Private fund managers frequently rely on assistance from legal counsel to bolster their operations and compliance practices, comfortable that the attorney-client privilege will shield these efforts from the SEC and others. As managers increasingly engage consultants to audit their compliance programs, a logical concern is whether similar protections are available to protect those efforts. For example, a manager engaging a consultant to conduct a risk assessment of its cybersecurity preparedness would not want the results to become public. See “Former Prosecutors Address Trends in Cybersecurity for Alternative Asset Managers, Diligence When Acquiring a Company and Breach Response Considerations” (Oct. 6, 2016). This three-part series describes the use of so-called “Kovel arrangements” by private fund managers to extend the attorney-client privilege to interactions with consultants. This first article describes the requirements of the Kovel privilege as established by case law, as well as critical considerations for managers when deciding whether to invoke or waive the privilege when interacting with the SEC, other regulators or litigants. The second article will detail the requisite features of a fully-compliant Kovel arrangement, including necessary features of engagement letters and the daily implementation of the arrangement. The third article will examine circumstances under which it is and is not appropriate for fund managers to employ Kovel arrangements. For more on the attorney-client privilege, see “How Hedge Fund Managers May Address the Practical Implications of the NY Court of Appeals’ Attempt to Clarify the Common Interest Doctrine” (Sep. 29, 2016); and “D.C. Circuit Confirms Applicability of Attorney-Client Privilege to Internal Investigations” (Aug. 7, 2014).