Credit: Freedomz; stock.adobe.com Who Is the Client? Recent Appellate Division Ruling Provides Useful Reminder
The result should not be surprising to attorneys. However, we suspect that it would unpleasantly surprise many owners of closely held corporations.
January 12, 2024 at 12:00 PM
2 minute read
Corporate Governance
A recent unpublished Appellate Division opinion provides a useful reminder of the relationship between the corporate veil and the attorney-client privilege. In Royzenshteyn v. Pathak, the shareholders of a closely held corporation decided to raise capital for the business by selling a majority interest, while retaining a minority interest and executive positions under employment contracts. After a few years, disagreements between the sellers and buyers led the sellers to sue and the buyers to counterclaim. The sellers claimed attorney-client privilege over a broad range of their presale communications with the law firm that represented the corporation in the sale.
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