Attorney-Client Privilege not Extended to E-Mails Exchanged with Attorney Litigation Funder

On January 30, 2015, in response to a Motion to Compel, the U.S. District Court for the Southern District of New York ordered emails exchanged between defendant’s ex-wife and a litigation funder to be produced after finding that the e-mails are not protected by the attorney-client privilege. Accordingly, the former husband is entitled to see hundreds of e-mails that contain valuable information about the suit against him.

Pursuant to New York privilege law, the Court concluded that the ex-wife is barred from claiming privilege for the e-mails because, even though the funder is an attorney, she is “neither necessary to facilitate [the ex-wife’s] communications with counsel nor in possession of a legal claim against [the ex-husband].”

Unlike the facts in the landmark case of United States v. Kovel, 296 F.2d 918 (2d Cir. 1961), where it was held that the privilege extends to exchanges with a third party who is essential for facilitating legal advice, the funder’s role in this matter is not necessary for the attorney-client relationship. The court also found that the common interest doctrine does not apply because the ex-wife and the funder do not share any legal interests, and despite possibly having a common financial interest in the outcome of the suit, “that relationship does not fall into the narrow category primarily reserved for co-litigants pursuing a shared legal strategy.”

The implications of this decision is that all communications between the ex-wife and the litigation funding company are discoverable, from the e-mail discussing legal strategy to those regarding filings and discovery. Thus, clients having their cases funded by a litigation funding company need to be careful to not electronically communicate information they would like to keep private.

Find the full text of the Order here. To read more, click here.


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