The Delaware Supreme Court recently issued a decision that has the potential to affect how corporations across the United States conduct investigations and communicate with their attorneys. The decision, Wal-Mart Stores, Inc v Indiana Electrical Workers Pension Trust Fund IBEW,(1)adopted the fiduciary exception to attorney-client privilege, which allows shareholders access to a company's privileged communications when there is "good cause" to believe that management may have breached a fiduciary duty to the shareholders.(2)
Wal-Mart Stores, Inc may have especially far-reaching consequences because it was decided by the highest court in Delaware, a state in which more than half of all publicly traded companies are domiciled and may be subject to suit.(3) Any of these corporations is now at risk of having to disclose an internal investigation report, emails or other documents likely presumed to be protected from disclosure. Further complicating matters, a minority of jurisdictions – including California – do not recognise the fiduciary exception to attorney-client privilege.(4) Thus, a company sued in California may be able to withhold certain privileged documents, while a company sued in Delaware may not.
Wal-Mart Stores, Inc casts a cloud of unpredictability over the question of when attorney-client communications might later be accessed by shareholders, and thus calls for close study from attorneys who represent corporations. Under Wal-Mart Stores, Inc, any communications regarding an investigation of alleged criminal conduct that do not contain trade secrets may be especially vulnerable to disclosure, particularly when shareholders can identify specific documents.
Read more here;click here
No comments:
Post a Comment