Thursday, December 4, 2008

Corporate Privilege

In a case involving interpretation of Rule 1.9 in the context of a motion to disqualify counsel on an interlocutory appeal, the New Hampshire Supreme Court remanded for further hearings. The case involves questions of privilege in the context of a corporate transfer. The court held:

We today adopt [a] "practical consequences" framework for analyzing what entity has dominion over the attorney-client privilege. Such framework furthers the legal principle identified in Weintraub, in that the corporate actor who gains control of an establishing corporation secures authority over its pre-existing attorney-client privilege. With respect to the matter at hand, the trial court used the "practical consequences" standard, and, accordingly, identified the proper test for determining whether CAS [the law firm] shared a valid attorney-client relationship with new T&M.


The trial court’s conclusion here, that the plaintiffs "failed to meet their burden of proving that [new] T&M continue[d] to exist as it did under Morgan Goodrich’s management," misses the mark. Whether old T&M continues to exist "as it did" under prior ownership is not the linchpin of the "practical consequences" standard. See In re I Successor Corp., 321 B.R. at 652-53 (criticizing district court’s decision that relied upon Weintraub for proposition that acquiring control of attorney-client privilege requires an effort to reconstitute or operate the pre-existing entity). Rather, the proper focus is upon whether control of old T&M passed with the transfer of ownership to [the new owners].

The litigation involves children suing parents. (Mike Frisch)

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