In a ruling this week, Vice Chancellor Lori Will addressed whether one-half of an evenly divided board could gain access privileged communications between the corporation and its long-time outside counsel. In re Aerojet Rocketdyne Holdings, 2022 Del. Ch. LEXIS 106. She ruled that the attorney-client privilege could not be used to deny access to incumbent directors, stating that the "defendants have no greater claim to the Company's privileged than the plaintiffs, who are joint clients of Company counsel".
The Vice Chancellor's ruling gives no indication that she is applying anything other than Delaware law. This would seem appropriate in a Delaware court, but shouldn't a choice of law analysis be applied in deciding the scope of outside counsel's engagement? For example, did the counsel's engagement letter include a choice of law provision?
I raise the choice of law question because under California's Rules of Professional Conduct, an attorney representing an entity does not automatically represent its directors and officers:
A lawyer employed or retained by an organization shall conform his or her representation to the concept that the client is the organization itself, acting through its duly authorized directors, officers, employees, members, shareholders, or other constituents overseeing the particular engagement.
Rule 1.13(a). This fact is further elucidated by the requirement:
In dealing with an organization's constituents, a lawyer representing the organization shall explain the identity of the lawyer's client whenever the lawyer knows* or reasonably should know* that the organization's interests are adverse to those of the constituent(s) with whom the lawyer is dealing.
Rule 1.13(f). As set forth in Rule 1.13(a), a lawyer's constituents includes its directors. If the corporation's attorney also wishes to represent a director or other constituent, he or she must comply with Rule 1.13(g). Therefore, had the Vice Chancellor applied California law, I would not automatically conclude that the directors were joint clients of the corporation's attorney.
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