On March 26, 2026, the First Department issued a decision in AAEB5 Fund 17, LLC v. Duval & Stachenfeld, LLP, 2026 NY Slip Op. 01838, holding that a party may have waived privilege by putting their counsel’s advice at issue, explaining:
[A]n at issue waiver of privilege occurs when the party asserting the attorney-client privilege or work product protection has raised a claim or defense that the party intends to prove by use of the privileged materials. As an initial matter, we reject defendants’ contention that plaintiffs’ assertion of the attorney-client privilege as to communications with defendants in the bankruptcy proceeding was an affirmative act that placed communications with successor counsel at issue in this action. However, plaintiffs have not plainly demonstrated that they do not intend to rely on successor counsel’s specific advice or work product to show that they made reasonable efforts to mitigate their damages, and the matter should be remanded to determine this issue.
Further, plaintiffs may have waived the attorney-client privilege as to successor counsel’s advice that is at issue in this action by disclosing three email exchanges with successor counsel during discovery. We note that plaintiffs, as the parties asserting the privilege, failed to show that the privilege was not waived as to the disclosed emails. Accordingly, upon remand, the court should determine whether plaintiffs intend to rely on the advice reflected in the three disclosed emails and whether the disclosure waived plaintiffs’ attorney-client privilege as to other communications or documents in the legal file that relate to plaintiffs’ mitigation of damages.
(Internal quotations and citations omitted).