United States: New York Appellate Court Broadens Common Interest Privilege

Last Updated: January 14 2015
Article by Brian J. Massengill and Justin A. McCarty

Keywords: common interest privilege, New York law

The New York Supreme Court, Appellate Division, First Department recently issued an opinion that provides important clarification to the scope of the common interest privilege under New York law. In Ambac Assurance Corp., et al. v. Countrywide Home Loans, Inc. et al.,1 the First Department held that the common interest privilege applies in non-adversarial contexts, rejecting prior caselaw that limited the privilege to situations where there is pending or reasonably anticipated litigation. In doing so, the court significantly broadened the scope of the common interest privilege to apply to communications between different entities in any legal matter in which they share a common interest.

The ruling, which expressly disagreed with the Southern District of New York's ruling in Allied Irish Banks, p.l.c. v. Bank of America, et al.2 limiting the common interest privilege to litigation situations, is significant for auditing and other professional services firms that operate as networks of member firms and that coordinate legal advice on matters in which they have a common legal interest.

Ambac, a monoline insurer, brought suit against Countrywide to recover damages it sustained in connection with its insurance of certain residential mortgage-backed securities transactions. Ambac also brought claims against Bank of America, alleging that Bank of America would be liable as successor-in-interest for any judgment against Countrywide as a result of the companies' 2008 merger. Bank of America and Countrywide signed a merger agreement that required the parties to work together on a number of pre-closing issues, all of which were subject to confidentiality provisions and a common interest agreement between the parties. 

At issue in Ambac was the question of whether Bank of America must produce communications between Bank of America and Countrywide and their counsel that took place during the period prior to closing. Bank of America argued that the communications were subject to the common interest privilege because it had a common legal interest with Countrywide during the pre-merger period. In rejecting this argument, the trial court concluded that New York follows a narrow approach that only provides for application of the common interest privilege when there is a common legal interest that involves potential litigation.

On appeal, the First Department disagreed and reversed the trial court's order. The court held that the common interest privilege only requires two elements: (i) a communication that qualifies for protection under the attorney-client privilege and (ii) that the communication be made for the purpose of furthering a legal interest or strategy common to the parties. In declining to require that such communications must also affect litigation, the court examined the overall purpose of the attorney-client privilege to facilitate communication between client and counsel and noted that the attorney-client privilege is not tied to any similar litigation requirement. Instead, the court explained, privileged communications often take place for the express purpose of considering complex legal obligations and risks and to avoid litigation. Thus, the court supported a broadening of the scope of the privilege to other legal contexts so long as the parties involved—even if they are different legal entities—have a common interest. Central to the court's analysis was the fact that in "today's business environment ... business entities often have important legal interests to protect even without the looming specter of litigation."

While acknowledging that New York's highest court has not yet weighed in on the litigation requirement for the common interest privilege, the appellate court was guided by what it regards as "the better approach" under Delaware's statutory law, which extends the privilege to communications with a lawyer "representing another in a matter of common interest" whether or not litigation is pending or anticipated. It also followed federal precedent, including the Second Circuit, noting that "the federal courts that have addressed the issue have overwhelmingly rejected" the litigation requirement as a prerequisite to receiving protection under the common interest privilege.

This decision may have significant implications for many affiliated companies. It is of considerable significance to professional services firms that operate as a network of independent firms, sometimes under an umbrella organization. Indeed, the court's decision in Ambac expressly rejects the result of the federal district court in Allied Irish Banks.

In Allied Irish Banks, the federal district court ruled that under New York law the common interest privilege could not protect documents that were shared between PricewaterhouseCoopers International Limited (PwCIL) and its member firms, which were a network of professional services firms operating under the PricewaterhouseCoopers name, because the court found that PwCIL could not show that it reasonably anticipated litigation in common with the other network firms.

Under the holding in Ambac, however, individual member firms may seek legal advice in tandem with the coordinating entity or other member firms so long as they have common legal interests. After the Ambac decision, firms may look forward to greater protection under New York law for common-interest communications.

1 2014 WL 6803006 (Index No. 651612/2010) (1st Dep't 2014).

2 252 F.R.D. 163 (S.D.N.Y. 2008).

Learn more about our Professional Liability practice.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions