Court Addresses “Client” Identity in a Closely Held Corporation

Identifying the "client" in closely held corporations can be difficult, but critical. That determination can affect both privilege protection for communications, and the right to access privileged communications between the corporation’s management and its lawyer.

In Mehwald v. Atlantic Tool & Die Co., a feud erupted between generations in a family-owned closely held corporation. 2023 Ohio App. LEXIS 2740, 2023-Ohio-2778, --- N.E.3d --- (Ohio Ct. App. Aug. 10, 2023). A minority-owning son sought access to privileged communications between the corporation and its lawyer, but the court rejected his efforts — noting that "Ohio courts have declined to extend the attorney-client relationship to minority shareholders in close corporations and we also decline to do so." Id. ¶ 39. The court then also found the son ineligible to rely on an Ohio statute that allows some shareholders access to books and records.

As difficult as it can be to properly identify the "client" in publicly held corporations, that issue can be even more acute in closely held corporations — sometimes exacerbated by stressful family dynamics.

Published .