Nov 1 2017

Legal Malpractice Law Update 10/31/17

Supreme Judicial Court of Massachusetts

Proximate Cause: Attorneys who failed to submit evidence to appellate court not entitled to summary judgment on legal malpractice claim because appellate court’s error of law was concurrent, not superseding, proximate cause of client’s damages.

By: Jillian McGrath

Kiribati Seafood Company, LLC v. Dechert LLP
2017 WL 4527467 (Mass. 10/11/2017)

The Supreme Judicial Court of Massachusetts reversed the trial court’s allowance of a law firm’s motion for summary judgment and the trial court’s denial of Plaintiff’s motion for partial summary judgment on a legal malpractice claim. The Plaintiff purchased a fishing vessel that was placed in a dry dock for repairs. When the dry dock collapsed, the ship sustained damages so severe that it was deemed a “constructive total loss” by Plaintiff’s insurer. Plaintiff retained a law firm to file a lawsuit for damages against a port in Tahiti. The insurer paid Plaintiff $1,763,803.71 on its insurance claim regarding the loss of the ship, which compensated Plaintiff for some, but not all, of its losses. The insurer had a right of subrogation to recover that amount from the Tahitian port. In April 2004, the insurer agreed to prosecute Plaintiff’s claim in Tahiti where Plaintiff sought to recover its losses that were not compensated by the insurer and where the insurer sought to recover through subrogation the amount it paid to Plaintiff. The insurer agreed to pay half of the attorneys’ fees and costs. Plaintiff later contended that it was paying substantially more than its fifty percent share of the legal fees. In December 2004, Plaintiff and the insurer entered into a new agreement in which Plaintiff released the insurer from all outstanding claims, including its claims for unpaid attorneys’ fees. In return, the insurer assigned its subrogation claims to Plaintiff. In January 2008, the Tahitian court issued judgment in favor of Plaintiff and against the port. The court held that the assignment of the subrogation claim was signed abroad by two foreign registered entities without any specific agreement that French law would apply (Tahiti follows French law), so the validity of the assignment could not be determined under French law. The court concluded that it was valid under foreign law and therefore awarded Plaintiff the full amount of the subrogation claim, approximately $1.76 million. The port appealed this decision and the court of appeals affirmed much of the judgment of the commercial court, but deferred decision regarding its enforcement of the assignment of the subrogation claim. After the first appellate decision, the law firm advised Plaintiff’s general counsel that he needed evidence of the consideration paid by Plaintiff for the assignment to address the court of appeal’s concern. Plaintiff’s general counsel provided the law firm with various documents on two separate occasions, including a letter from Plaintiff’s general counsel to the insurer demanding payment of equal share of the legal fees with payment records showing that Plaintiff paid far more than an equal share of the legal fees along with the December 2004 agreement between Plaintiff and the insurer that included a release by Plaintiff of all further claims. The law firm submitted to the court of appeals only the letter from Plaintiff’s general counsel without any supporting documentation regarding legal fees and the released claims. After the port responded that Plaintiff had provided no proof of having paid attorneys’ fees, another of Plaintiff’s attorneys sent the law firm the documents that Plaintiff’s general counsel had previously provided and informed the law firm that it needed to submit the attorneys’ fees payment records and the release in order to demonstrate the payment of consideration for the assignment. The law firm did not provide these documents to the court of appeals. In May 2011, the court of appeals reduced the amount of Plaintiff’s award by the amount of the assigned subrogated claim and noted that Plaintiff failed to provide evidence that it had paid attorney’s fees that the insurer was obligated to pay or that it released the insurer from legal claims. When Plaintiff was in receivership, the law firm indicated that it would not recommend challenging the decision because of the cost and duration of the appeal. The receiver later filed in the receivership action a motion for authorization to waive an appeal in the Tahiti litigation attaching to his declaration a letter indicating that Plaintiff would follow the firm’s advice and not appeal the Tahiti litigation. In July 2013, Plaintiff brought a legal malpractice claim against the law firm in the Massachusetts Superior Court. Plaintiff alleged that the firm negligently failed to provide the appellate court with the evidence that the court deemed necessary for Plaintiff to prevail on a claim, which resulted in the court’s denial of the claim and a loss to Plaintiff of $1.76 million. The law firm moved for summary judgment and Plaintiff cross-moved for partial summary judgment on its legal malpractice claim. The Superior Court granted summary judgment to the firm and denied partial summary judgment to Plaintiff, ordering that the appellate court committed an error of law in requiring the attorneys’ fees evidence and that, even if the law firm was negligent in failing to provide the evidence to the court, Plaintiff could not recover damages for the firm’s negligence because the court’s legal error was a superseding cause of the adverse decision. Plaintiff filed an appeal and the case was transferred to the Supreme Judicial Court. The issues on appeal were whether, in a legal malpractice action, a court’s error of law constitutes a superseding cause that bars recovery to a plaintiff even where the law firm was negligent for failing to prevent or mitigate the legal error and whether an attorney should be relieved of liability for professional negligence where the attorney’s negligent act or omission precedes judicial error. The SJC began its analysis by noting that, where an attorney makes a reasonable and correct argument of law and loses because of judicial error that was not foreseeable, the attorney cannot be found negligent for failing to prevent or mitigate that legal error. But where the judicial error is foreseeable, such as where a court has indicated an intention to rule in a manner the attorney believes to be an error of law, the attorney has an obligation to take reasonable and prudent steps to prevent or mitigate that error. In this case, assuming the court of appeals made an error of law, the SJC concluded that a reasonable finder of fact could determine that there were two independent proximate causes of Plaintiff’s loss: the firm’s negligence in failing to furnish the court with proof of the consideration paid for the assignment and the court’s error of law in concluding that the assigned subrogation claim was not enforceable under Tahitian (French) law. In so holding, the SJC determined a superseding cause in a legal malpractice action must occur after the original negligence and cannot be the consequence of the attorney’s negligence. Thus, where an intervening cause is a new and independent cause that breaks the chain of causation, it becomes a superseding cause that relieves the defendant of liability for the original negligence. But where the intervening cause (here, the court’s alleged error of law) is reasonably foreseeable and the attorney could have taken reasonable steps to prevent or mitigate the anticipated harm, the intervening cause is a concurring cause that leaves the causal link between the defendant’s negligence and the plaintiff’s harm unbroken. In the instant case, the SJC held that the law firm’s failure to submit evidence that would have proved Plaintiff’s disproportionate payment of attorneys’ fees and its release of valuable claims against the insurer could be found to be the concurrent proximate cause of the appellate court’s adverse decision. The SJC further held that, where it was plainly foreseeable from the first appellate decision that the court would not enforce the assignment without such proof, and where the Defendant law firm had the documentation in its possession that would have demonstrated that there was substantial consideration for the assignment, the law firm’s failure to furnish the court of appeals with the documentation was so plainly negligent that no expert testimony was needed to establish it. Moreover, the SJC commented that, where a client suffers an adverse decision because of both an error of law and an attorney’s negligence in failing to act reasonably to prevent or mitigate that error, the client’s duty to mitigate damages might in some circumstances require appealing from that adverse decision to a higher court to correct the lower court’s error of law. Here, however, where the law firm recommended against an appeal, the law firm cannot possibly meet its burden of proving that the Plaintiff acted unreasonably by failing to appeal the court of appeals decision. Therefore, the loss proximately caused by the law firm’s negligence is the loss arising from the adverse ruling of the court of appeals on the assigned subrogation claim. Because the SJC concluded that an error of law under these circumstances was a concurrent, not a superseding, proximate cause, and that the court erred in granting summary judgment to the law firm and denying partial summary judgment to the Plaintiff on the Plaintiff’s legal malpractice claim, the SJC reversed and remanded the case for further proceedings.

Appellate Court of Illinois, First Judicial District, Fourth Division

Standing of Estate Beneficiaries: Beneficiaries of an estate lacked standing to bring claims for breach of fiduciary duty and conversion against decedent’s real estate attorneys where the estate beneficiaries were only incidental beneficiaries of the lawyers’ attorney-client relationship with the decedent.

By: Colin T. Barrett

Mareskas-Palcek v. Schwartz, Wolf & Bernstein, LLP
2017 WL 4358174 (Ill. App. (1st) 9/29/2017)

Attorneys were retained by the Decedent to represent her at a real estate closing for the sale of the Decedent’s home. The Decedent executed a power of attorney that allowed her attorneys to attend the closing in her place. The Decedent died one day before the closing. The attorneys were aware of her death but continued with the closing without disclosing her death in the closing documents and without the permission of the beneficiaries of the estate. The attorneys received compensation of $20,000 in connection with the closing in addition to the $650 fee agreed upon with the Decedent. The Decedent died testate, and her estate was to pour into two trusts, both of which had Plaintiffs listed as beneficiaries. One Plaintiff was listed as a trustee for one of the Trusts. Plaintiffs alleged that their status as beneficiaries and trustee receiving the Decedent’s home provided them standing to bring claims for breach of fiduciary duty and conversion against the attorneys. Plaintiff’s initial complaint, which alleged breach of fiduciary duty and made a claim for attorneys’ fees, was stricken. The amended complaint alleged breach of fiduciary duty and conversion, and provided additional facts alleging Plaintiffs’ status as beneficiaries. The attorneys successfully moved to dismiss the amended complaint. Despite being offered the opportunity to file a second amended complaint, Plaintiffs allowed final judgment to enter on the dismissal and appealed. On appeal, Plaintiffs argued that the attorneys owed them a duty and the attorneys’ breach of that duty provided Plaintiffs standing to bring their action. Under Illinois law, standing requires that the plaintiff possess a personal claim, status, or right and a distinct injury traceable to the defendants’ conduct that is substantially likely to be addressed through the plaintiff’s action. In the instant case, Plaintiffs could not allege that they were the executors of the decedent’s estate. As an estate is not a natural nor artificial person, only the executor of the estate may sue or be sued. Plaintiffs argued that their status as beneficiaries of the estate and trust, which would have received the Decedent’s home and the $20,000 paid to the attorneys, provided them standing. The Appellate Court found that Plaintiffs’ status as “ultimate beneficiaries” of the estate was insufficient to provide them standing for the action. The Appellate Court also rejected Plaintiffs’ argument that the attorneys owed them a fiduciary duty due to Plaintiffs’ status as “ultimate beneficiaries” of the estate. Although Illinois law provides that attorneys may owe a duty to third parties, such a duty only arises when it is clear that the purpose of the attorney’s engagement with the client is to benefit the third party. Under the circumstances of this case, the Appellate Court affirmed the Trial Court’s finding that counsel’s attorney-client relationship with the Decedent was limited to attendance at a real estate closing. Absent evidence indicating that Plaintiffs were intended to benefit from the Decedent’s engagement with the attorneys, Plaintiffs were not owed any duty. Accordingly, the judgment of the Trial Court was affirmed.

United States Court of Appeals, Seventh Circuit

Personal Jurisdiction: Arizona law firm was not subject to specific personal jurisdiction in Illinois in a client’s action alleging legal malpractice, breach of contract, and breach of fiduciary duty, even though the firm communicated with the client in Illinois, attorneys’ fees were sent from Illinois, and the client experienced injury in Illinois.

By: Eric W. Thuotte

Brook v. McCormley
2017 WL 4531687 (7th Cir. 10/11/2017)

Plaintiff appealed the district court’s finding that the Northern District of Illinois lacked personal jurisdiction over a law firm in an action for legal malpractice, breach of contract, and breach of fiduciary duty. Plaintiff, an Illinois resident, was the president of a now-dissolved corporation and trustee of an Arizona trust that owned the corporation. In 2001, Plaintiff sought out the law firm to represent the corporation in a lawsuit arising out of a dispute over a ground lease created when the corporation sold one of four plots of land owned in Scottsdale, Arizona. The suit was dismissed in 2002. In 2005, and again in 2013, the corporation sought additional legal advice from the firm to analyze the viability of claims related to the same ground lease under Arizona’s various limitations periods. In 2014, the corporation asked the firm to initiate a non-judicial foreclosure on the property. The firm ultimately decided that its involvement in the non-judicial foreclosure would pose conflict of interest issues and declined to represent the corporation. Throughout the representation, the parties exchanged phone calls and correspondence between Arizona and Illinois, but all in-person meetings occurred in Arizona. The corporation filed suit against the firm in the Northern District of Illinois. After the district court requested a jurisdictional statement, the corporation substituted Plaintiff, individually, in the action through an amended complaint, which was subsequently dismissed by the district court for lack of personal jurisdiction. The district court acknowledged that the firm entered into a business relationship with an Illinois plaintiff, but pointed out that the representation was strictly conducted in Arizona. Additionally, the court cited the lack of evidence showing the law firm reached out or solicited the corporation, the Trust, or Plaintiff to enter into the relationship. On appeal, Plaintiff argued that, based on evidence of correspondence from Arizona, telephone calls, the contract governing the attorney-client relationship, attorneys’ fees sent from Illinois, and Plaintiff’s having experienced the injury in Illinois, the firm had availed itself of the forum state. Plaintiff further argued that three enumerated sections of Illinois’ long-arm statute were applicable because the transactions involved: (1) the commission of a tortious act within the state; (2) the making or performance of a contract or promise substantially connected with the state; and (3) the breach of a fiduciary duty within the state. The district court found this argument unpersuasive as Plaintiff essentially attempted to use the firm’s relationship with himself to establish personal jurisdiction. In affirming the dismissal of Plaintiff’s complaint, the United States Court of Appeals, Seventh Circuit, held that the firm’s tenuous contacts with Illinois were insufficient to establish personal jurisdiction over it. The Court reasoned that the firm never sought out nor conducted business in Illinois; rather, the corporation sought out legal services from the firm. In addition, the subject matter of the representation was land in Arizona subject to Arizona law, and all business on behalf of the corporation was done in Arizona by an Arizona-based law firm with Arizona lawyers. Accordingly, the Court affirmed the district court’s dismissal of Plaintiff’s amended complaint for lack of personal jurisdiction.

Ohio Court of Appeals – First District

Existence of Attorney-Client Relationship: No express or implied attorney-client relationship existed between plaintiffs and law firm where law firm filed claims on behalf of plaintiffs without their knowledge, but under the circumstances a substitute for an attorney-client relationship may be found based on conduct of the law firm sufficient to maintain a legal malpractice claim.

By: Ashley Johnson

Tye v. Beausay
2017 WL 4338941 (Ohio App. (1st) 9/29/2017)

Plaintiffs sued a law firm that represented plaintiffs in a medical malpractice action at the request of plaintiffs’ father and step-mother but without plaintiffs’ knowledge. The medical malpractice action sought recovery for the father’s paralysis resulting from a failure to diagnose and treat a spinal epidural abscess. The law firm settled the medical malpractice action and all of the settlement proceeds were paid to the father. After the father’s death, plaintiffs discovered the law firm’s actions and sued the firm for legal-malpractice, bad faith, conversion, malicious conduct, privity, estoppel, third-party beneficiaries, and respondeat superior. The trial court ruled on a motion to dismiss that the non-legal malpractice claims were duplicative of the legal malpractice claim and dismissed them. The law firm then moved for summary judgment on the basis that it had no attorney-client relationship with plaintiffs and that plaintiffs had not incurred any damages. Plaintiffs opposed arguing that a “malice” substitute for an attorney-client relationship existed and that there were genuine issues of material fact concerning whether the law firm’s actions caused them harm. The trial court granted summary judgment to the law firm on grounds that no attorney-client relationship existed, that a malice substitute did not apply, and that any ethical violation by the firm did not give rise to a cause of action for legal malpractice nor create any presumption that a legal duty has been breached. Plaintiffs appealed, arguing that the trial court erred in not finding an express or implied attorney-client relationship, or a recognized substitute for such a relationship, between them and the law firm. Plaintiffs also argued that the trial court erred in disposing of their seven alternative claims for relief when it decided the law firm’s motion to dismiss, and that the trial court further erred in failing to vacate its dismissal of the plaintiffs’ alternative claims upon the granting of summary judgment. The law firm argued that no express or implied attorney-client relationship existed, that plaintiffs failed to raise their alternative claims in opposing the law firm’s summary judgment motion, and that plaintiffs incurred no harm. The Court of Appeals held that no express attorney-client relationship existed given that the plaintiffs admittedly never communicated with the law firm and never agreed to have it represent them. No implied attorney-client relationship existed either because plaintiffs were unaware the law firm had named them as parties and had no reasonable expectation that he was representing them. However, the Court determined that malice could substitute for this relationship where a lawyer’s actions could be construed as a conscious disregard for the rights and safety of other persons that had a great probability of causing substantial harm along with evidence of extra-legal activity, unethical conduct on the verge of fraud or other evidence showing more than mere negligence. Applying this reasoning to the instant matter, the Court of Appeals held that the law firm’s holding itself out to the court as representing plaintiffs, and then instituting, pursuing, mediating, settling and dismissing claims on plaintiffs’ behalf, could constitute extra-legal conduct sufficient to substitute for an attorney-client relationship, and thus reversed the granting of summary judgment for the law firm. As to damages, the Court of Appeals held that there were issues of fact warranting a trial, reasoning that plaintiffs’ claims presumably had some settlement value; otherwise, there would be no purpose to include them in the lawsuit and the medical-malpractice defendants would not have required their signatures on the releases. The Court of Appeals upheld the dismissal of plaintiff’s other causes of action.

California Court of Appeal, Second Dist, Division 3

Arbitration of Malpractice Claims: Former client had statutory right to seek preliminary determination of arbitrability from a court on law firm’s breach of contract claim despite arbitration provision in retention agreement; arbitration award in law firm’s favor on former client’s malpractice claim confirmed.

By: Jacqueline A. Welch

Sargon Enterprises, Inc. v. Browne George Ross, LLP
2017 WL 4250188 (Cal. App., 10/15/2017)

This long-running case stemmed from an underlying dispute between plaintiff and a university over a five-year clinical study related to a patented dental implant in 1991. In the underlying case, filed in 1999, a disagreement arose concerning whether evidence of plaintiff’s lost profits should be excluded at trial. The trial court excluded the evidence, and the jury awarded $433,000 to plaintiff in compensatory damages. On appeal, the Court of Appeal reversed, holding that the trial court erred by excluding evidence of plaintiff’s lost profits. On remand, plaintiff retained a law firm in 2005 to represent it in the second trial. The retention agreement with the law firm contained an arbitration clause that would govern any dispute between the client and law firm. The trial court again excluded plaintiff’s expert’s opinion testimony, and the parties stipulated to entry of judgment on the breach of contract claim in the same amount as the first court had awarded, i.e., $433,000. Then, the university filed an interpleader action against plaintiff and several law firms, including the firm at issue in this case, for resolution of attorney fee disputes. The law firm represented plaintiff in the interpleader action. In addition, the plaintiff appealed the judgment entered after the second trial. In 2001, the Court of Appeal reversed the judgment because it found that plaintiff’s expert’s testimony should have been admitted. The court also affirmed the trial’s court’s $1.8 million attorney fee award to plaintiff. Later, however, the California Supreme Court granted review, and reversed the decision of the Court of Appeal, resulting in the Court affirming the $433,000 stipulated judgment. In 2014, plaintiff filed a legal malpractice complaint against the law firm. Plaintiff argued that, in 2007, the law firm advised plaintiff to enter into a stipulated judgment with the university before appealing the order that excluded the testimony of plaintiff’s lost profits expert. Moreover, because the law firm had failed to preserve the issue, plaintiff was not permitted to offer alternative evidence of lost profits. The plaintiff alleged that the law firm “knew or should have known that [plaintiff’s] entry into the stipulated judgment [might] preclude [plaintiff] from introducing lost profits evidence.” Soon afterwards, the law firm filed a demand for arbitration and a petition to compel arbitration of plaintiff’s pending court action for legal malpractice based on the terms of the 2005 retainer agreement. The arbitrator rejected the plaintiff’s legal malpractice claim, concluding that, in 2008, when plaintiff retained the law firm to represent it in the interpleader action, it released the firm and its attorneys from all claims that existed as of that date. Regarding the breach of contract claim, the arbitrator found that the law firm had suffered damages resulting from plaintiff’s breach of the retention agreement by filing the suit in court, as opposed to pursuing arbitration, and awarded the firm $200,000. When the law firm sought approval of the arbitration award, the client opposed the petition contending that the damages award for breach of contract exceeded the arbitrator’s powers because it violated plaintiff’s right to petition, and the damages awarded were not related to plaintiff’s breach. After the trial court granted the petition to confirm the arbitration award, the Court of Appeals asked the parties to brief two questions: i) Does the California Arbitration Act express a legislative intent that issues of arbitrability should be resolved by a superior court, unless as arbitration agreement explicitly states otherwise? ii) If so, was the arbitrator’s breach of contract award inconsistent with plaintiff’s statutory rights or an explicit legislative expression of public policy. On appeal, plaintiff argued that the arbitrator’s award of breach of contract damages violated its statutory right to petition the courts. The law firm contended that plaintiff waived the right to challenge the arbitrator’s award of contract damages. The Court of Appeals held that plaintiff had a statutory right to initiate its action in the courts. The Court also ruled that the arbitrator’s award in the law firm’s favor on the legal malpractice claim should be affirmed, and the award of damages to the law firm could not stand. The Court of Appeals explained that plaintiff did not waive the issue, and preserved for judicial review its objection to the arbitrator’s power to award breach of contract damages. The Court further ruled that the arbitrator’s damages award violated plaintiff’s statutory right to initiate litigation in court. One of the statutory provisions the Court found persuasive allows a party to challenge the enforceability of an arbitration agreement in Court without forfeiting the right to arbitrate should the challenge be unsuccessful. Accordingly, the Court found in plaintiff’s favor that an arbitration agreement does not preclude a party from initiating a civil action or asking a Court to resolve disputed issues; and, plaintiff’s initiation of its malpractice lawsuit in Superior Court thus was consistent with the arbitration agreement. Finally, the Court affirmed the portion of the arbitrator’s disposition of plaintiff’s malpractice claim in favor of the law firm.

Court of Appeals of Arizona, Division One

Implied Waiver of Attorney-Client Privilege: Plaintiffs suing transactional attorneys for malpractice related to creation of bond offering did not impliedly waive attorney-client privilege with respect to their communications with, and advice received from, defense counsel in separate litigation brought against plaintiffs by purchasers of bonds.

By: Christopher C. Storm

Robert W. Baird & Co., Inc. v. Whitten
2017 WL 4296583 (Ariz. App. 9/28/2017)

Plaintiffs, the principal underwriters of a municipal bond offering, retained transactional counsel to assist them in preparing bonds for sale. Plaintiffs were later sued by bond purchasers who alleged misrepresentation and other defects in the bond offering. Plaintiffs retained defense counsel to represent them against the bond purchasers' claims, and also retained separate plaintiff's counsel to bring a malpractice action against the transactional attorneys. In the malpractice action, transactional counsel raised the affirmative defense of contributory negligence and filed notices of non-parties at fault. In discovery in the malpractice action, the transactional counsel obtained a trial court order for the production of information provided to plaintiffs by their defense counsel that was otherwise protected by the attorney-client privilege and work product doctrine on the basis that the plaintiffs were using defense counsel's advice as both a sword (the basis for their damages in the malpractice action) and as a shield (preventing discovery based on the attorney-client privilege and work product doctrine). The Court of Appeals of Arizona accepted plaintiffs' appeal and reversed the trial court order, holding that the plaintiffs did not impliedly waive the attorney-client privilege with defense counsel because the three prongs of the "Hearn test," which evaluates implied waiver of the attorney-client privilege when the litigant's mental state is at issue, were not satisfied. According to the Hearn test, implied waiver exists when (1) the assertion of privilege was the result of an affirmative act by the asserting party; (2) through the affirmative act, the asserting party put protected information at issue by making it relevant to the case; and (3) the application of privilege denies the opposing party of information vital to the defense. The Court reasoned that the first prong was not satisfied simply because transactional counsel chose to defend on a contributory negligence basis. The Court noted that, while the plaintiffs' filing a complaint was an affirmative act putting at issue whether the transactional counsel caused plaintiffs to incur the cost of defending litigation by bond purchasers, the complaint did not put at issue the specific question resulting in the plaintiffs' assertion of privilege, namely whether other persons besides transactional counsel were responsible for some claimed damages. Rather, that issue was raised by transactional counsel through their contributory negligence defense. The Court further reasoned that the plaintiffs' malpractice complaint was not the "catalyst" for transactional counsel's defenses because such an argument would undermine the privilege with subsequently-retained counsel in every legal malpractice action where the issue of damages was raised. The Court believed that the second prong of the Hearn test was not satisfied because, contrary to the trial court's finding, the plaintiffs did not seek to use protected information as both a sword and a shield. To use counsel's advice as a sword, a party must make an affirmative claim that its conduct was based on advice of counsel. Here, the alleged malpractice occurred prior to retention of defense counsel and, therefore, the malpractice claims could not be dependent on defense counsel's advice. The Court cautioned, however, that the plaintiffs' decision to assert the privilege did pose some risk to plaintiffs' ultimate ability to prove their claims if such claims were provable only through privileged material. Finally, the Court held that the third prong was not satisfied in that barring transactional counsel from accessing defense counsel's budgets, status reports, and analyses of liability exposure did not deprive transactional counsel of information vital to its defense. Further analyzing this prong, the Court noted that the usefulness and relevance of information to the requesting party should not provide grounds for waiver where the privilege is being used as a shield only.

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