NJ court says that attorney-client privilege applies to subsidiaries, too

Privilege is one of those fraught issues for in-house counsel, and it’s constantly being relitigated. Now, a federal court in New Jersey has confirmed that members of a corporate family all are represented by the same in-house counsel, whether that counsel occupies an office within the parent company or within a subsidiary. It said that corporate family members are considered joint clients. So it held that emails sent between in-house counsel employed by a subsidiary and an executive  from a parent company are protected by the attorney-client privilege.

In the case, according to a report in The National Law Review, the defendant’s general counsel works for an American subsidiary. The general counsel and the global CFO of the research and innovation organization of the French parent company exchanged emails. The plaintiff argued that the difference in corporate entities meant these emails were not protected by the attorney-client privilege. But a magistrate judege denied the plaintiff’s renewed application to compel production of three emails at issue.

“The fact that the attorney and client do not work for the same … entity [was] of no moment.” Indeed, “parent companies often centralize the provision of legal services to the entire corporate group in one in-house legal department, and, as a result, the members of the corporate family are joint clients … all represented by the same in-house counsel (whether that counsel typically takes up office with the parent or with a subsidiary),” the court held.