The title of this recent law review article frames the problem well, At the Whim of Your Adversaries: California's Hazards in Sell-Side Representation and Waiver of Attorney-Client Privilege, 54 Santa Clara L. Rev. 651 (2014).  In this article, the authors, practicing attorneys Mattia V. Murawski and Brian R. Wilson, argue for an amendment to the California Evidence Code because under present law "sell-side corporations and their attorneys must assume that upon merger or acquisition the substance of their privileged communications will become known, controlled, and possibly used to their detriment by their adversaries."  This is a problem that I wrote about last December after then Chancellor Leo Strine’s ruling in Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 80 A.3d 155 (Del. Ch. 2013) (Surprisingly, the authors fail to mention this case).  See  Is The Attorney-Client Privilege An Asset? and More On Asset Sales And The Attorney-Client Privilege.

The authors unabashedly favor the approach of the New York Court of Appeals in Tekni- Plex, Inc. v. Meyner & Landis, 674 N.E.2d 663 (N.Y. 1996), which bisected the attorney-client privilege into communications relating to general business matters and communications relating to merger negotiations.  The New York Court allowed the former, but not the latter, to pass to the buyer.  The authors therefore propose an amendment to Evidence Code Section 953 to achieve that result when the attorney for the seller jointly represents the directors, officers, or controlling shareholders.  However, attorneys representing a corporation in a sale transaction do not inevitably represent the directors, officers or controlling shareholders.  Thus, the authors' solution would seem to apply only in those cases in which joint representation is found.