08 February 2022

The Disclosure Process Defense to Securities Fraud Claims, Part II: Protecting the Attorney-Client Privilege


This article addresses potential privilege issues that arise from the integral role that in-house counsel typically plays in a company’s disclosure process.

When faced with allegations of securities fraud, a defendant’s reliance on a robust and well-functioning disclosure process can be a powerful tool to negate scienter, i.e., fraudulent intent. Part one of this article discussed the theory behind the disclosure process defense as well as key prophylactic steps that can be taken to strengthen the defense for when it is needed. This Part Two addresses potential privilege issues that arise from the integral role that in-house counsel typically plays in a company’s disclosure process. First, it distinguishes the superficially similar advice of counsel defense, which requires waiver of the attorney-client privilege. Then it identifies important steps that corporate counsel can take to protect the privilege when a disclosure process defense is asserted. (more…)

16 November 2021

A Reminder That Former Directors Can Often – But Not Always – Access Their Former Company’s Privileged Records


In a November 9 letter decision, Vice Chancellor Will denied a motion filed by a company’s former directors to obtain its privileged information.  The decision highlights an exception to the rules governing a former director’s right to access their former company’s privileged information: access will be denied where the former director is seeking the information to pursue an individual damages claim against the company. (more…)

13 May 2021

Court of Chancery Provides Reminder That Privilege Is Not Absolute


Last week, Vice Chancellor Joseph R. Slights III issued a ruling in Tornetta v. Musk that serves as a reminder that the corporate attorney-client privilege is not absolute. Deciding a discovery motion in a stockholder derivative suit challenging the 2018 compensation deal for Tesla CEO Elon Musk, the Court ordered the defendants to produce a limited set of documents that reflected communications between Musk and in-house counsel, though it rejected the plaintiff’s request for additional communications between in-house counsel, the Board’s Compensation Committee, and outside advisors. The decision serves as a reminder to company counsel, both internal and external, that their communications may not always be protected from stockholder plaintiffs in shareholder derivative actions.


21 August 2020

Management of a Delaware Corporation Cannot Unilaterally Withhold Privileged Information From Directors


The Delaware Chancery Court recently found that directors serving on a special committee were entitled to privileged communications between management and company counsel because there was no formal board process to wall off those directors or other actions at the board level demonstrating “manifest adversity” between the company and those directors.