MARKET COMMENTARY 25
There are two types of documents a third-party funder will have access to: (a) Lawyer to client communications – these relate to the potential action and are created by the parties’ for the purposes of their own due diligence of the litigation / arbitration. These are then sharedwith third-party funders. For privilege to apply, the dominant purpose of these communications should be for the conduct of the litigation / arbitration proceedings or for the giving of legal advice. If documents are passed on to a third-party funder theymust be on the express terms that privilege is not waived and the receiving party undertakes to keep the documents confidential. Alternatively, a third-party funder may be considered to share a common interest in the communications provided by the lawyers. (b) Communications originating from the third-party funder – sharedwith lawyer and client. These documents arguably can receive the protection of litigation privilege if they relate to a party’s litigation strategy and are for the dominant purpose of funding / conducting the litigation. Whether privilege applies will also depend on the timing of the creation of the documents. CONFIDENTIALIT Y AND COMMON INTEREST AGREEMENTS In order tomaintain the confidentiality of documents and in advance of providing any documents to a prospective third-party funder, it is advisable to enter into a confidentiality and common interest agreement with a prospective third-party funder. Such an agreement will set out a clear (a) assert that the documents to be shared between the party and the prospective third-party funder are subject to privilege. It will be important to clearly set out the nature of the privilege; (b) state that documents are prepared, compiled and provided to the third-party funder for the sole purpose of pursing the arbitration / litigation proceedings; (c) state that the sharing of the relevant documents will not affect their confidentiality nor waive privilege over the documents; and (d) state that the parties, in particular the third-party funder, will take all possible steps tomaintain the confidentiality in all documents shared under the agreement. When discussing a case with a third-party funder, it is important that the funders enter into a confidentiality agreement. This will helpmaintain the confidentiality of the documents, thereby helping to protect privilege. basis for maintaining legal privilege over documents sharedwith the funder. In order to protect privilege, the agreement should cover the following issues:
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