The Appellate Division, First Department, has adopted the “Garner test” for determining whether an attorney-client privilege claimed by a corporation and its lawyers may be overcome by the “fiduciary exception.”
“In the corporate context, where a shareholder (or, as here, an investor in a company) brings suit against corporate management for breach of fiduciary duty or similar wrongdoing, courts have carved out a ‘fiduciary exception’ to the privilege that otherwise attaches to communications between management and corporate counsel,” a unanimous panel explained Thursday.
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