BSP Software v. Motio, Case No. 12-2100 (N.D. Ill. July 9, 2013)(Schenkier)
BSP Software disclosed legal advice it had received to its “advisory board,” an informal collection of advisors assembled by an officer of BSP’s. Following long standing precedent in the Northern District, Judge Schenkier refused to acknowledge that the advisory board was a “functional equivalent” to a formal board, and accordingly, disclosure to these individuals destroyed any claim of privilege.
Such “advisory boards” are common among startup companies. This opinion should serve as a wakeup call to such companies that establishment of a formal board of directors – at least if they will be litigating in the Northern District of Illinois – is a wise step.