Preservation of Privilege - Part I General Report -Chapter 5 - Handbook on Third-Party Funding in International Arbitration
Originally from Handbook on Third-Party Funding in International Arbitration
The third party funding market, like any financial market, is built on the gathering and analysis of information in order to make a calculated risk on investment in an asset. In order to evaluate the possibility of recovering on a damages award, third party funders routinely seek information regarding the strength of a party's claims (and defenses to counterclaims) as well as the ability to recover on a successful award. In doing so, third party funders, guided by their own counsel, will request the submissions and evidence available to the party seeking third party funding, and may even look to the counsel of such parties on questions of applicable law and proposed legal strategies. From the perspective of the third party funder, such due diligence is important to its evaluation of whether a particular arbitration represents a viable financial opportunity, in the sense that it may likely result in an enforceable and favorable award.
From the perspective of counsel to a client that is seeking third party funding for an international arbitration, however, the prospect of disclosing confidential, privileged and other private information (referred to herein as “Protected Information” ) can present a two-headed dilemma: on the one hand, third party funding may be in the client's interests for a variety of reasons, including the ability to bring and pursue a claim; on the other, counsel will be concerned with preventing the waiver of the various privileges (including attorney-client privilege and attorney work product privileges) that protect the information from disclosure to outside parties.
Recognizing that the laws of privilege and confidence vary considerably between countries and jurisdictions, and that there is no guarantee confidentiality and privilege will be preserved when making disclosures to third party funders, the following Guideposts are presented as best practices for counsel in navigating the aforementioned competing needs. Derived from the author’s general review of case law in the United States and internationally, the objective of these Guideposts is to assist counsel in ascertaining and mitigating the risk of a waiver of privilege or of confidence in the event a client makes the reasoned decision to pursue third party funding.