Q&As

A potential purchaser of a company would like the company’s privileged advice to be added to the data room. What safeguards should be put in place?

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Produced in partnership with Jonathan Edwards of Radcliffe Chambers
Published on LexisPSL on 23/02/2018

The following Dispute Resolution Q&A Produced in partnership with Jonathan Edwards of Radcliffe Chambers provides comprehensive and up to date legal information covering:

  • A potential purchaser of a company would like the company’s privileged advice to be added to the data room. What safeguards should be put in place?
  • Privilege and confidentiality
  • Respecting rights to confidentiality
  • Guarding against external attack
  • The relationship with the potential purchaser
  • Conclusion

Privilege and confidentiality

Privilege is a special protection afforded to communications between lawyers (and in certain circumstances, third parties) and their clients. The key principle is that a person should be able to consult with their lawyer freely, assured that the confidence in any information provided will be maintained and protected. Privilege accordingly provides a right to resist disclosure of a document where permitting the inspection of such document might otherwise be compulsory.

For an overview of the meaning and rationale underpinning privilege, see Practice Note: Privilege—general principles.

Privilege can only be claimed in respect of documents which are confidential and only if certain further conditions are satisfied. It follows that if a document ceases to be confidential, it will not be possible to claim privilege in the future. In providing access to privileged advice, an obvious concern is that confidentiality may be lost which will disadvantage the company, and the proposed purchase may not be completed with the result that the seller(s) of the company are worse off.

For more detail on the general principles of confidentiality and the ambit of confidential information, see: Protecting confidential information—overview and Practice Note: Use of confidential information in civil proceedings.

Respecting rights to confidentiality

The starting point must be to identify exactly which party’s rights are involved. Uncertainty can arise, for example, where there is an individual who is the sole or

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