Illinois is in danger of becoming a state where corporate lawyers and their clients will no longer be able to have open conversations about complex issues, the Association of Corporate Counsel warned Wednesday in a brief filed with the Illinois Supreme Court [PDF].

Unless the state’s Supreme Court overturns it, a lower court ruling waiving attorney-client privilege “will undermine the public policy interests of the legal profession in Illinois, create an impossible environment for business negotiations in Illinois, and unfairly place lawyers into a mine-field of ethical conflicts and potential malpractice claims,” the ACC’s amicus brief states.

Veta Richardson, ACC’s president and CEO, says the group is taking up the issue because “the attorney-client privilege is sacred to any client’s ability to be completely candid with their attorney.” The ruling, she says, “impacts the ability of attorney and client to engage in confidential, full, and candid communications. It entirely undermines the relationship.”

The controversial ruling arose in a case involving a business transaction between companies that own and operate shopping malls. During negotiations, three defendants from different companies shared certain legal advice that each of them received from their attorneys regarding the purchase.

Plaintiffs argued each defendant waived attorney-client privilege by discussing the legal advice with a third party—i.e., with each other.

The plaintiffs filed a motion seeking all of the attorney-client communications concerning the purchase negotiations, even those not disclosed among the three defendants. The motion included the production of over 1,500 documents identified in defendants’ privilege logs.

When the trial court agreed that the privilege had been waived, the defendants refused to disclose and were held in contempt. On appeal, an intermediate court affirmed the decision [PDF].

Now it’s before the state’s highest court.

ACC’s brief sides with the defendants, arguing that just because a portion of legal advice was discussed with a third party does not mean that the privilege was waived on all legal communications. It says the ruling’s expansion of so-called “subject matter waiver of privilege” is contrary to court policy against creating non-statutory waivers of privilege. The decision also conflicts with the Illinois Rules of Professional Conduct, the brief argues.

Counsel for ACC includes Amar Sarwal, the group’s chief legal strategist; Alexandra Darrow, advocacy chair of ACC’s Chicago chapter and senior corporate counsel of Automatic Data Processing, Inc., in suburban Chicago; and Charles Northrup, general counsel of the Illinois State Bar Association.