A recent decision from the Alberta Court of Queen's Bench regarding solicitor-client privilege in the context of negotiating the sale of a wholly-owned subsidiary will likely be a wake-up call for corporate counsel. Madam Justice Horner applied well-known and accepted principles regarding solicitor-client privilege in holding that the target and parent were parties to a joint retainer/common interest as part of negotiating the share purchase agreement, such that when the target and purchaser amalgamated post-closing, the parent could not assert privilege as against the amalgamated entity over the solicitor-client communications.
There are many ways to protect the parent's interest over solicitor-client privilege. Perhaps the easiest and most cost effective would be to provide a clause within the share purchase agreement that indicates that privilege over joint retainer/common interest communications remains with the parent post-closing.
For a full summary of this case, view our client update, Share Purchase Transactions, Solicitor-Client Privilege and Multiple Representations: A Cautionary Tale for Corporate Counsel. For more information on legal privilege, read the Bennett Jones guide, Legal Privilege.