Attorney-Consultant Privilege? Situations in Which Fund Managers May – and May Not – Be Able to Use Kovel Arrangements (Part Three of Three)

So-called “Kovel arrangements” provide unique opportunities for fund managers and their legal counsel to extend the attorney-client privilege to consultants, provided they are used in the appropriate contexts. There are certain circumstances under which Kovel arrangements are frequently employed by private funds and other companies, in addition to specific situations in which they are particularly effective at protecting fund managers’ operations and processes from being exposed to the public. This final article in a three-part series describes the contexts in which fund managers can benefit from having their attorneys engage consultants via Kovel arrangements, as well as situations where that possibility is tenuous or nonexistent. The first article outlined the Kovel doctrine’s legal requirements and key items to consider before deciding to waive or invoke the privilege. The second article provided practical guidance for maintaining a Kovel arrangement on a daily basis, as well as critical provisions to include in an engagement letter with a consultant. For background information on how private funds can use compliance consultants, see “Challenges and Solutions in Managing Global Compliance Programs” (Oct. 5, 2017); and “The Role of Outsourced Compliance Consultants in the Private Fund Compliance Ecosystem” (Jun. 27, 2014).

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