Last Thursday, the New York Court of Appeals issued a stark reminder to transactional lawyers: no matter how much “common interest” two parties may have with respect to a transaction, the common interest doctrine may not protect their communications.

In Ambac Assurance Corp. v. Countrywide Home Loans, Inc., New York’s highest court held, in a 4-2 decision, that a party waives its attorney-client privilege if it shares privileged information with another party unless (i) those two parties share a common legal interest, (ii) the communication between the parties was made in furtherance of that legal interest, and (iii) the communication relates to pending or anticipated litigation.