The third-party litigation financing industry continues to grow, with Burford Capital’s December 2016 merger with Gerchen Keller Capital serving as the most recent indication. Read Above the Law’s story on the merger here.
Of course, litigation-financing firms must evaluate a company’s legal claims before agreeing to finance potential litigation. And this evaluation may include reviewing the company’s privileged communications and its lawyers’ work-product. The question arises: does disclosure of work-product or privileged information to a third-party litigation financing firm waive these protections? The court’s decision in Viamedia, Inc. v. Comcast Corp., 2017 WL 2834535 (ND Ill. June 30, 2017), available here, provides guidance.
In Search of Funds
Before Viamedia, Inc. filed its antitrust lawsuit against Comcast over market share in the spot cable advertising space, it approached three prospective litigation funders, Therium, Burford, and Longford. Viamedia required all three to execute NDAs and then supplied them with multiple documents, including documents reflecting its attorneys’ legal advice and mental impressions about potential claims against Comcast.
In the subsequent litigation, Comcast moved to compel Viamedia to produce 51 work-product and privilege-related documents that Viamedia supplied to these litigation-financing firms. Viamedia asserted three arguments that the work-product and privilege protections cover information supplied to the firms.
Three Arguments for Protection
First, citing “federal and state courts across the country,” Viamedia argued that the work-product doctrine protects litigation-funding communications.
Second, it argued that the common–interest doctrine protects its sharing of work-product and privileged information with third-party litigation funders.
And, third, it argued that the agency exception to the attorney–client privilege precludes waiver of the documents’ privileged status.
The court focused on work-product waiver, noting that “[w]aiver of work-product immunity  differs from waiver in the attorney-client-privilege context.” Waiver of the work-product protection occurs “only where the disclosure substantially increases the opportunity for potential adversaries to obtain the information.” The court explained–
The reason for this difference is the work-product doctrine’s roots in the adversarial process—the point of the protection is not to keep information secret from the world at large but rather to keep it out of the hands of one’s adversary in litigation.
The Court did not address the common–interest doctrine, but simply held that disclosing work-product documents to litigation-funding firms, particularly under a NDA, does not constitute waiver. While Comcast argued that the NDA permitted the litigation-funding firms to disclose the work-product to other individuals, such as their attorneys, the court found that Viamedia’s disclosures did not make it “substantially more likely” that its work-product would fall into its adversaries’ hands.
Thus, the work-product protection remained. And with that protection, the court declined to address the attorney–client privilege argument.