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Discussions with People Including Lawyers in a Business Transaction Does Not Waive the Attorney-Client

In the case of Center Partners, LTD v. Growth Head GP, LLC, state of Illinois Supreme Court clarifies the law about waiver of the attorney-client privilege in a business transaction.

Anything said between an attorney and their client is normally privileged. Parties cannot get at the substance of the conversation during discovery. In this case the attorney client privilege came up in a business transaction. The parties to an agreement all discussed with their attorneys, various aspects of the transaction. There was litigation over the transaction. During the discovery depositions one of the parties testified as follows:
“[Stefanek]: Well, we all signed it, so it would seem pretty logical that-you know, that-that anything significant would have been discussed with everybody, yes.
[Plaintiff’s attorney]: Again, I think that’s-there’s been a waiver in light of the court’s prior ruling on that, [Westfield’s attorney], and did you want to reconsider your advice to instruct him not to answer that?
[Westfield’s attorney]: What’s your question?
[Plaintiff’s attorney]: I would like to know what the legal advice was.
[Westfield’s attorney]: If-if-as the-what-if-do you mind asking the foundational questions, whether he knows what the legal advice that was shared was?
[Plaintiff’s attorney]: You received legal advice on why Simon, Rouse and Westfield believed they could exclude certain provisions of the Urban partnership agreement, Correct?
[Stefanek]: I received advice what-based on why we could.
[Plaintiff’s attorney]: Okay. And you believe that it’s logical that advice was shared with the other partners, Simon and-Rouse? Is that correct?
[Stefanek]: Seems logical that it would be, yes.” (pg. 8, Docket Nos. 113107, 113128 cons., Center Partners, Ltd, et al., Appellees, v. Growth Head GP, LLC, et al., Appellants. Opinion.)

Normally, courts find waiver of the attorney-client privilege when a party discusses some of the information that was discussed with an attorney. The theory is that a party cannot use part of the communication in litigation without disclosing the remainder of it. It would be a sword/shield analysis. If you can use the information in the conversation as a sword, you should not be able to shield disclosure of the rest of the conversation. If you say things to people other than your lawyer with other people present, the information is not private, and therefore not privileged.

The court in Illinois had not discussed whether or not this can be waived in a business situation. In other words, if people discuss what their lawyer says in a business context, does this waive the attorney-client privilege in the lawsuit.

The Supreme Court held discussions with someone else’s lawyer does not waive the attorney-client privilege in a business transaction. The Illinois State Supreme Court decided to apply waiver of the attorney-client privilege only in litigation. The court cited a number of out of state cases going both ways and determined that it would be more appropriate in Illinois to use waiver only if it comes up in the context of litigation.

The case makes it more difficult to waive the attorney-client privilege. The court decided that business people should be able to consult their lawyers without fear of waiving their privilege in the context of a business transaction. If the court did not do that, the court reasoned that people would be more reluctant to consult with lawyers on their business transactions.

The case is interesting from a litigation standpoint in that it does not restrict the attorney-client relationship for the litigants. It is well decided in the sense that business people can discuss matters about what their lawyers say without having to waive their privilege in context of their business transactions. It promotes fairness for litigants and the community.

Ackerman Law Office is available to help people with issues concerning business litigation and/or other litigation. We keep abreast of changes in the law. Please call us at 217-789-1977 or see our web site if you need advice concerning business litigation and attorney-client privileges.

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