  The answer is: yes.  This is called the subsequent-proceeding exception to the co-client privilege.[2]   This exception provides that if co-clients ultimately sue each other, then the attorney client privilege does not apply, and the former co-clients can use the communications made between the lawyer and other client. In that case, the co-client can require the lawyer to disclose communications with the other client.^[3]

Homer and Moe come to Attorney Lionel Hutz to form a business selling Flaming Moes – a drink developed by Homer and Moe. In the course of the representation, Homer sends a memo to Hutz that says, “It is my understanding that I will be receiving 75% of the profits, and Moe will receive 25% of the profits and will retain the trademark in ‘Flaming Moe.’ Let me know the tax consequences of this agreement.” Homer did not send this memo to Moe. Thereafter, Moe and Homer had a falling out and terminated the joint representation. Moe then files suit against Homer regarding the business venture. Moe knows about the memo that Homer sent to Hutz but does not know what the memo says. Moe asks a court to require Hutz to turn over the memo to Moe.  Homer says that the memo is protected by the attorney client privilege and should not be disclosed.  Will the court require Hutz to turn over the memo? [Restatement (Third) of the Law Governing Lawyers § 75, cmt. d, ill. 1.]

Yes.  This is where the excecption to the co-client privilege applies.  The court will order Hutz to disclose the memo because the privilege does not apply to communications between co-clients and the common lawyer in a dispute between the co-clients about the matter.

However, when a third party sues one of the co-clients and seeks to have the lawyer or other client testify as to the communications, the common communications remain privileged – and any of the co-clients can assert the attorney client privilege to prevent disclosure. So, if Barney sued Homer for trademark infringement, Barney could not compel disclosure of the memo from Homer. The memo remains privileged. Even if Barney sued Moe and sought to have the memo disclosed, Moe could not waive the privilege on behalf of Homer and would have an obligation to raise the privilege.^[4]  

[1] Restatement (Third) of the Law Governing Lawyers § 75(1).

[2] Restatement (Third) of the Law Governing Lawyers § 75, cmt. d.

[3] Restatement (Third) of the Law Governing Lawyers § 75(2).

[4] Of course Homer could always waive the privilege with regard to the communication.