Privilege (Attorney-Client)

Attorney-client privilege protects confidential communications between a lawyer and their client made for the purpose of obtaining or providing legal advice. In the litigation finance context, privilege issues arise primarily around whether sharing case assessments, legal memoranda, or attorney communications with a funder waives the privilege as to those materials. Most U.S. courts have held that sharing privileged materials with a litigation funder does not constitute waiver where the communication is made in confidence for the purpose of obtaining funding — treating the funder as a party with a common legal interest. However, this analysis is fact-specific and jurisdiction-dependent, making it critical for counsel to structure funder due diligence carefully to preserve privilege over shared materials.

Because courts differ on whether sharing case assessments with a funder waives privilege, funders structure their due diligence process around common-interest and confidentiality agreements specifically to preserve the argument that the funder's involvement does not constitute disclosure to an adverse third party. This is a live, fact-specific risk in every deal, which is why sophisticated funders standardize their diligence intake process around counsel's privilege concerns rather than requesting materials in whatever form is most convenient for underwriting.