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Consider this scenario: During routine due diligence for an impending transaction, the acquiring company learns that the business it is trying to buy has received a grand jury subpoena and is now conducting an internal investigation. Before the buyer will proceed further, it requests detailed follow up due diligence. The seller would like to provide the requested information so that it can sell the business. But some of what the buyer wants to know and the seller wants to share is protected by the attorney-client privilege. Concerns about waiving the privilege by sharing that information are creating an obstacle to closing the deal.

This is a familiar scenario in corporate transactions, especially in heavily regulated industries where government investigations are commonplace. The ultimate owner of the business will want to ensure that attorney-client communications remain privileged if litigation ensues. But sharing such materials during due diligence could result in waiver of the privilege and, ultimately, to the materials being used against the business in subsequent litigation.

Do the parties have any option, short of waiving privilege or walking away from the deal? One solution may be to share the privileged information in a way that allows the parties to successfully assert the common interest doctrine.

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