This is my sixth and final update from the corporate law seminar in New Orleans. The final panel today is titled: "The Role of Counsel in Transactions: Enhanced Ethics and Professionalism".

Members of the panel include Vice Chancellor Donald Parsons of the Delaware Chancery Court as well as several leading corporate practitioners.

[As an aside, this two-day seminar which featured panel members from all over the country, benefited from a majority of the members of the Delaware Supreme Court and a majority of the members of the Delaware Chancery Court participating on various panels, in addition to a very large contingent of Delaware lawyers who practice in the area of corporate litigation.]

This last panel presentation of the day was based on a fact pattern involved in a real Delaware Chancery Court decision called Postorivo, that was summarized on this blog here. There were also several other Chancery Court decisions involving this case, all highlighted here.

The factual background that forms the context for the ethical issues addressed  was the asset purchase of a business. In that situation, the general rule is that when one purchases a business, one also acquires any "attorney/client privileges" that attach to the business assets, as well as related files (and computers)  of the parties. An exception may apply to issues related to the purchase transaction itself.

VC Parsons provided the following overview:  Under Delaware law, one can speak to the former employee of an adversary, but  with precautions. For example, it must first be determined if that person in represented by counsel. Also, one must first say that one does not want any privileged data, and one must also notify the ex-employee of the nature of the dispute. A description of the matter involved must be explained. The care that must be taken was also addressed in the Delaware decisions of both Monsanto and LaPoint.  His Honor also mentioned that if one finds oneself with privileged data that may belong to another party, one must be careful to preserve all applicable rights before proceeding.

Of course, there are also applicable Rules of Professional Conduct that may apply to this situation.

New Federal Rule of Evidence 502 was discussed in the context of a case where there a millions of emails and hundreds of boxes of documents and only two months to do discovery (e.g., in an expedited case). Thus, one might employ a clawback agreement.

This new rule changes the prior rule by providing that if the waiver is inadvertent then there is NO "subject-matter" waiver.

VC Parsons commented on the applicability of this rule to Delaware Chancery Court. While acknowledging the excellent litigation skills of attorneys who practice in that court, His Honor suggested that those same competent lawyers may not be the "most familiar" (my words) with electronic discovery matters.

Part D of new Rule 502 refers to whether an order from a federal court determining that there is no waiver (e.g., in a protective order) may also apply to prevent a waiver of that same matter in any STATE court proceeding.

Three-part test. Waiver will only apply if:

(1) the waiver  was intentional; (2) the disclosed and undisclosed communication or information concern the same subject matter; and (3) they ought in fairness be considered together.

Inadvertent disclosure. A disclosure will not operate as a waiver if:

(i) the disclosure is inadvertent;

(ii) the holder of the privilege took reasonable efforts to avoid disclosure; and

(iii) the holder took reasonable steps to rectify the error, including (if applicable) following Fed. R. Civ. Proc. 26(b)(5)(B).


Addresses potential conflicts that arise with lawyers going from one firm to another. Also note that not all states will uniformly recognize or enforce "advance waivers".