Mian R. Wang of Greenberg Traurig discusses issues relating to privileges that may arise with Chinese/Taiwanese entities and affiliates or subsidiaries in the U.S. — and offers steps to help avoid the pitfalls.
While joint-client privilege, joint defense/common interest privilege and work product are known protections in the U.S., certain foreign jurisdictions, such as China and Taiwan (which are civil law jurisdictions), may be unfamiliar with these protections. For example, neither Taiwan nor China recognize common law concepts like attorney-client privilege and the work product doctrine. Under the so-called “touch base” test applied by many U.S. jurisdictions when assessing privilege claims for foreign communications, U.S. privilege law typically applies to communications related to legal proceedings in the U.S. or advice regarding American law.
In those circumstances, it’s vital that in-house counsel in China and Taiwan understand the applicability, scope and implications of these privileges and their differences. Inadvertent disclosure of privileged information or waiver may result in the disclosure of damaging information and may significantly affect the outcome of potential and actual litigation.
Joint-client privilege
Joint-client privilege authorizes multiple clients who share a common interest in legal representation to communicate with their shared attorney without waiving privilege. In the U.S., communications seeking and rendering legal advice between in-house counsel and employees of affiliated companies on matters of common interest are generally protected from disclosure under the joint-client privilege.
Joint-client privilege applies to members of the corporate family where the communication is (1) covered by attorney-client privilege and (2) the clients share or shared a common legal interest. To qualify for attorney-client privilege, the communication is made between an attorney and the client in confidence and for the purpose of obtaining or providing legal assistance for the client. In addition, attorney-client privilege may cover documents composed of preexisting documents or information prepared by an employee for counsel’s review during the attorney-client relationship for purposes of legal services.
A common legal interest can be shown by common ownership or control between the parent and the affiliated entity. A common legal interest can also exist where the joint clients are working together to complete a transaction, avoid litigation and/or defend against litigation. Some jurisdictions in the U.S. require a common interest to be an identical interest, but other U.S. jurisdictions allow for something less than an identical interest. Under joint-client privilege, one of the clients can waive the privilege unilaterally only as to that client’s own communications with the in-house counsel and only where the communication relates solely to that client.
If the communication at issue pertains to or is with the second client, then the second client must also consent to the waiver before the parent can use the communications with a third party.
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Read moreDetailsCommon interest privilege
Common interest privilege is an extension of attorney-client privilege. If corporate affiliates are represented by different in-house counsel, then common interest privilege may apply to protect communications. This privilege applies where separate clients are represented by separate counsel and communications between attorney and client would remain protected if disclosed in the presence of common interest parties and their counsel.
Typically, protected disclosure under the common interest privilege requires attorney participation. However, some courts have held that as long as the communications between non-attorneys are made for the purpose of communicating with an attorney or their agent and both parties are represented by counsel, common interest privilege still applies when no attorneys are not copied on the communications.
The privilege applies where (1) the communications were made in furtherance of a joint defense effort; (2) the statements were designed to further the joint defense; and (3) the privilege was not waived. The limitation to this privilege is that it applies in the context of litigation or anticipated litigation or a legal interest and does not apply to a commercial, business or financial interest. Similar to joint-client privilege, a single member of a common interest group cannot waive another member’s privilege without the consent of that member.
Work product doctrine
The work product protection is broader than attorney-client privilege in that it is not restricted solely to confidential communications between an attorney and client. The work product doctrine protects (1) documents and tangible things, prepared (2) by or for another party or by or for that other party’s representative and (3) in anticipation of litigation or for trial. A document is prepared in anticipation of litigation if prepared to defend actual litigation or to avoid the prospect of potential litigation. Moreover, anticipation of litigation does not need to be the primary purpose or motivation. Documents prepared to help make an informed business decision based on possible outcomes of potential litigation are work products, even when no litigation is pending at the time of their creation. The holder of the work product privilege is the attorney.
Work product doctrine covers two types — opinion work product and fact work product. Opinion work product provides the greatest protection and conveys the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation. Certain jurisdictions recognize “other representative” to include “attorney, consultant, surety, indemnitor, insurer, or agent.” (Fed. R. Civ. P. 26 (b)(3); Mass. R. Civ. P. 26(b)(3).) Opinion work product is only discoverable, if at all, in extremely rare circumstances.
Fact work product has a lower bar for discoverability compared to opinion work product. Fact work product is discoverable upon a showing that the party seeking discovery has substantial need of the materials and that the party is unable, without undue hardship, to obtain the substantial equivalent of the materials by other means. However, even a factual document may constitute an opinion work product if the selection or arrangement of the facts reflects the attorney’s thought process in some meaningful way.
Conclusion
In-house counsel working with corporate parents in China and Taiwan that have affiliates in the U.S. should be well-advised to have working knowledge of these common types of privileges. Understanding the applicability, scope and implications of these privileges better protect client interests and avoid mistakes that could impact litigation outcomes.
Mian R. Wang is a shareholder at Greenberg Traurig’s Boston office. She is an MIT-trained critical thinker focusing her practice on corporate malfeasance. Mian represents public and private companies, financial institutions, directors, officers and individuals before state and federal courts in commercial and bankruptcy litigation. She routinely handles matters related to fraud, breach of fiduciary duties, high-value breach of contract, preference claims and fraudulent transfers. Her practice covers multiple disciplines and industries, including education, health care, event management, startup firms, financial institutions and commercial finance and asset management firms.
