Upon the signing of a merger agreement, the parties and their advisors—adversaries during the negotiation process—immediately become allies that must work closely together to complete the transaction. To that end, they will coordinate their efforts on a broad range of contractual requirements, including regulatory approvals, third-party consents and filings with the SEC, typically under significant time constraints. In doing so, it is often prudent and efficient for the parties and their advisors to share attorney-client privileged communications in order to achieve legal and regulatory compliance (e.g., to ensure that disclosures related to the contractual requirements are complete and accurate).
In most state and federal jurisdictions, parties to a transaction can share such communications without risk of discovery in later litigation in reliance on the “common interest doctrine” (also known as the “common interest exception”). In New York, however, the state’s highest court recently ruled, in Ambac Assurance Corporation v. Countrywide Home Loans,1 that the attorney-client privilege afforded by the common interest doctrine extends only to those communications relating to pending or anticipated litigation, and not those relating to transactional matters.
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