FEATURE
Attorney-Client Privilege in Communications with Outside Directors By NOAH KRESSLER AND LACEY ROCHESTER
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orporate counsel should pay close attention to a recent Delaware Court of Chancery decision that addresses the potential for outside directors to waive attorney-client privilege. They do so by communicating through third-party email addresses that do not entitle them to a reasonable expectation of privacy. The decision arose within the context of a discovery dispute related to litigation commenced by the We Company (WeWork). To resolve its liquidity crisis, WeWork and its majority shareholder entered into a Master Transaction Agreement with Softbank Group (SBG), which
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obligated SBG to use its reasonable best efforts to consummate a tender offer with WeWork. At the time, SBG was the majority owner of Sprint, Inc., a third party not involved in the WeWork litigation, and several SBG employees wore multiple hats at SBG and Sprint. For example, SBG’s chief operating officer was chairman at both Sprint and WeWork, and was assisted by Sprint’s CEO on WeWork-related matters. Two additional Sprint employees were seconded to SBG to serve as chief of staff for the COO and staff operations director. After SBG failed to complete the tender offer, a special committee of the company’s board sued SBG
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and sought to discover communications that Sprint’s CEO and chief of staff exchanged with SBG’s internal and external counsel regarding WeWork. In response, SBG sought to retain or redact the email communications on the basis that they were confidential attorney-client communications under Delaware law. Critically, the WeWork-related emails were sent to or from the SBG employees’ Sprint email accounts despite the fact that the employees had access to nonSprint email accounts, which they could have used for SBG-related matters. At the heart of the dispute over the documents’ privilege or lack BACK TO CONTENTS
