November 19, 2013

Delaware: Attorney-Client Privilege Passes to Surviving Corporation

Here’s news from Richards Layton:

In Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, C.A. No. 7906-CS (Del. Ch. Nov. 15, 2013), the Court of Chancery interpreted Section 259 of the General Corporation Law of the State of Delaware to hold that all privileges–including the attorney-client privilege–pass in a merger from the acquired corporation to the surviving corporation.

Specifically, the Court held that, without a contractual provision to the contrary, even the seller’s pre-merger attorney-client communications with respect to the merger itself would pass to the surviving corporation. The Court suggested that parties concerned about this issue should “use their contractual freedom in the manner shown in prior deals to exclude from the transferred assets the attorney-client communications they wish to retain as their own.”