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Protecting the Common Interest from Imputed Disqualification

By Tiffany M. Williams, Litigation News Associate Editor – November 25, 2009

As firm shifts and job changes mount, defense counsel in complex, multidefendant litigation who are sharing a joint defense are faced with how to protect their confidential work product and whether they can rely on the “common interest” privilege to prevent disclosure.

Defendants with divergent interests often unify in a joint defense against plaintiffs in an action and seek to prevent plaintiffs from discovering information shared between them. The “common interest” privilege enables counsel for clients with a common interest to exchange privileged communications and attorney work product to prepare a defense without waiving the clients’ privileges to that information. The privilege has long been recognized by a number of federal and state courts, but its parameters are still being defined.

California Weighs In
In Meza v. H. Muehlstein & Co. [PDF], a California court of appeal granted a manufacturer’s motion to disqualify a law firm from representing a personal injury claimant, despite the party’s claim that its counsel had shared information through a common interest privilege.

The claimant had sued a number of defendants, alleging personal injuries caused by workplace exposure to toxic chemical products. A pretrial order in the case had permitted defense counsel to exchange information regarding their common interests without waiving the attorney-client and attorney work product privileges.

After defense counsel had shared work product, one of the attorneys who represented one of the defendants and had been given access to the confidential work product of other defendants became an associate of the firm that represented the claimant.

The other defendants sought the claimant firm’s disqualification to protect the defense work product. The claimant argued that defense counsel had waived the attorney work product privilege by disclosing their thoughts and impressions about the case to counsel for other defendants.

The trial court rejected the claimant’s argument and held that the common interest privilege applied. The defendants had not waived their privileges by sharing information in furtherance of their joint defense.

The California court of appeal agreed and found that not only did the associate have a per seconflict of interest but also that the firm was vicariously disqualified as well.

The claimant had argued that the common interest did not apply to the facts of this case because the defendants had separate, dissimilar, and, at times, adverse interests. The claimant argued the lack of “common interests” meant that the defendants’ attorneys could not disclose work product to each other without waiving the attorney work product privilege.

Disagreeing with the claimant’s argument, the court of appeal found substantial evidence of a joint defense common interest to uphold the trial court’s finding that there had been no privileges waived.

The court assessed the applicability of the common interest under three factors:

  • the disclosure relates to a common interest of the attorneys’ respective clients;
  • the disclosing attorney has a reasonable expectation that the other attorney will preserve confidentiality; and
  • the disclosure is reasonably necessary for the accomplishment of the purpose for which the disclosing attorney was consulted.

The court also rejected the plaintiff’s argument that the former defense counsel’s short tenure of seven months at the firm should diminish the concerns for disqualification.

Guide to Protecting the Common Interest
Practitioners wanting to ensure that they maintain a common interest privilege when sharing defense information should consider the following practice points:

Create a joint defense agreement and ensure clients understand the risks and rewards.
“A careful lawyer will always have a joint defense agreement. Most courts almost require it because they want one lawyer to stand up on behalf of the defendants,” suggests Lawrence J. Fox, Philadelphia, Section of Litigation Delegate to the ABA House of Delegates and former Section chair.

Fox also warns of the importance of clear communication with the client about the terms of the joint defense and the importance of managing a client’s expectations.

“It is very important for the lawyer to explain to the client the risks and the rewards, says Fox. Potential risks exist such as seen in the Meza case where one lawyer’s disqualification impacts the entire firm. Similarly, one party’s sanctions could create a risk to the other parties to the joint defense agreement, notes Fox.

Ensure retroactive application of the joint defense agreement.
The date a joint defense agreement is signed does not always speak to the privilege that may exist in the communications prior to the signing of a joint defense agreement, reminds Robert R. Simpson, Hartford, CT, cochair of the Section of Litigation’s Annual Conference.

“A mistake I often see by inexperienced or younger lawyers is that they do not reference that the parties have been operating under the joint defense agreement prior to signing it. A specific reference to its retroactivity is key,” says Simpson.

Anticipate a remedy for withdrawal.
Parties can eventually withdraw from a joint defense agreement for a myriad of reasons, including settlement or disqualification.

To ensure the privileged and confidential information gathered during the course of the common interest remain protected, the agreement should explicitly anticipate withdrawal, advises Simpson.

Protect against future disclosure in future litigation.
Finally, experienced attorneys encourage practitioners to include provisions in joint defense agreements that will protect the privilege even in future litigation related to the same subject matter.

“Often you will find the same issues arise in cases in different jurisdictions related to the same parties and the joint defense agreement should specify that all information remains privileged,” says Simpson.

A carefully crafted joint defense agreement that covers initial formative communications and anticipates creating future protections will diminish any attempts to discover documents, information or communications that are subject to the common interest privilege for attorney work product.

Keywords: multidefendant litigation, joint defense, common-interest privilege, work product

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