What Type of "Common Interest" Satisfies the Common Interest Doctrine?

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Some lawyers incorrectly assume they can contractually assure that disclosing privileged communications to third parties does not waive the privilege – by entering into a "common interest" agreement. But nearly every month some courts reject the effectiveness of such agreements, by which time the participants will already have waived their privilege protection.

In Citibank, N.A. v. Bombshell Taxi LLC (In re Hypnotic Taxi LLC), 566 B.R. 305 (Bankr. E.D.N.Y. 2017), a settlor of several trusts claimed that he shared a common interest with the trusts in resisting defendant's efforts to enforce a judgment against him. But the court rejected his common interest assertion. The court first pointed to decisions denying common interest agreements' effectiveness in the contexts of "an agent for a syndicated loan group and the members of the group," and "an assignor and assignee of trademark rights." Id. at 315. Because the settlor had transferred all of the pertinent assets to the trusts without retaining any interest in them, the court found that he lacked a common interest with the trusts. Instead, the settlor "shares only a personal or business interest with the Trusts, i.e. the desire for 'the protection of the assets [held by the] Trusts for the benefit of [the settlor's] heirs and/or parents.'" Id. at 317 (first alteration in original) (internal citation omitted). In other words, his desire to protect his children's and his parent's assets was not a sufficiently common legal interest to avoid waiving the privilege when he disclosed privileged communications to the trusts.

Lawyers must always remember the difficulty of successfully relying on common interest agreements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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