QUESTION: Our hospital is about to sign a letter of intent to merge with a regional health system. The lawyers want us to also sign a “joint defense agreement.” What is that and does it make sense to do so?
ANSWER: A joint defense agreement or “JDA” memorializes the intention and understanding of parties to a prospective merger or acquisition regarding: (1) particular communications that have been made between them, (2) the contents of such communications, and (3) any other work product containing or referring to such communications shall remain confidential and protected from disclosure to any third party. The JDA also permits the parties and their respective attorneys to share and exchange information among themselves and with any retained experts or consultants without waiving any privilege that may apply to that information. It is usually a good idea to have a JDA in any merger transaction. The courts have recognized that the joint defense and common interest privileges will protect privileged communications between the parties from disclosure. Given the recent aggressive posture of the FTC and state attorney generals who have challenged numerous health care mergers, a JDA is not only a good idea, it is a critical tool for self-preservation.