Issue 018 · Jul 1, 2025
El Museletter Part Dix-Huit
Most business consultants think their communications are protected. They aren't.
A company hires a financial advisor to model a sensitive transaction. Emails fly. Models get built. Strategic options get debated. None of it is privileged. If the company gets sued three years later, all of it shows up in discovery — and the opposing lawyer gets to read every word.
This is the rule for most third-party engagements. The lawyer is privileged. The accountant who helps the lawyer is not. The consultant retained alongside the lawyer is not. The investment banker advising in parallel is not. Any sensitive material that touches the third party leaves the privileged corridor.
Kovel agreements are how you fix this.
A Kovel agreement is a contract structure named after a 1961 case, United States v. Kovel. The Second Circuit held that an accountant engaged by an attorney — specifically to help the attorney provide legal advice — could fall within the attorney-client privilege. The attorney retains the third party, not the client. The third party's work is in furtherance of legal advice, not in furtherance of business advice. The communications and work product live inside the privileged corridor.
You can pull a financial advisor, an accountant, a tax expert, even certain consultants into the privileged tent — if you structure the engagement correctly from day one.
Most companies don't. They sign master service agreements with consultants directly, route invoices through finance, and discover at the discovery stage that everything the consultant produced is fair game.
The cost of doing this right is small. The cost of doing it wrong is unbounded — every sensitive strategic document the consultant touched, suddenly readable by opposing counsel.
Kovel isn't a hack. It's how the legal profession built a way for clients to use specialized expertise without leaking the strategy underneath it.
The next time you bring in a consultant for something sensitive, ask: who is retaining them? If it isn't your lawyer, the answer is the wrong answer.