A recent ruling in the Aon securities class action provides important protection from discovery for companies' drafts of Form 10-K language. In an order dated January 9, 2009, Magistrate Judge Morton Denlow of the US District Court for the Northern District of Illinois ruled that Aon was not required to produce an email seeking comments on draft disclosure language for Aon's Form 10-K because it was protected by the attorney-client privilege.

The plaintiff in the Aon case filed a motion to compel the production of a two-page document consisting of a March 1, 2004 e-mail and attached memorandum. The memorandum portion of the document was from Aon's CFO to both Aon's CEO and Aon's General Counsel, and it provided an expanded draft of the "Compensation for Services" section of Aon's Form 10-K to be filed with the SEC.

The e-mail forwarding the document was from the CFO to (1) Aon's head of Investor Relations, (2) Aon's Deputy General Counsel, (3) Aon's Controller, and (4) an Aon employee in the Controller's division. It attached the memorandum, and requested that the recipients provide their thoughts on it.

The court found that "Form 10-K requires extremely detailed financial, legal, and structural information pertaining to the company" and that Aon's involvement of legal counsel in the drafting of Form 10-K, and in decision-making in preparation for its submission was therefore unsurprising. It ruled that

the determination of what information should be disclosed for compliance is not merely a business operation, but a legal concern. The Court finds that the communications contained in the [CFO's] e-mail did reasonably seek legal advice.

In addition, the court rejected plaintiffs' arguments that (1) the attorney-client privilege did not apply to drafts of documents that will one day become public, such as a Form 10-K, and (2) that the attorney-client privilege was destroyed by the inclusion of non-lawyer individuals on the email in question. The court observed that each of these individuals, including the CFO, CEO, Head of Investor Relations, Controller, and member of the Controller's division, was directly concerned with the matter of the Form 10-K disclosures, and that "to disallow corporations the space to collectively discuss sensitive information with legal counsel would be to ignore the realities of large-scale corporate operation."

Read Magistrate Judge Denlow's opinion in Roth v. Aon