Good communication within a deal team can be the linchpin of a
successful transaction. Equally important, however, is the need to
preserve privilege and ensure that sensitive information is
insulated from any subsequent litigation. Balancing these two
demands in a complex and fast moving transaction can be cumbersome,
complicated and fraught with risk. Fortunately, recent developments
in the common law have shed some light on this issue and provide
useful guidance on how best to manage sensitive communications
within a deal team.
Solicitor-client privilege exists as a common law exception to
the evidentiary rules that compel disclosure during a litigation
dispute. The law recognizes the need to protect the relationship
between the lawyer and client from any apprehension that candid
discussions could be disclosed and used to the client's
detriment. Thus, the common law grants clients a protective right
over any communication passing between them and their legal
advisor, made confidentially, for the purpose of seeking or
receiving legal advice.
The law of privilege also recognizes the necessity of using
intermediaries to facilitate the process of giving and receiving
legal advice. Accordingly, communications made to a lawyer or
client's "agent" will be equally protected so long as
these individuals also satisfy the criteria for establishing
Once a communications falls outside this nexus, however, there
is a significant risk that privilege may be waived. Where, for
example, sensitive information is distributed to financial advisors
in a communication that relates to business issues, it is difficult
to assert legal privilege because the underlying rationale for the
protection, the lawyer-client relationship, is absent. In these
circumstances the client may be deemed to have waived privilege and
the communication may be compellable in any subsequent
Clear enough in the abstract, the complexity of these rules
multiply with each additional lawyer, banker, and consultant added
to the transaction. With dozens of individuals on the deal team,
each a purported "agent" of the lawyer or client, the
sheer volume of communications can stretch the umbrella of
privilege into a three-ring circus tent.
Earlier this year, Justice Colin Campbell of the Superior Court
Commercial List gave some much-needed guidance on this issue in Barrick Gold Corporation v. Goldcorp.
Inc. In summary, he held that a communication distributed
to a non-legal advisor could be privileged where that non-legal
advisor's involvement was essential for rendering the legal
advice sought by the client. Importantly, the court rejected a
permanent "deal team" extension of solicitor-client
privilege that would automatically apply to transactional
communications. Rather, it emphasized that this analysis would be
context specific and would have to be established based on the
particular facts of each circumstance.
There are a number of useful guidelines that flow from the
principles explored by the Court in this case:
Recognize privilege issues early in a transaction and establish
a policy for distributing sensitive communications.
Document the function that non-legal advisors play in shaping
the overarching legal strategy.
Limit the dissemination of sensitive information to those
individuals whose role is essential for rendering the legal advise
sought by the client.
Review the entire chain of correspondence before forwarding an
email and consider establishing a new message if sensitive
information could be disseminated beyond the privilege nexus.
Scan the recipient list before sending a sensitive email.
Hitting "Reply All" indiscriminately can significantly
weaken the strength of the privilege.
As with any area of transactional risk, forethought on these
issues is imperative. While courts are loath to compel disclosure
of properly privileged information, stretching this protection over
ill fitting communications may have material and significant risks
if the deal sours and privilege is challenged. Implementing these
guidelines can help undercut these issues and ensure your sensitive
information remains protected.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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