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CALIFORNIA CORPORATE & SECURITIES LAW

Magistrate Judge Rules SEC’s Attorney-Conduct Rules Preempt State Law

Last December, Chief Magistrate Judge Joseph C. Spero ruled that the SEC’s attorney-conduct rules preempt California’s statutory and professional rules requiring attorneys to maintain inviolate the confidences.  Wadler v. Bio-Rad Laboratories, Inc., 2016 U.S. Dist. LEXIS 176166  (N.D. Cal. Dec. 20, 2016).  This is a topic that I and other members of the Corporations Committee of…

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Court Rules Attorney-Client Privilege Ceases To Exist When Corporation Ceases To Exist Without Successor

The LLC May Well Be The Platypus Of Business Organizations What happens to the attorney-client privilege when a corporation dissolves?  Magistrate Judge Sallie Kim recently answered that question in Virtue Global Holdings Ltd. v. Rearden LLC, 2016 U.S. Dist. LEXIS 53076 (N.D. Cal. April 5, 2016): When a corporation ceases to exist, “the corporate powers, rights and…

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Are Consultant’s Employees Functionally Equivalent To Client’s Employees?

As a general matter, the attorney-client privilege is waived by disclosing a communication to a third party.  When a corporation hires an investment banker, the corporation’s attorneys will frequently communicate with employees of the investment banker.  Are those communications protected by the attorney-client privilege or do those communications waive the privilege?  U.S. Magistrate Judge George…

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Why Keeping Corporate Lawyers Quiet Is Good For Us All

In a recent post in The New York Times DealBook, Berkeley Law School Professor Steven Davidoff Solomon argues that keeping corporate lawyers silent “can shelter wrongdoing”.  I completely agree that the attorney-client privilege limits society’s access to information.   If access to information is the only societal value to be considered, then the attorney-client privilege should be abolished forthwith.  Other societal…

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Insurer Claims Attorney-Client Privilege Of Third Parties Prohibits Disclosure To Its Own Attorneys

At first, this case seems somewhat pedestrian – a lawyer sues her erstwhile law firm for employment discrimination.  But then things get complicated.  It turns out that the lawyer was employed by a law firm that was employed by an insurer to represent its insureds.  When the lawyer served a request for production of documents, the insurer…

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Former Executive Has No Right To Possess A-C Privileged Documents

Suppose that a corporation terminates its president and chief executive officer who then sues for breach of his employment contract.  Does the former executive officer have a right to access and use materials subject to the attorney-client privilege that were created during his tenure with the corporation?  If so, what would be the theory? In…

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Federal Court Applies California Privilege Law To Delaware Corporation

Lawyers often speak of the attorney-client privilege in the singular as if there is only one privilege.  Given the multiplicity of fora in which actions may be brought, it is best to think in the plural.  There are many versions of the attorney-client privilege and the one that is applied to your case may not be the one that…

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This Interest May Be Common, But It’s Still Privileged

Section 954 of the California Evidence Code establishes a privilege “to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer”.  A “confidential communication between client and lawyer” is defined in Section 952 of the Evidence Code.  Under that statute, the presence of third persons does not result always…

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More On Asset Sales And The Attorney-Client Privilege

Last week, I dipped a toe into the difficult topic of what happens to the attorney-client privilege in merger and acquisition transactions.  In that post, I framed a definitional question – is the attorney-client privilege an asset?  If the attorney-client privilege is an asset, an agreement that purports to transfer all of a seller’s assets would…

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Client Secrets Must Be Kept Even When Not Privileged

Yesterday, I discussed whether an SEC attorney might commit an ethical violation by encouraging an attorney to disclose her client’s confidences.  That discussion was prompted by a recent posting by Lawrence A. West addressing whether attorneys may seek whistleblower awards from the SEC.  My post focused on a California attorney’s statutory duty to preserve “at every peril”…

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