To establish that communications between lawyers with different clients are protected by “common interest privilege”, pending or reasonably anticipated litigation is not a required element, a New York appellate court has held. Ambac Assur. Corp. v. Countrywide Home Loans, Inc. 2014 N.Y. Slip Op. 08510 (N. Y. App. Div. Dec. 4, 2014).
The “common interest” or “community of interest” privilege may protect, from third party discovery, otherwise privileged information shared by counsel for separately represented parties whose clients share a common legal interest. This “privilege” is best described as an exception to the rule that privilege is lost when attorney-client privileged information is disclosed to a stranger to the relationship. The "community of interest privilege" is most often invoked to protect communications made under a joint defense agreement, where the participants’ common legal interest is successfully defending pending claims. Some courts have recognized legal interests other than defense of pending or threatened litigation that can support a claim of common interest privilege. E.g. In re Regents of the Univ. of California, 101 F.3d 1386, 1390-91 (Fed Cir. 1996), cert denied sub nom Genentech, Inc. v. Regents of the University of California, 520 U.S. 1193 (1997)( common-interest doctrine "is not limited to actions taken and advice obtained in the shadow of litigation" and applies to parties’ common interest in securing the broadest possible patent). On the other hand, it is clear that for the privilege to apply, parties’ common interest must be legal, and not solely commercial. Duplan v. Deering Milliken, 397 F. Supp. 1146, 1172 (D.S.C. 1975).
Notwithstanding the recent Ambac decision, counsel must be cautious in disclosing privileged information in a transactional context. In Ambac itself, the appellate court ruling reduced but did not relieve the burden of Countrywide and Bank of America to show that a common interest privilege protected pre-closing communications that they and their counsel made pursuant to the institutions’ merger agreement. The case law on “common interest privilege” varies by jurisdiction and by context. One must consider carefully whether the overlapping interests of parties to a transaction are in fact identical, legal and not solely commercial. Disclosures of privileged information should be made only under authority of a confidentiality agreement, and the extent necessary to advance an identified and truly common legal interest.