Joint Defense Agreements

By Joseph Allen Kelly

When lawyers are involved in multi-party litigation or transactions, concerns about protecting attorney-client privilege and work product information often arise. One way to alleviate these concerns is by utilizing joint defense agreements. A joint defense agreement allows multiple parties with a common interest in a legal matter to share information and coordinate strategy without waiving the attorney-client privilege and work product protection. This article explains the basic elements of joint defense agreements and offers tips for drafting them successfully.

I. The Common Interest Privilege

Most attorneys know that the attorney-client privilege protects communications between a lawyer and a client seeking legal advice. However, the privilege protects only confidential communications, i.e., those intended to remain private, between or among the lawyer, the client, and the client's representatives. In other words, if any other parties are present, the general rule is that the communication is not privileged. See Matter of Fischel, 557 F.2d 209, 211 (9th Cir.1977). There is an exception, though, when the communication takes place among persons with a "common interest." See In re Teleglobe Commc'ns Corp., 493 F.3d 345, 363-66 (3rd Cir.2007). Under the common interest privilege (or "joint defense privilege") the attorney client privilege is extended to protect communications that are "part of an on-going and joint effort to set up a common defense strategy." Weinstein v. Eisenberg, 474 U.S. 946, 106 S.Ct. 342, 88 L.Ed.2d 290 (1985).

In order to establish the existence of a joint defense privilege, the party asserting the privilege must show that (1) the communications were made in the course of a joint defense effort, (2) the statements were designed to further the joint effort, and (3) the privilege has not been waived. Matter of Bevill, Bresler & Schulman Asset Management Corp., 805 F.2d 120, 126 (3rd Cir. 1986) (citations omitted). Joint defense agreements are a way to formalize this privilege. In a joint defense agreement, the parties agree to maintain the confidentiality of communications between them that would, absent disclosure to the other defendants or lawyers, be protected by the attorney-client privilege or work product doctrine. United States v. Henke, 222 F.3d 633, 637 (9th Cir. 2000).

II. Drafting Joint Defense Agreements

Joint defense agreements can be verbal or written, as long as the parties have agreed to preserve the confidentiality of communications. United States v. Schwimmer, 892 F.2d 237, 244 (2d Cir. 1989), cert. denied, 502 U.S. 810 (1991) (recognizing verbal joint defense agreement). However, parties who anticipate asserting the privilege should always insist on a written agreement. There are several benefits to having a written joint defense agreement: A written agreement helps establish that the privilege was not waived, notwithstanding disclosure; it lays out specific terms for the parties so that there is no dispute on what is covered by or the scope of the agreement; it usually specifies the duties of the parties when a party either withdraws or joins the agreement; and it can specifically address current and potential conflicts of interest and provide for their resolution. Having a written joint defense agreement is also a way to establish consistency and predictability in complex cases and cut costs by avoiding duplicate investigations, interviews and discovery.

A.  Applicability

Because a joint defense agreement does not create privilege, it only preserves by evidencing the privilege, the first step in drafting one is to determine whether there is any privilege to preserve. Generally, only those communications made in the course of an ongoing common defense or strategy (and intended to further the enterprise) are protected under the common interest privilege. US. v. Schwimmer, 892 F.2d 237, 243 (2d Cir. 1989). In that scenario, a joint defense agreement is appropriate. On the other hand, a joint defense agreement is not appropriate where the parties are not pursuing a common or joint interest. See, e.g., In re Imperial Corp. of America, 167 F.R.D. 447, 455 (S.D. Cal. 1995) (letter to insurer not protected, despite a joint defense agreement, because not sent in the course of a joint defense effort); United States v. Weissman, 195 F.3d 96, 100 (2d Cir. 1999). And parties cooperating in conjunction with a business transaction, such as a merger or business deal, are not necessarily pursuing a common or joint defense. Walsh v. Northrop Grumman Corp., 165 F.R.D. 16, 19 (E.D.N.Y. 1996) (refusing to extend doctrine to joint business strategy); SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 512 (D. Conn.1976) (privilege waived by disclosing legal antitrust analysis to joint venturer, where the parties were not commonly interested, but rather negotiating a business transaction between themselves); In re Gibco, Inc., 185 F.R.D. 296, 299 (D. Colo. 1997) (cooperation alone does not amount to a joint defense).

B.  Elements

Although the benefits of joint defense agreements can be obvious, these agreements can sometimes cause unexpected problems for lawyers and their clients. Among these potential problems are conflicts of interest, the creation of unwanted fiduciary relationships, possible disqualification of counsel and unenforceability of the agreement itself. With regard to conflicts of interest, at least one court has held that when one member has disclosed confidential information as part of the joint defense agreement and then becomes adverse, the lawyers for the other parties may not cross-examine the turncoat witness and continue to represent co-defendants without violating ethical duties. U.S. v. Henke; 222 F.3d 633 (9th Cir. 2000). Joint defense agreements can also create another conflict of interest issue: a conflict can arise if a law firm party to a joint-defense agreement hires a new attorney who formerly represented a party adverse to a member of the joint-defense group. Likewise, if the new attorney, while at a prior firm, worked on matters involving joint defense agreements, adversity between the new law firm and members of the attorney's prior joint defense group may result in a disqualifying conflict on other cases.

There are several elements that can be included in a joint defense agreement to help alleviate these types of problems and increase the likelihood that the agreement will be enforced:

• A joint defense agreement may set out the general areas of common defense or joint strategy between the parties, or, it may recite that such common interests exist.
• A joint defense agreement may state that the sharing of materials and information is reasonably necessary to achieve the parties' common goal.
• A joint defense agreement may disclaim any attorney-client relationship (and should expressly disclaim any duty of confidentiality or loyalty) between an attorney and client other than the attorney's pre-existing client. The agreement may also state that no such relationship will arise by implication.
• A joint defense agreement may make it clear that communications or materials that fall within the attorney-client privilege or work product doctrine can be disclosed or revealed only to parties to the agreement or approved non-parties (such as consultants or experts) to the agreement.
• A joint defense agreement may state that waiver can be only by consent of all the parties.
• A joint defense agreement may describe the parameters by which joint defense materials may be used by the parties and their counsel.
• A joint defense agreement may identify the procedures to be followed when subpoenas, court orders or other demands are made for materials.
• A joint defense agreement may describe the effect of a guilty plea or settlement.
• A joint defense agreement may provide a method for clients and their attorneys to withdraw from the agreement, including a method for providing notice to the other parties and returning materials.
• A joint defense agreement may provide a representation by the attorneys that they have no conflicts in the matter.
• A joint defense agreement may state that the agreement itself is confidential.

The agreement should be as thorough as practicable under the circumstances. It may also include a mechanism to address future contingencies that may arise between the parties. Not every joint defense agreement will have all of the above elements, but these are issues to be considered in the drafting of the agreement. Of course, the most important thing to remember about joint defense agreements is that they only apply if there is an underlying common interest. So, the first step should always be a determination of the relationship and interests among the various parties to the proposed agreement.

III.  Tennessee

Tennessee courts have affirmatively recognized the common interest privilege. See, e.g., Boyd v. Comdata Network, Inc., 88 S.W.3d 203, 214-15 (Tenn. Ct. App. 2002) (applying common interest doctrine to protect communications shared between attorneys for civil defendant and non-party); Gibson v. Richardson, 2003 WL 135054, 5 (Tenn. Ct. App. 2003). In Boyd, the Court explained that the privilege "protects not only the communications between any of the clients and attorneys regardless of whether the communicating client's own attorney is present but also the communications between any of the clients' respective attorneys." Boyd, 88 S.W.3d at 214 (citations omitted). The Boyd Court further held that joint defense agreements are privileged, and, therefore not discoverable by other parties. Id. at 217.

IV.  Employment Context

Joint defense agreements can be particularly useful in the employment context. For example, when a company and its employee are sued by the employee's former employer for misappropriation of trade secrets, the two defendants will likely fall under the protection of the common interest privilege. Similarly if an employer and its supervisor employee are both defendants in a wrongful termination or other employment suit, a joint defense agreement could be appropriate. A joint defense agreement would allow the employer and employee to exchange information and communicate confidentially with each other as if there were joint representation, while still maintaining separate counsel.

Of course, employers should always thoroughly analyze their interests and potential future interests before entering a joint defense agreement with an employee. This analysis should include the possibility of future contracts and provide a mechanism for severing the joint defense agreement of the parties that no longer share a common defense interest.

V.  Conclusion

Despite some potential risk, joint defense agreements remain important tools for reducing costs, improving strategies, and increasing efficiency in litigation. In engaging in joint defense agreements, prudent attorneys will use careful planning and drafting to ensure that any risks are minimized, and that all parties have a clear understanding of their obligations under the agreement. This will increase the chances of the agreement serving its intended purpose for all defendants.