In M&A transactions, companies disclose sensitive information to their transaction counterparties and financial advisors, and the disclosure of this information often implicates attorney-client privilege issues. This article addresses two common attorney-client privilege questions that arise in M&A transactions.

2. Does the disclosure of attorney-client privileged information to transaction counterparties during due diligence and negotiations waive the privilege? It is common for a purchaser, in the course of its due diligence, to request information from the seller to assess the litigation, compliance or regulatory risks of the acquisition. Because the attorney-client privilege is usually waived when a communication is disclosed to a third party, the seller often is reluctant to provide privileged information to the purchaser. However, without sharing of information, the purchaser may decline to go forward with the deal.

The common interest doctrine, which preserves the privilege with respect to communications among parties and their attorneys that have a shared legal interest, can address this problem. Some courts have held that the common interest doctrine applies only when two or more clients participate in joint attorney-client discussions for the purpose of preparing a common litigation defense. Other courts have held that the common interest doctrine protects information shared by parties to a purchase agreement prior to closing of a transaction, even if it does not concern anticipated or pending litigation, so long as the primary purpose for the communication is for the parties to obtain legal advice or to further a legal interest in common to the parties, rather than for purely business purposes.