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Transactional attorneys should take notice of a significant decision recently issued by the New York Appellate Division for the Second Department, Askari v. McDermott, Will & Emory, LLP. In Askari, the Court confirmed the longstanding New York rule that the attorney-client privilege protecting pre-acquisition / pre-merger communications relating to the transaction belongs to the seller and does not transfer to the purchaser of the entity. But the Court also noted that New York law wars with Delaware law, pursuant to which the attorney-client privilege protecting these communications transfers to the purchaser upon completion of the transaction. This question of who owns the privilege has considerable and practical importance, as subsequent litigation between parties to a merger, asset sale, stock transfer or corporate reorganization is not uncommon.
Please join James Q. Walker and Daniel C. Zinman of Richards Kibbe & Orbe LLP as they address:
- The current state of the law on who holds the attorney-client privilege after a merger or acquisition;
- Whether joint representation of the seller and the to-be-formed successor entity in the transaction alters the privilege analysis;
- The effect of choice of law provisions in the deal documents;
- The ability of parties to draft around common law privilege rules by carving out the pre-merger attorney-client privilege from the assets that pass to the purchaser; and
- Other privilege issues that arise in the context of a corporation’s sale of some or all of its ownership interest in a subsidiary or other affiliate.