In early 2006, now-defunct hedge fund managers D.B. Zwirn & Co., L.P. and D.B. Zwirn Partners, LLC (Zwirn) learned of certain financial irregularities in their operations, including unauthorized early payment of management fees and the purchase of a Gulfstream jet for use by their founder and principal, Daniel B. Zwirn. See “Ten Steps That Hedge Fund Managers Can Take to Avoid Improper Transfers among Funds and Accounts
,” Hedge Fund Law Report, Vol. 4, No. 13 (April 21, 2011). The Zwirn companies retained the services of three different law firms – Schulte, Roth & Zabel, LLP (SRZ); Gibson, Dunn & Crutcher, LLP (GDC); and Fried, Frank, Harris, Shriver & Jacobson LLP – to investigate the irregularities and defend any legal actions arising from them. The investigations placed blame on plaintiff Perry A. Gruss (Gruss), who was Chief Financial Officer and a partner of certain Zwirn entities. Gruss resigned. Zwirn then communicated its attorneys’ findings to its investors and to the Securities and Exchange Commission (SEC). In response, Gruss sued Zwirn for defamation in U.S. District Court. During discovery, Gruss moved to compel disclosure of the interview notes and summaries prepared by SRZ and GDC attorneys in the course of their investigations. This article discusses the District Court’s ruling on Gruss’ motion, as well as the Court’s analysis of the attorney-client privilege and the related work product doctrine in the hedge fund context. For a summary of Gruss’ complaint, see “Former CFO of Highbridge/Zwirn Special Opportunity Fund Sues Ex-Partner Daniel B. Zwirn for Defamation and Breach of Contract
,” Hedge Fund Law Report, Vol. 2, No. 30 (July 29, 2009).