In Schaeffler v. United States, No. 13 Civ. 4864 (S.D.N.Y. May 28, 2014), the district court held that a taxpayer, Schaeffler, waived the attorney-client privilege when privileged legal advice was disclosed to a Bank Consortium that had provided refinancing to entities controlled by the taxpayer (the Schaeffler Group).  In this case, the Schaeffler Group hired Ernst & Young (E&Y) and a law firm to provide advice regarding the complex tax issues presented by the acquisition of a company and the associated refinancing and restructuring involved in the acquisition.  The Schaeffler Group entered into an “Attorney-Client Privilege Agreement” (ACP) with the Bank Consortium.  The ACP articulated that there was a common legal interest among the parties, and that the parties would keep confidential otherwise privileged documents shared between the Schaeffler Group and the Bank Consortium.  The IRS subpoenaed E&Y for documents that had been provided to parties outside the Schaeffler Group, including documents disclosed to the Bank Consortium.  Schaeffler asserted that documents disclosed to the Bank Consortium remained privileged pursuant to the ACP, because there was a common legal interest in understanding the tax implications of the transaction, which could affect both the Schaeffler Group and the value of the collateral on which the refinancing was based.  The court rejected application of the common interest doctrine on the grounds that, while the parties shared a common business interest in favorable tax treatment, they did not share a common legal interest or common legal strategy.  “To be sure, this common economic interest depended on the resolution of legal issues regarding tax treatment.  But this does not equate to a common ‘legal’ interest as that term is used in case law.”