If you have ever been involved in litigation relating to a defunct company, then you know that problems such as who will serve as the Rule 30(b)(6) representative and who will verify the answers to interrogatories or provide responses to other discovery requests can be difficult to manage. See, e.g., FDIC v. Wachovia Ins. Servs., 2007 U.S. Dist. LEXIS 62538 (D. Conn. 2007) (dealing with difficulties of Rule 30(b)(6) deposition notice directed to FDIC in its capacity as receiver of a failed bank).  Now you can add the attorney-client privilege to that list of problems.

In Red Vision Sys. v. Nat’l Real Estate Info. Servs., L.P., 108 A. 3d 54 (Pa. Super. Ct. Jan. 13, 2015), creditors of three “dead” real estate services companies served the companies’ former in-house counsel with a subpoena seeking documents that might evidence fraudulent transfers of the companies’ assets. The former in-house counsel objected to the subpoena, arguing that the thousands of pages of responsive documents contained information protected by the attorney-client privilege. The trial court denied his motion to quash the subpoenas.

On appeal, the Pennsylvania Superior Court affirmed the trial court’s ruling and held that the former in-house counsel could not rely upon the attorney-client privilege to avoid producing the documents because his former clients were “dissolved and/or ha[d] ceased to operate, and ha[d] neither a legal successor nor some remaining management with authority . . . to raise or waive the privilege.” Red Vision Sys., 108 A. 3d at 68 (Pa. Super. Ct. 2015). The Court emphasized the fact that the dissolved companies were “’dead’ as opposed to being in some other state, such as a windup phase, bankruptcy or liquidation, or having merged into or been acquired by a successor.” Id. at 65. “In the latter cases, there [is] a person or entity which succeed[s] to the defunct company’s interests and authority to assert the privilege; in the former, no such person or entity exist[s].” Id.

The opinion creates uncertainty for businesses and their stakeholders, who might now be reluctant to seek legal advice for fear that their communications with company attorneys could be disclosed if the company later goes out of business.