June 10, 2008
LLCs and the attorney-client privilege
Posted by Donald Scotten
The federal district court in Nevada recently addressed an issue of first impression involving LLCs and the attorney-client privilege in Montgomery v. eTreppid Technologies, LLC, --- F. Supp. ---, 2008 WL 1826818 (D. Nev.) The case arises from a dispute between an LLC, which is in the business of developing and marketing software, and a member and former manager of the LLC, who contends that the LLC unlawfully used a software license that belonged to him. The court was asked to resolve a discovery dispute in which the defendant LLC refused to produce various documents to the plaintiff former manager based on an assertion of attorney-client privilege. The former manager contended that the assertion of the privilege against him was improper because he and the LLC were joint clients for privilege purposes during the time he worked as the LLC’s manager.
The issue of first impression before the court was whether an LLC should be treated as a partnership or corporation for purposes of the attorney-client privilege. The court had to make this determination in order to determine "who the client is" in an LLC. After reviewing several cases that the court pointed out were distinguishable, the court determined that LLCs should be treated as corporations for purposes of the attorney-client privilege. Accordingly, the court then looked to the law of corporations to determine the privilege issue. The court noted divergent views in corporations law regarding who the client is for purposes of the privilege. One view is that the corporate entity is the sole client, and former officers and directors are not; the other view is that the corporate entity and present and former officers are joint clients. In the present case, the district court found more persuasive the line of cases holding that only the corporate entity is the client. It thus held that the defendant LLC only was the client for purposes of the attorney-client privilege, and that the LLC properly asserted the privilege against the former manager in refusing to produce documents in discovery.
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» Attorney-Client Privilege for LLC's? from Legal Profession Blog
The Unincorporated Business Law Prof Blog, and that is a mouthful (or a typeful), raised the interesting question in this recent post, per Donald Scotten (Lect., Southern Cal). The federal district court in Nevada recently addressed an issue of first [Read More]
Tracked on Jun 18, 2008 7:48:02 AM