Sharing Protected Information with Potential Litigation Funders

Parties seeking financing to fund their litigation efforts must, of course, share information with the potential funder so that it can make an informed investment decision.  The attorney-client privilege or the work-product doctrine protects some of this information, such as a lawyer’s analysis of potential claims.

Parties adverse to the funded party now routinely seek this shared information in discovery, arguing that the party waived any privilege or work-product protections by sharing protected information with the litigation-financing company.  Many issues arise, such as the different waiver standards for the attorney-client privilege and the work-product doctrine, and whether the common-interest doctrine offers non-waiver protection.

In an article published in the Spring 2018 issue of Today’s General Counsel, I explore these issues.  You may read the article here.

Court Orders Production of Documents Shared with Litigation-Financing Firm 1

Companies searching for capital to fund litigation pursuits must first persuade a potential investment firm of the claim’s merits.  These persuasion efforts often include the company’s counsel sharing legal analyses and other work-product documents with a putative financier.  But this sharing leads defendants to later claim privilege waiver and seek production of the shared information.

While some courts, such as the one profiled here, have rejected these waiver claims, the Delaware federal court bucked this trend.   The court rejected the work-product and common–interest doctrines and ordered a company to produce its emails and documents shared with a potential litigation-financing firm.  Acceleration Bay LLC v. Activision Blizzard, Inc., 2018 WL 798731 (D. Del. Feb. 9, 2018).  You may read the opinion here.

Background

Before pursuing a patent-infringement action, Acceleration Bay LLC and its counsel communicated with Hamilton Capital about financing the litigation effort.  Acceleration also provided documents so that Hamilton Capital could conduct due diligence before deciding whether to provide capital.  This information exchange occurred before Acceleration and Hamilton Capital entered an agreement or filed litigation which, as we’ll see, is apparently a big deal. More…