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Legal advice privilege: application and protection

Signing Document Print publication

11/12/2015

An important High Court decision has clarified the circumstances in which factual communications and documents between lawyers and their clients are protected by legal advice privilege. Gwendoline Davies and Andrew Beck explain the case and share their practical advice for the protection of privilege.

Privilege: Important protection for clients

Privilege is a hugely valuable legal right. It entitles a client to withhold documents (including electronic communications) from a court or third party, without any adverse inferences being drawn.

There are important public policy justifications underpinning privilege, such as the need for clients to be able to candidly disclose matters to their lawyers; to enable lawyers to obtain, investigate, record and freely communicate to their clients factual information so that clients can make fully informed decisions; and, as was highlighted in the recent case of Property Alliance v RBS [1] in the context of regulatory investigations, so that regulators can deal with experienced lawyers who can accurately advise their clients how to respond and cooperate, which in turn will advance public interest.

There are various different forms of privilege, each of which can arise in different circumstances. For example:

  • Litigation privilege, a type of ‘legal professional privilege’, arises where a document or communication has been created for the dominant purpose of litigation which is pending, reasonably contemplated [2] or existing.
  • Without prejudice privilege arises where parties are engaged in genuine attempts to resolve a dispute. It can ensure that communications concerning those negotiations are protected from disclosure to the court, so that neither party’s open position in the dispute is prejudiced.
  • Common interest privilege can arise where a privileged document is disclosed to a third party, (such as a co-defendant, an insurer or, potentially, a potential purchaser reviewing a target company’s due diligence) who has a common interest in the subject matter.

In this briefing we concentrate another key form of legal professional privilege: legal advice privilege.

Legal advice privilege

The following crucial factors must exist for legal advice privilege to apply:

  • The document or communication in question must be confidential. Any document that has been too widely disseminated or has been made public (for example has been posted online) cannot attract privilege protection.
  • The document must pass between a qualified lawyer [3] and his or her client. ‘Client’, in this context, is very narrowly defined and will only cover those members of an organisation who are actually charged with instructing lawyers [4].
  • The document must have been created for the purpose of giving or receiving legal advice in the relevant legal context. Today, a commercial lawyer’s role often extends beyond advising on black letter law and privilege will not arise where a lawyer advises on purely business or administrative matters. There must be a relevant legal context. To determine this, the court will ask whether the lawyer’s involvement relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law and whether a policy justification for legal advice privilege applies in the particular case [5].
  • Privilege must not have been lost or waived, even inadvertently.

Property Alliance v RBS

When the LIBOR manipulation scandal broke and RBS became the subject of several regulatory, multi-jurisdictional investigations, it established a steering group to oversee the various investigations and any related litigation, and to liaise with external legal advisors. The Property Alliance Group (PAG) brought a claim against RBS and sought disclosure of two types of factual documents prepared by RBS’ lawyers for the steering group: confidential tables which informed and updated the steering group on the progress of, and issues arising from, the investigations; and confidential notes (effectively minutes) of steering group meetings organised and attended by the lawyers. PAG argued that the lawyers were performing an administrative function and that the documents in question were largely factual and should be disclosed, but with any legal advice redacted. RBS countered that the documents were privileged – and the High Court agreed.

Snowden J held that both types of documents were, in their entirety, part of the “continuum of communication and meetings between the solicitor and client… Where information is passed… aimed at keeping both informed so that advice may be sought and given as required[6]. All of the requisite factors were present and the documents were therefore protected by legal advice privilege. The judge emphasised that factual documents will not attract privilege simply because they were prepared by a lawyer who was present at a meeting – the key consideration will be whether the documents were created in connection with the provision of legal advice. In this particular case, the meetings had a substantial legal content and, as well as performing administrative functions, the lawyers had given their impressions on, and responded to questions relating to, issues concerning the investigations.

Practical advice

Here are our top tips for the protection of privilege generally:

  • Remember, whilst standard disclosure under Part 31 of the Civil Procedure Rules requires all relevant documents within a party’s control to be listed in ongoing court proceedings, inclusion of a document in the disclosure list does not, in itself, render a privileged document admissible.
  • At the outset of any investigation (internal or regulatory) or any dispute, consider carefully the advisors who will be retained and the ‘client’ (i.e. the person or persons within the client-organisation) who will be charged with instructing advisors.
    • Privilege will only attach to documents and communications passing between a client and a qualified lawyer. Privilege will not arise when advice – even advice on legal matters – is taken from any other professional.
    • If too many people within an organisation are charged with instructing lawyers that could undermine any claim to privilege. It could also cause practical, case management difficulties if there are no clear reporting lines for the giving and receiving of instructions, documents and legal advice. It could also risk confidentiality breaches, which could, again, undermine privilege.
    • However, if too few people are authorised to instruct lawyers, that could cause practical difficulties if, for example, the key client contact(s) was/were absent, uncontactable, or perhaps left the business.
    • In line with one of the key underlying justifications for privilege, consider appointing specialist legal advisors to assist with any investigations and/or litigation. Appointing external lawyers can have the dual benefit of providing specialist expertise and strengthening any claim to privilege.
  • There may be circumstances in which dissemination of information, documents and/or advice relating to an investigation is necessary with an organisation beyond the defined ‘client’ circle.Where that cannot be avoided, the communication/document should be endorsed with wording which confirms that it is privileged and that provision of it does not amount to a waiver of privilege. Confirmation should also be obtained from the recipient(s) that the document will be held in confidence and not distributed any further.
  • Where it proves essential for a privileged document to be disclosed to any third party (for example an insurer or a potential purchaser), the third party should be asked to enter into a common interest privilege agreement, or to give an undertaking to ensure that the document will be held in confidence and to prevent waiver of privilege.
  • Non-lawyer employees, experts or advisors should not conduct the information-gathering, interviewing and/or reporting process in any investigation or [potential] litigation. It is possible, even likely, that any documents created by non-lawyers will be disclosable unless the fairly stringent requirements for litigation privilege can be met.
  • To maximise protection, any reports or other documents created by lawyers for clients should ideally interweave legal analysis and advice along with factual matters and they should be headed “privileged and confidential”.
  • Where lawyers attend meetings, any minutes should record the fact that lawyers are attending to give legal advice, and any advice given should be noted.
  • Finally, an important point to note is that you cannot make a document or communication privileged simply by saying it – whether or not privilege applies will, in each case, be a matter of fact and law. If privileged material (even material which may be subject to a confidentiality agreement) is disclosed to third parties such that any privilege is lost, then it might well be disclosable. If you are in any doubt, always seek specialist legal advice.

If you are faced with an investigation or any potential dispute and wish to proactively protect your important legal right of privilege, or if you are already involved in a matter and have any queries or concerns relating to privilege or possible inadvertent waiver, please do not hesitate to speak to Gwendoline Davies, Andrew Beck or any member of Walker Morris’ Litigation and Dispute Resolution department.

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[1] Property Alliance Group Limited v The Royal Bank of Scotland Plc [2015] EWHC 3187
[2] Litigation must be a real likelihood as opposed to a mere possibility, USA v Philip Morris Inc and British American Tobacco (Investments) Limited [2003] EWHC 3028 (Comm) and [2004] EWCA Civ 330. If a document has been created for more than one purpose, litigation must be the dominant purpose.
[3] In R (Prudential Plc  & Anor) v Special Commissioner of Income Tac & Anor [2013] UKSC 1 the Supreme Court confirmed that legal advice privilege does not extend beyond qualified members of the legal profession, even to other professionals such as accountants.
[4] Three Rivers District Council & Ors v Governor & Co of the Bank of England [2003] EWCA Civ 474
[5] Three Rivers District Council & Ors v Governor & Co of the Bank of England [2004] UKHL 48
[6] Property Alliance v RBS paras 25 and 28; Balabel v Air India [1988] Ch 317

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