BofA’s Privilege Waiver may be Broader than Intended

Zach Lowe at The AmLaw Daily has done a great job covering the hullabaloo surrounding Bank of America’s waiver of attorney-client privilege in the Merrill Lynch merger case before Judge Jed Rakoff in New York’s Southern District.  As we reported last Wednesday, BofA wrote a letter to Attorney General Andrew Cuomo’s office in New York in which it relied on the newly revised Rule 502 of the Federal Rules of Evidence which it believed would prevent the otherwise privileged documents from being more widely disseminated (in particular, to plaintiffs’ firms in private securities suits against the bank).

On Friday Mr. Lowe reported on a fascinating conversation he had with Mr. Gregory P. Joseph, an attorney who helped draft the rule.  Mr. Joseph believes the bank’s lawyers’ misunderstanding of the rule may have the unintended consequence of extending the waiver to related lawsuits and investigations.

It turns out the bank’s first mistake is simple: They referred repeatedly to a “waiver” in their court order, and rule 502 does not deal with “waivers,” Joseph says. It gives corporations the ability to disclose privileged documents in a limited way under the terms of a court order, not a waiver. It may seem like a semantic distinction, and it is, but Joseph says its implications could be huge. Put simply, any privileged document the bank discloses to the SEC is now fair game for plaintiffs lawyers in those 58 cases we mentioned earlier, Joseph says. BofA’s order protects the bank against the SEC or those plaintiffs lawyers from getting their hands on documents the order doesn’t specifically cover. But what the bank turns over to the SEC is no longer protected, Joseph says. “They’ve waived the privilege” as it relates to documents the bank turns over to the SEC…”in this case and every other case.”

 

 

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Filed under: Litigation, Opinion, document review, PSLRA, SEC, securities