Article by Ben Jetten, ©2005 Blake, Cassels & Graydon LLP
This article was originally published in Blakes Bulletin on Litigation - May 2005
There are circumstances when more than one party may be under investigation arising out of an event or set of facts. In those circumstances, there can be advantage to co-operation amongst the parties under investigation. This typically arises where there is commonality of interest due to the same factual underpinnings being applicable, where corporate parties are in the relationship of parent and subsidiary, where current or former executives of the corporation may be involved or where there otherwise may be corporate inter-relationships.
Potential Benefits and Disadvantages of Co-operation
The potential benefits of co-operation lie in the establishment of a united front to the investigating authority and the ability to prepare a unified defence in the proceeding or otherwise gain a greater degree of control over the course of the proceeding. In addition, the alliance will often tend to allow the parties to develop a more global view of the issues and to benefit from the pooling of information.
The potential disadvantages of co-operation are the danger of disclosure of damaging information to adverse parties and the possibility that one or more of such parties may seek to co-operate with the investigating authority in return for immunity or follow a course where the interests of the parties may very well diverge. There is always the prospect of actual or deemed waiver of privilege and the potential for the future disqualification of counsel.
Common Interest Privilege
The law recognizes a "common interest privilege" which protects against a waiver of privilege in a case where documents and other information are shared between persons having a common interest in the litigation. The principle applies where parties with a common interest in anticipated litigation exchange facts, advice or other information regarding litigation or an investigation which may lead to legal proceedings of some kind. In other words, there will be a common interest where parties anticipate litigation or share a united front against a common adversary on the same issue. In this arrangement, as between the parties, communications are not privileged.
The key in these arrangements is to protect the confidentiality of the communications in the hands of each co-operating party as against the outside world. Canadian courts may uphold the privilege as part of either litigation privilege or solicitor-client privilege. What is emerging from the case law on the point is that there must be a mutuality of interest but not necessarily identical interest. It also appears that the possibility that parties might at some future point become adverse in interest is insufficient to deny the existence of a present common interest. The case law supports the proposition that common interest privilege can apply outside of the litigation context to the sharing of legal opinions or advice in the context of an earlier commercial transaction. It all appears to depend on the intention of the parties in sharing the information, including the intention of confidentiality.
Joint Defence Agreement
Co-operation can be formalized through the development and execution of a joint defence agreement. This form of agreement assists in protecting the common interest privilege by regulating and co-ordinating a joint defence and the use of information and documents. The key provisions of such an agreement would be a description of the common effort for which the agreement would be used, for example, a governmental investigation, regulatory submissions or litigation. The agreement should also contain a general statement regarding the nature of co-operation – covering verbal and written communications – or specific enumeration of the types of co-operation that will be provided.
Joint defence agreements will customarily address the exchange of documents, the sharing of knowledge, including factual information pre-dating the proceedings; information gathered during internal investigations; legal analyses and strategy discussions; briefings; other intelligence and the substance of discussions with the regulator. The agreement will typically address the co-ordination of activities, including joint interviews, joint analysis of issues and advising of clients, and co-ordinated communications with the relevant government officials.
Joint defence agreements also may reserve the rights of the parties concerning materials or communications that are confidential and are intended to remain confidential. In those cases, all applicable privileges continue to apply, including solicitor-client and litigation privilege. The agreement may even mark out terms that relieve parties from the obligation to share information. Joint defence agreements will typically contain limitations on their use as being only in connection with the proceedings at issue. Furthermore, limitations on persons to whom information may be released may also be prescribed, with specific reference to individuals within a party, in-house or external counsel, experts and other consultants who may be retained in connection with the matter.
The agreements will often stipulate a procedure for dealing with documents that are subject to the agreement, commonly requiring such documents to be marked "privileged and confidential – joint defence materials". There may also be provision for designating certain documents as "for solicitors’ eyes only" which are not intended to be disclosed to anyone other than clients’ counsel. Confidentiality will be maintained and documents will not be disclosed without prior consent of the producing party.
Where a party is served with legal process calling for production of any document or requiring it to divulge information subject to the joint defence agreement, the parties must immediately inform the other parties and provide copies of a summons or process and assert solicitor-client privilege, litigation privilege and any other applicable privilege.
With respect to unauthorized disclosure, in addition to all other remedies, a non-breaching party may seek specific performance, injunctive relief or other equitable remedy to restrain the disclosure. Typically at the conclusion of proceedings, all copies of documents are either to be returned or destroyed along with a certification that they have been so returned or destroyed and confidentiality obligations will continue notwithstanding the conclusion of the proceeding.
The agreement may contain a provision which clearly preserves the right of each party to be separately represented by counsel and at liberty to pursue any course of action in its best interests, even if adverse to the interests of the other parties. The agreement should specify that the alliance does not create any solicitor-client relationship between a party and counsel to another signatory. In that regard, all parties should waive any right to claim a conflict of interest or to disqualify counsel that receives confidential information under the agreement.
Joint defence agreements should be signed by both the clients and their counsel. Counsel should certify that they are authorized to enter into the agreement on their own behalf and on behalf of the clients, that they have explained the contents of the agreement and responsibilities of each signatory to their clients and that each counsel and client agrees to be bound by the terms of the agreement.
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.