How to protect your right to litigation privilege when there’s a dispute on the horizon

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There are recognised benefits in enabling parties to investigate potential disputes without worrying that the documents they create during their investigations will be scrutinised by the other party. The law has therefore established a party’s right to claim privilege over certain documents to keep them out of legal proceedings.

There are two types of legal professional privilege: legal advice privilege which applies to communications between a lawyer and client relating to legal advice and litigation privilege which applies to confidential communications between a lawyer and a client with third parties made in contemplation of litigation. This briefing deals with the latter.

Privilege is a valuable right for a potential litigant – a document that is privileged can be withheld from the opposing party. However, for the right to exist, the document over which it is claimed must meet fairly strict criteria. Those criteria were reviewed in Starbev v Interbrew [1], a recent case which involved a dispute about the financial aspects of a business sale. The defendant claimed that two categories of its documents were covered by litigation privilege and refused to hand them over to the claimant. The claimant objected and challenged the defendant’s position in court [2]. In finding that the documents were not protected by litigation privilege, Mr Justice Hamblen reiterated the criteria needed for litigation privilege to arise and in particular, emphasised that:

  • the party claiming litigation privilege has to prove its entitlement and that at the time of creating the documents, litigation was reasonably contemplated or anticipated;
  • the litigation must have been more than “a mere possibility” [3] and to check that, the court will scrutinise the claim to privilege carefully and objectively and might require more than just a witness statement [4];
  • specifically, the court will look for evidence that the documents in question were created for the dominant purpose of either seeking legal advice or obtaining information or evidence to be used in or in connection with the anticipated/contemplated proceedings.

In the Starbev case, the two categories of documents involved were the defendant’s documents relating to advice from their bank on the financial arrangements connected with the business sale and also documents relating to their dealings with their accountants connected with one of the business sale agreements. The defendant claimed that these documents had been created in contemplation of litigation but the court found the defendant’s evidence in support insufficient. Rather, the court concluded that the bank’s role was investigatory and in the case of the accountants, the defendant’s retainer letter significantly did not include any reference to the prospect of litigation – nor had the defendant been advised to preserve documents in contemplation of the alleged impending dispute.

The correspondence from the time also offered insufficient evidence that preparing for litigation had been the dominant reason for the defendant’s instructions to its bank and accountants. The judge refused to inspect the privileged documents themselves holding that was an option of last resort. “It is generally undesirable for the Court to consider material which is not to be shown to one of the parties…” [5]

The defendant in the Starbev case therefore found itself in the unenviable position of having to disclose documents revealing its early investigations and thought processes.

How do you avoid getting into a similar situation?

Tips for protecting your right to litigation privilege
How do you protect your right to litigation privilege and avoid having to disclose documents you regard as privileged? Here are some tips.

  • At the first hint of a dispute, consider what work and investigations you need to carry out to establish your position. Do you need third parties to investigate? If yes, how will you deal with these third-party, non lawyer, advisors and experts. Ask yourself is there is a risk of litigation? Is the impending litigation the dominant reason for your instructions?
  • If you want to claim litigation privilege over your communications, your main reason for instructing third parties must be in contemplation of litigation. Bear in mind that even in this case, privilege will not always arise.
  • If litigation is anticipated, ensure your instructions to your third party advisers and experts refer specifically to the potential dispute. Explain that their work is being sought for the dominant reason of helping with your pre-action investigations. Ensure all correspondence dealing with the third party’s work and the issues in dispute refer to your genuine concerns about the potential dispute.
  • Mark your correspondence ‘confidential’ and head it up with a note that it is ‘prepared with a view to litigation’.
    Ensure that your team know there’s the potential for litigation and that they therefore preserve all relevant documents (including electronic documents).
  • Ensure all contemporaneous correspondence reflects the fact that the third party was instructed to assist in relation to the anticipated litigation.
  • Ensure both your team and the third party advisers treat the documents as privileged and do not risk waiving that privilege by showing the documents to persons unconnected with the dispute. Keep the documents within as small a team as possible.

If there are other reasons for investigating the facts and creating documents other than an impending litigation, there is a good chance that your communications will not satisfy the ‘dominant purpose test’ and will not therefore be privileged. Consider whether you want the opposite party to see the documents you are creating. (For more on the dominant purpose test, read our briefing on Why are you creating that pre-action document… more on Litigation Privilege (especially if you’re a liquidator!) )

If in doubt, or if there are two or more reasons for instructing the third party, privilege in your documents might be better protected by speaking to your solicitor first and asking them to manage the pre-action investigations. Communications between clients and their lawyers are generally covered by legal advice privilege.

Alternatively, consider giving your advisers two sets of instructions and keep separate any privileged issues relating to even the smallest chance of a dispute.


[1] Starbev GP Ltd v Interbrew Central European Holding BV [2013] EWHC 4038 (Comm)
[2] CPR 31.19: (5)
[3] Tchenguiz v SFO case, paragraph 48 (iii)
[4] Paragraph 11 of the Judgment
[5] Paragraph 40 of the Judgment