Four co-defendants meet with their joint defense counsel to discuss a pending lawsuit. The meeting ends and all participants are confident that the discussions will remain private. There is just one problem. One of the co-defendants recorded the conversation. And that co-defendant is ready to talk. Can that co-defendant waive the privilege for all defendants, or must all co-defendants consent?

In Howard v. IOMAXIS, LLC, the North Carolina Supreme Court considered this question, albeit in a narrower corporate context. Even so, parties and attorneys involved in joint representations should heed its warnings.

The law firm in IOMAXIS represented an LLC and its four members in a business court lawsuit. The firm provided general corporate counsel to the LLC. For this lawsuit, the law firm entered a separate engagement letter with the LLC and the four members. This second agreement provided that

as a necessary consequence of this joint representation, all information you share with [the law firm] in this joint representation will be shared among each other … [and] … in the unlikely event of a disagreement among you, the attorney–client privilege will not protect the information you share with us.

One member became dissatisfied with the others. He retained separate counsel and sought to use information shared in a joint defense call in the lawsuit. The LLC then moved for a protective order and argued it held the attorney-client privilege for all defendants. The business court disagreed. It found that the law firm represented the LLC members as individuals, not just the LLC, and the individuals each had the right to waive their privilege.

On appeal, the LLC asked the Supreme Court to adopt the Blevins test, a framework used by many jurisdictions for privilege disputes when corporate counsel provides personal legal advice to corporate officers and members. The Supreme Court recognized the utility in the Blevins test and even endorsed its application in North Carolina. Still, the court declined to apply the test here because it found the facts did not merit a Blevins analysis. The law firm’s engagement letter covered the LLC and the four member-defendants as individuals. In the conversation at issue, counsel provided the LLC member with individual legal advice. These findings supported the business court’s decision that each defendant had an individual attorney-client privilege that could be waived.

The Supreme Court then took the opportunity to suggest several ways a corporation could ensure its privilege is protected. For one thing, a law firm can inform jointly represented corporate officers that any legal advice provided is just for the company and not the individual officers. Another option would be for counsel to inform all represented individuals that all communications are covered by an attorney-client privilege that belongs only to the company. Counsel could then advise the individuals to seek their own counsel for personal legal advice.

Corporate counsel should heed this advice in joint representations going forward. And all counsel engaged in a joint representation of co-defendants should clarify who holds the attorney-client privilege before a dispute arises.