On Sept. 5, the Delaware Court of Chancery, on a matter of first impression, ruled that a director’s emails with his personal attorney were not privileged because the director used his company email address to communicate with counsel and he was aware of the company’s policy that all work emails were accessible by the company. The court emphasized in In re Information Management Services Derivative Litigation, C.A. No. 8168-VCL, slip op. (Del. Ch. Ct. Sept. 5, 2013), that its holding was limited to its facts and that in different factual settings the outcome might be different. Nonetheless, the court’s decision raises uncertainties, at least in Delaware, about preservation of privilege, which has important implications for directors and their counsel, particularly for directors who serve on special committees that have retained separate, independent counsel. As with all issues of privilege, it is best to err on the side of caution, and in light of the court’s decision in Information Management, directors and their independent counsel should be mindful of the following issues:
• If a director is serving on a committee that has retained separate, independent counsel—e.g., a special committee of independent, disinterested directors formed to evaluate a conflict of interest transaction—the director should avoid using his or her company email address to communicate with counsel on matters intended to be privileged.
