Private fund managers frequently rely on assistance from legal counsel to bolster their operations and compliance practices, comfortable that the attorney-client privilege will shield those efforts from the SEC and others. As managers increasingly engage consultants to also audit their compliance programs, a logical concern is whether similar protections are available to protect those efforts. For example, a manager engaging a consultant to conduct a risk assessment of its cybersecurity preparedness would not want the results to become public. See “Perspectives From Cybersecurity Industry Professionals on Preparedness, Vendor Management, Cyber Insurance and Cloud Services” (Jul. 7, 2016). This three-part series describes the use of so-called “Kovel arrangements” by private fund managers to extend the attorney-client privilege to interactions with consultants. This first article describes the Kovel privilege requirements established by case law, as well as critical considerations when deciding whether to invoke or waive the privilege when interacting with the SEC, other regulators or litigants. The second article will detail the features of a fully compliant Kovel arrangement, including necessary engagement letter provisions and the daily implementation of the arrangement. The third article will examine circumstances when fund managers can employ Kovel arrangements and others when it is inappropriate. For more on the attorney-client privilege, see “How Fund Managers Can Maintain Work Product Protection During Investigations After the Herrera Decision” (Feb. 22, 2018); and “D.C. Circuit Confirms Applicability of Attorney-Client Privilege to Internal Investigations” (Aug. 7, 2014).