When Company A acquires Company B, in many cases it will also come to share in the attorney-client privilege formerly belonging to Company B. This general rule is considered by many to be necessary and beneficial for successful mergers and the succeeding company’s ongoing operations. A caveat and contested exception to the rule concerns Company B’s communications with its attorneys concerning the merger itself. Can the surviving company access the privileged communications regarding the merger between the acquired company and its attorneys?
Only a handful of courts across the country have answered that specific question. On the one hand, the New York Court of Appeals determined that permitting the successor company to possess those communications would significantly chill attorney-client communications during the transaction process. On the other, the Delaware Court of Chancery concluded that those communications were the property of the surviving company, relying on the terms of a statute providing that the successor company acquires all privileges of the preceding constituent corporations.
