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Posted: July 29, 2014

Analyses Performed by Litigation Counsel Not Work Product When Done to Meet Contractual Obligation

On July 16, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in Home Equity Mortgage Trust Series 2006-1 v. DLJ Mortgage Capital, Inc., 2014 NY Slip Op. 31923(U), granting a motion to compel the production of analyses performed by litigation counsel.

In Home Equity Mortgage Trust Series 2006-1, the plaintiff moved to compel the production of loan repurchase analyses performed for the defendant by Orrick, Herrington & Sutcliffe LLP, which was hired by the defendant not just to perform the analyses but also to “advise [the defendant] of any legal liability that may result.” Notwithstanding that the analyses were performed by litigation counsel, the court granted the motion to compel, explaining:

In order for the attorney-client privilege to apply, the document must be primarily prepared in anticipation oflitigation. The attorney work product doctrine applies only to documents prepared by counsel acting as such, and to materials uniquely the product of a lawyer’s learning and professional skills, such as those reflecting an attorney’s legal research, analysis, conclusions, legal theory or strategy. Documents prepared in the ordinary course of business are not privileged and are, therefore, discoverable.

. . .

The First Department has made clear that repurchase analyses are not privileged when they are conducted pursuant to a contractual obligation[, holding] that documents and information concerning defendants’ repurchase review, generated in response to plaintiffs repurchase requests, are discoverable. The Appellate Division noted that processing repurchase requests was an inherent part of defendants’ business because defendants were, and always had been contractually obligated to conduct repurchase reviews.

. . . Although [the defendant] anticipated litigation and retained counsel to perform the repurchase analysis, [the defendant] was still contractually obligated to conduct repurchase reviews and such analysis would have been performed even had there been no threat of litigation. Immunity does not attach to Orrick’s repurchase analysis merely because it anticipated litigation. It attaches only to analyses that were created primarily, if not solely, in anticipation of litigation. Defendants try to distinguish the instant action from MBIA by arguing the [the defendant] does not have a long-standing business unit to deal with repurchase demands. [The defendant] notes that prior to 2008, members of their due-diligence staff would be pulled to deal with the few repurchase demands it received. In 2008, when [the defendant] received its first large-scale repurchase demand, [the defendant] retained Orrick as legal counsel and gave Orrick independent discre!ion about how to handle the repurchase demands. Defendants maintain this shows that responding to repurchase demands is not an inherent part of defendants’ business and as such are not performed in the ordinary course of business.

Although defendants may not have a dedicated business unit to deal with repurchase demands that does not mean that repurchase demands are not a long-standing business practice. In fact, defendants admit that members of their staff had performed repurchase analyses prior to 2008. Additionally, the fact that members of defendants’ due diligence department, who are not attorneys, were capable of performing repurchase analyses highlights that these analyses are not legal in nature. Such analyses do not become privileged merely because an investigation was conducted by an attorney.

(Internal quotations and citations omitted) (emphasis added).

This decision illustrated that just as not every communication by a lawyer is an attorney-client communication, not all work done by a lawyer is attorney work product.

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