Privilege — Right of Former Officer or Director to Rely on Advice Given by Corporate Counsel

Corporate officers and directors are statutorily permitted to rely on advice of counsel when making decisions in their fiduciary capacities. When these actions are challenged after they have left office, they commonly want to assert as a defense reliance on the advice they received from counsel to the corporation (either in-house or outside), and it would seem only fair and logical that they be permitted to do so. There is a split in the cases, however, as to whether the corporation may assert attorney-client privilege and thereby prevent former officers and directors from having access to privileged materials to which they had access during their terms of corporate service and on which they claim to have relied. Compare, e.g., Kirby v. Kirby, 1987 WL 14862 (Del. Ch. July 29, 1987) (allowing former directors and officers to have access); Gottlieb v. Wiles, 143 F.R.D. 241 (D. Colo. 1992) (same); Moore Bus. Forms, Inc. v. Cordant Holdings Corp., 1996 WL 307444, *4 n.4 (Del. Ch. June 4, 1996) (same) with Lane v. Sharp Packaging Systems, Inc., 251 Wis.2d 68, 640 N.W.2d 788 (Wis. 2002) (denying access and permitting corporation to assert privilege in a dispute between the former director and the company); ; Genova v. Longs Peak Emergency Physicians, 72 P.3d 454, 463 (Colo. App. 2003) (same). Some of these cases arise in a context in which the former director or officer is asserting an affirmative claim against the corporation, and the analysis is not necessarily the same in that circumstance (when he or she arguably seeks to profit by use of privileged material) as when the former officer or director is under attack and need the information to defend actions they took in a corporate capacity.

Last week, the First Department of the Appellate Division of the New York State Supreme Court came out in favor of access in People v. Greenberg, 2008 NY Slip Op 1444, 2008 N.Y. App. Div. LEXIS 1395 (1st Dep’t Feb. 19, 2008), in which the former top officers of AIG sought privileged documents with which to defend themselves. Newspaper reports over the weekend reflect that AIG is seeking further appellate review, so this matter is not yet finally resolved.

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