The Perils of Confidentiality Agreements

The tidal wave of corporate scandals reminds us that the most popular and perhaps viable response for the corporation under siege remains cooperation with government investigators. Reports of disclosure of internal company investigations and documents have come pouring out of Enron, WorldCom, Global Crossing and many others. When corporations divulge potentially privileged materials to the government, concerns about whether such disclosure results in the waiver of the company's attorney-client privilege and the loss of its work product protection inevitably follow. Waiver of privilege and work product to the government could also mean loss of protection as to all third parties, including would-be class action plaintiffs and potential criminal defendants. The corporation sits on the horns of a dilemma ' cooperate and face significant civil liability, or resist and face strict government scrutiny and possible criminal conviction.