We’re in it Together: The Pros and Cons of Joint Defense Agreements

By Charles A. “Chip” Gentry

The owner of Marked-Down Windows LLC, “Mark Downing,” walked into my office last week and informed me that a commercial project had gone south, and he wanted to work together with the general contractor to try and bring the project to a close.

“And why is that, Mark?” I asked.

“Because this general contractor came to me and told me they’ve got my company covered. They want to work hand-in-hand toward a resolution.”

My immediate question was, “Do you have a joint defense agreement in place?”

Mark exclaimed, “A what?!?”

JOINT DEFENSE AGREEMENTS

Mark is an extremely savvy businessman, but his understandable lack of knowledge about the world of litigation was evident that afternoon. A joint defense agreement is one between parties (a fenestration product manufacturer and a general contractor, for example) with similar common legal interests (such as defending a lawsuit by the owner of a construction project gone wrong) that allows them to share confidential information with each other without entirely waiving the attorney-client privilege or work-product protections. In essence, the agreement allows the parties to use their resources collectively to coordinate strategy against a common opponent, thereby reducing their litigation costs and providing efficiencies.

While this type of agreement certainly serves a purpose, and can be a win-win for all parties when used effectively, it’s not risk-free. Most notably, while the attorney work-product doctrine and attorney-client privilege can still be asserted against the opposing party in the lawsuit (in our continuing example: the owner), numerous courts have held that once a joint defense agreement is entered into, the doctrine and privilege has been effectively waived, on some level or another, between all parties and attorneys
involved.

For example, suppose Mark tells me some damaging information that
arguably renders his fenestration company at fault for the botched construction job. Accordingly, I jot down some notes, conduct some legal research, and author an opinion memo about our defense strategy in light of this newly acquired information. Depending on the terms of the joint defense agreement, that information may not be protected from other parties that are privy to it, namely, the general contractor and its attorney. In turn, that general contractor and counsel are now aware of new information and/or a new legal theory that may permit them to get out of the case, leaving only Marked-Down to foot the
liability bill.

PROTECT YOURSELF

Another potential pitfall associated with these agreements is that they can create future disqualifications for attorneys. In the context of our running example, suppose I had been lead litigation counsel for Marked-Down for 20-plus years. Now suppose the same general contractor that Marked-Down entered into a joint defense agreement with later sues them on a completely unrelated matter. I may not be able to defend Marked-Down against the general contractor because of the information I learned through the information exchanged pursuant to the joint defense agreement.

Analyze the risks and rewards of a joint defense agreement thoroughly with your legal counsel before signing your name, and your company’s bottom line, on the dotted line.

Charles A. “Chip” Gentry is a founding member of Call & Gentry Law
Group in Jefferson City, Mo. He can be reached at chip@callgentry.com.

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