LLC Attorney-Client Privilege

The recent decision in Carpenters Pension Trust v. Lindquist Family LLC, has led courts to acknowledge that “[t]he application of attorney-client privilege to members of an LLC is a relatively unchartered area of law.”  Because limited liability corporations combine characteristics of corporations and partnerships, questions as to whether privilege applies to these business entities remains open.

The court applied the privilege principles to applicable corporations and after reviewing withheld documents, the court concluded that despite the LLC’s designation of one person to be the “sole manager,” several other LLC members “communicated with each other and with the LLC’s attorneys about legal advice.”  Because these members served as the LLC’s daily managing members, “disclosure of confidential information received by one managing member of the LLC to another managing member does not, by itself, defeat the attorney-client privilege.” 

See Thomas Spahn, How Do Courts Treat LLCs for Privilege Purposes? Mondaq, July 7, 2014.