Waiver of the attorney-client privilege generally occurs only with a voluntary disclosure – not a compelled disclosure. Not surprisingly, litigants sometimes debate the nature of a disclosure.
In Urban Box Office Network, Inc. v. Interfase Managers, L.P., 01 Civ. 8854 (LTS)(THK), 2004 U.S. Dist. LEXIS 21229 (S.D.N.Y. Oct. 19, 2004), defendants argued that their earlier disclosure of a privileged document during an arbitration did not cause a waiver, because those receiving the document in the arbitration would have been entitled to it under various legal theories. The court disagreed. After noting that the party seeking the privileged document in the earlier arbitration would have had to successfully establish “good cause,” the court explained that defendants’ position was that the arbitration panel “would have eventually compelled [them] to produce the Documents had they objected to the . . . discovery demand.” Id. at 12, 14. The court found that this argument “is based entirely on prediction, and does not demonstrate any actual compulsion.” Id. at 14. Because the defendants had produced the privileged document in the arbitration “to avoid a discovery dispute they anticipated losing,” the earlier disclosure was voluntary (not compelled), and thus caused a waiver that required the defendants to produce the document in the pending litigation. Id.
Even if a litigant expects to lose a privilege fight, handing over the arguably protected documents rather than fighting to the finish usually will cause the disclosure to be “voluntary” rather than compelled – meaning that other parties in later litigation can argue waiver. Even worse, the voluntary disclosure might well cause a subject matter waiver, requiring the disclosure of additional documents.