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Newsflash: Relief as legal privilege is restored

Businessman verifying the documents Print publication

06/09/2018

Walker Morris Part of the Risk SeriesWalker Morris Commercial Dispute Resolution and Regulatory experts Gwendoline Davies and Andrew Northage explain why the Court of Appeal’s landmark decision in Serious Fraud Office v Eurasian National Resources Corporation Limited and The Law Society [1]  is good news for businesses, in-house lawyers and the rule of law overall.

Concerns arising from High Court findings

As we explained in our earlier article, certain aspects of the High Court’s decision in 2017 gave rise to significant concerns among corporations and within the legal profession that the crucial principle of legal professional privilege – that clients should be able to candidly disclose matters and documents to their lawyers and to withhold documents from a court or third party without any adverse inferences being drawn – was being eroded.

In particular, the High Court had held that, in a criminal or regulatory investigation, the test as to whether litigation is in reasonable contemplation (and whether privilege protection therefore applies) would not necessarily be met where an investigation was contemplated, or even ongoing, because prosecution only occurs once evidence of any truth in the allegations is discovered. As such, the High Court considered that only a prosecution – not an investigation – would amount to ‘litigation’ for privilege purposes.

The High Court had also held that documents created with a view to investigating, or even obtaining advice for the purpose of avoiding or settling criminal or civil litigation or investigation, would not pass the requisite test for privilege.

The potential implications were so significant that The Law Society intervened in the appeal on behalf of the legal profession.

Court of Appeal victory for privilege

On 5 September 2018 the Court of Appeal overturned the High Court’s findings, reinstating the law of privilege so that in-house advice prepared prior to court proceedings, and discussions and documents prepared in connection with the avoidance or settlement of proceedings are protected.

Christina Blacklaws, president of The Law Society, said clients can now be “far more confident that discussions with their solicitors will remain confidential”. She also commented: “The rule of law depends on all parties being able to seek confidential legal advice without fear of disclosure” and “a lack of privilege in these cases could have made it more difficult to uncover wrongdoing, as organisations might have been less willing to investigate issues to their full extent without the protection afforded by legal professional privilege.”

Ripe for further reform?

The Court of Appeal was not required, in this case, to decide the long-standing controversy arising from the Three Rivers (No. 5) [2] decision that the ‘client’ entitled to claim privilege can only be only those individuals actually charged with instructing lawyers – a very narrow definition.  However, in-house lawyers may be interested to note that the court did, nevertheless, confirm that it saw force in departing from Three Rivers and would have done so.  That, along with the fact that the SFO is understood to be considering an appeal to the Supreme Court, indicates that the law in this important area may be ripe for reform.

Walker Morris will continue to monitor and report on key developments.

Practical advice and tips for in-house lawyers

For practical advice about legal professional privilege, please see our more detailed earlier briefing and the privilege chapter from our upcoming Little Green Book of Dispute Resolution.

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[1] [2018] EWCA Civ 2006
[2] Three Rivers District Council & Ors v Governor & Co of the Bank of England [2003] EWCA Civ 474

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