An interesting privilege issue maneuvered through the NC court system—does a contract’s indemnification provision create an attorney–client relationship between a law firm, indemnitee, and a non-party indemnitor so that the privilege protects communications between the indemnitor and indemnitee?
In a decision that I profiled in this post, the NC Court of Appeals held that the indemnification clause created a business—not legal—interest between the indemnitor and indemnitee, and therefore the common–interest doctrine did not protect their communications from discovery.
But the NC Supreme Court reversed, ruling that an indemnification agreement creates a common legal interest between an indemnitor and indemnitee because “the indemnitor contractually shares in the indemnitee’s legal well-being.” This common interest creates a tripartite attorney–client relationship between the indemnitee, indemnitor, and their defense counsel. Friday Investments, LLC v. Bally Total Fitness of the Mid-Atlantic, Inc., 2017 WL 5016625 (N.C. Nov. 3, 2017). You may read the decision here.