Ordinarily, when a communication between an attorney and her client is disclosed to a third party, that communication loses its privileged status. The common interest privilege operates as an exception to that rule that allows the privilege to extend to communications with certain third parties. For the common interest doctrine to apply, the communication must be in furtherance of a legal interest that is shared by the client and the third party. Historically, New York courts additionally required that the communication relate to legal advice regarding pending or prospective litigation. On December 4, 2014, in a landmark decision, a New York appellate court did away with this additional requirement.
Darren Teshima helps clients intelligently manage risk. From providing counsel to safeguard against anticipated and unforeseen dangers to handling high stakes litigation, clients turn to him for creative solutions to protect their businesses. Chambers USA 2020 quotes clients praising his ability to “balance expert knowledge with practical application.” Darren is sought-after for his advice to policyholders in insurance coverage disputes. With the profound uncertainty of COVID-19, clients are relying on Darren’s extensive insurance coverage experience to pursue claims and his proactive judgement to review policies to mitigate and eliminate potential coverage gaps.
Darren’s proactive judgement has protected clients’ long-term business goals time and again. He serves as a true business partner to clients in the technology, fintech and financial services industries. He tailors innovative strategies to help avoid litigation and minimize cyber, data and cryptocurrency concerns, as well as D&O and professional liability. Leaders in the fintech space also seek Darren’s counsel on E&O and cyber loss coverage.
When litigation is necessary, Darren helps clients assert their rights. He’s successfully litigated high stakes commercial disputes with significant wins in connection with insurance coverage, RMBS, D&O coverage, and cyber insurance for some of the largest data breaches in history. He was part of the Orrick team for Credit Suisse that handled one of the only post-financial crisis RMBS cases to go to trial.
A recognized leader, Darren has been ranked for his work on behalf of insurance policyholders by Legal 500, Chambers USA, and has been named a Law360 Rising Star, one of the "Best Lawyers Under 40" by the National Asian Pacific American Bar Association.
Darren is a leader at Orrick serving currently as co-Partner-in-Charge of Diversity and Inclusion, and previously as deputy, co-leader and leader of the Complex Litigation and Dispute Resolution practice from 2016-2020. He is passionate about making the legal profession inclusive for all and takes an active role in D&I industry engagements, including as a fellow in the Leadership Council on Legal Diversity and participating in the Diversity in Law Hackathon.
Darren also is deeply committed to pro bono work and community involvement. He’s handled administrative trials and hearings on behalf of asylum seekers and low-income tenants and provided litigation advice to nonprofit organizations. For his efforts, Legal Services for Children honored him with the Pro Bono Advocate Award twice. Currently, Darren is the chair of the Asian Americans Advancing Justice – Asian Law Caucus, and serves on the boards of Center for Gender & Refugee Studies and Legal Services for Children.
Posts by: Darren S. Teshima
In 2006, Bear Stearns agreed to a $250 million “neither admit nor deny” settlement with the SEC to settle charges that it facilitated late trading and deceptive market timing by its hedge fund customers. $160 million of that settlement payment was characterized in the SEC’s Order as disgorgement of profits, even though Bear Stearns contended its own profits from the trades were less than $17 million. J.P. Morgan (the successor to Bear Stearns) sought D&O insurance coverage for the portion of the disgorgement payment that was attributable to the profits of its hedge fund customers, rather than revenue it received. The insurers denied the Bank’s claim on the ground that New York public policy prohibits insurance coverage for disgorgement payments. Disgorgement, the reasoning goes, is the return of ill-gotten gains and therefore payment for intentionally caused harm. The insurers also argued that disgorgement does not qualify as a “loss” or “damage” under terms of the insurance policies. The trial court agreed and dismissed Bear Stearns coverage suit against its D&O insurers.
On June 11 the New York Court of Appeal reinstated Bear Stearns’s coverage action. J.P. Morgan Securities Inc., et al. v. Vigilant Ins. Co., et al., 2013 N.Y. LEXIS 1465 (June 11, 2013). The Court of Appeal held that the Court must look beyond the labels of the SEC Order and even beyond its findings that the Bank’s securities law violations were willful. Those findings, the Court held, were not sufficient to conclusively establish that Bear Stearns intentionally caused harm. In short, the Court of Appeal allows the possibility of coverage for disgorgement if the insured can demonstrate that the payment, although labeled “disgorgement”, is actually payment for something else that might otherwise qualify for insurance coverage.
The June 11 ruling is notable for another reason – it came the week before SEC Chairwoman Mary Jo White announced that the SEC would depart in some cases from its long-established practice of “neither admit nor deny” settlements. It is an open question whether the Court of Appeal would have allowed J.P. Morgan/Bear Stearns’ coverage action to proceed if its settlement with the SEC had not included a neither admit nor deny provision. The Court’s willingness to look beyond the disgorgement label further highlights the importance of avoiding binding admissions wherever possible, so as to leave open every possible coverage avenue.