Most lawyers know that including a third party in an otherwise privileged communication usually waives privilege. Less well known are three important exceptions that can protect privilege in particular circumstances: (1) the Kovel rule for third-party consultants, (2) the functional equivalent doctrine, and (3) the common interest doctrine. The crucial inquiry when analyzing a set of documents in the context of all of these three doctrines is whether the communications were made in order to request or render legal advice or services for the client.

The Kovel rule applies “when a third-party advisor, such as an accountant, clarifies communications between the attorney and client where the advisor translates or interprets information given to the attorney by the client.” See United States v. Kovel, 296 F.2d 918, 922 (2d Cir. 1961). In the recent case of Monterey Bay Mil. Hous., LLC v. Ambac Assurance Corp., No. 19 Civ. 9193 (PGG) (SLC) (S.D.N.Y. Jan. 19, 2023) the court found that privilege had been waived where the plaintiff failed to show the advisors included in the communication were necessary to translate or interpret information exchanged for counsel’s legal analysis. In contrast, the court in Hydrojet Servs., Inc. v. Sentry Ins., No. 20-4727-SWR (E.D. Pa. June 16, 2022) found no waiver of privilege because that plaintiff’s counsel’s ability to provide sound and informed legal advice and strategy with regard to coverage issues depended on the assessment of the claim and other information conveyed by plaintiff’s agents.

The functional equivalent doctrine applies “where a consultant serves as a de facto employee of a company….” See Walsh v. CSG Ptrs., LLC, 544 F. Supp. 3d 389, 392 (S.D.N.Y. 2021). The court in J.L. ex rel. J.P. v. N.Y. City Dep't of Educ., No. 17-CV-7150 (JPC) (KHP) (S.D.N.Y. Dec. 15, 2022) found a waiver of privilege due to the lack of evidence that the consultant served as a de facto employee of the New York City Department of Education.  Nevertheless, the court allowed some information to be redacted because of work product protection and ruled that some documents were still protected by attorney-client privilege pursuant to the common interest doctrine.

The common interest doctrine applies where “the communication is made by separate parties in the course of a matter of common interest, [and] the communication is designed to further that effort…..” See United States v. Bergonzi, 216 F.R.D. 487, 495 (N.D. Cal. 2003). The purpose of this doctrine is “to allow attorneys for different clients pursuing a common legal strategy to communicate with each other.” See In re Pacific Pictures Corp., 679 F.3d 1121, 1129 (9th Cir. 2012). The court in Rodriguez v. Seabreeze Jetlev LLC, No. 4:20-cv-07073-YGR (LB) (N.D. Cal. Aug. 11, 2022) found that the common interest doctrine preserved the privilege only with respect to communications with non-party witnesses who were beneficiaries to the estate at issue after they reached an agreement to pursue a joint legal strategy, but did not preserve privilege with regard to communications with non-party witnesses who were not beneficiaries of the estate.

Keep in mind that these three doctrines are not independent privileges; rather, they are limited exceptions to the general rule that disclosing privileged information to third parties constitutes a waiver.

For a more in-depth analysis of these cases, and CLE credit, check out “Third Parties and Attorney-Client Privilege: Common Interest, Functional Equivalence, Waiver” available on-demand from Strafford, featuring Reed Smith Counsel Patricia Antezana.