Pryor Cashman Partner David Rose, a member of the firm's Executive Committee, a member of the Litigation, Media + Entertainment, and Sports Groups, and co-chair of the Alternative Dispute Resolution Practice, spoke with Regulatory Compliance Watch about a key exception to the attorney-client privilege.

In "Attorney-client privilege: Beware the fiduciary exception," David says, "When you've got more disclosure, more regulation, you're going to have more interactions between funds and their counsel. That could open things up down the road for a disgruntled LP to say, 'Hey, what were you talking about?'"

He notes that in that circumstance, fiduciaries need to understand the nature of their relationship with legal counsel:

"As a fiduciary, when I'm seeking advice of counsel regarding fund operations, I'm not doing it for my own sake. I'm doing it on behalf of those people who are investing in the fund," he says. "Those beneficiaries have every right to know what that lawyer said and how it impacts my fiduciary duty."

As a result, there are risks for fiduciaries that they need to be aware of, including reputational risk:

"There are all kinds of things that could damage your reputation," he says. "You could come off looking foolish, you could come off looking cavalier. It's that moment where someone says to themselves, 'I get it, I don't have a breach-of-fiduciary duty claim, but I'm seeing a lot in these e-mails. If they're this unprofessional with counsel, inside or outside, how professional are they when it comes to the management of my money?'"

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