In a highly regulated environment, it is challenging for U.S. corporations to maintain 100% compliance with each and every law touching them. When issues arise, U.S. corporations rely on the ability to have full and frank discussions with their legal counsel to assess risk and take corrective action to minimize loss. The ability to have such private discussions is based on the attorney-client privilege, which prohibits legal counsel from divulging privileged communications to any third party.
Although the attorney-client privilege is quite strong, one of the world’s largest public companies learned it is not absolute. The Delaware Supreme Court, in Wal-Mart Stores, Inc. vs. Indiana Electrical Workers Pension Trust Fund IBEW, ruled that in-house counsel’s legal advice to management was not protected by the attorney-client privilege.
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