By Sue Thackeray, Partner, Dispute Resolution and Karen Scott, Professional Support Lawyer, Dispute Resolution, Kingsley Napley LLP
Legal professional privilege (LPP) is a fundamental legal right and a complex area of English common law. LPP arises when a client seeks legal advice from a lawyer and permits certain relevant documents to be exempt from production to a third party or the court. LPP is important because it enables a client to obtain effective legal advice, which requires absolute openness between a client and his lawyer.
In the jurisdiction of England and Wales there are two main types of legal professional privilege:
Legal advice privilege
Legal advice privilege applies to advice in a legal context. It is broader than litigation privilege in that it applies to documents and/or communications related to contentious and non-contentious matters. It includes confidential communications between a lawyer and client for the purpose of giving or receiving legal advice, and covers all material forming part of the continuum of those communications. In Three Rivers District Council v Bank of England (2005)Lord Scott confirmed that legal advice relates to “the rights, liabilities, obligations or remedies of the client either under private law or under public law”.
Legal advice privilege only extends to communications between a lawyer and client, not third parties.
Litigation privilege protects confidential communications and/or documents created for the dominant purpose of an existing, pending or reasonably contemplated litigation. It covers confidential communications between a client or lawyer as well as communications with a third party. The nature of the litigation must be adversarial, rather than investigative. Communications with third parties to assist with the legal advice are not privileged unless there is existing or pending litigation.
The extent of legal professional privilege
The right to LPP belongs to the client and not to the lawyer. The lawyer has a duty to protect a client’s LPP and would be in breach of his professional duties if he waived privilege without his client’s informed consent.
If the client is part of a corporate entity, the client team needs to be carefully identified from the outset for the purpose of LPP. Not all employees in a company will be treated as the ’client’ for the purposes of privilege under English law. This will be limited to the individuals who obtain the legal advice and communicate directly with the lawyer.
The controversial decision in Three Rivers gave a narrow definition of the client and confirmed that privilege does not extend to the entire corporate entity. This narrow approach to the definition of ’client’ was confirmed in the recent RBS Rights Issue Litigation (2016)case, in which the court held that certain employees of the client bank were not the client for the purpose of legal advice privilege. The client consisted only of those employees authorised to seek and receive legal advice from the lawyer, and that legal advice privilege did not extend to information provided by employees and former employees to or for the purpose of being placed before a lawyer.
The court held that notes of interviews conducted by the bank and external lawyers, as part of the bank’s internal investigation into alleged financial misconduct relating to LIBOR, were not covered by legal advice privilege. Under English law, a lawyer’s working papers are privileged under the legal professional privilege doctrine on the basis that disclosure of them would give the recipient an indication of the legal advice provided. However, the factual evidence in this case did not demonstrate sufficiently that the internal notes were likely to give an indication of the legal advice provided to RBS.
The current English law, therefore, appears to differ from the US decision in Upjohn where the court extended the privilege to lower level employees. However, we note that the court in Upjohn only extended the privilege based upon specific facts. A more detailed description of this case can be found in last month’s US law privilege article.
Therefore, not all documents produced by employees and sent to the company’s lawyer will attract privilege. The definition of ‘client’ in the lawyer’s retainer letter should identify the primary individuals who will be seeking and obtaining the legal advice but also be wide enough to include changes of personnel.
Under English law, privilege applies to advice given by external lawyers and in-house lawyers acting in their capacity as lawyers. However, under EU law, advice given by in-house lawyers will not be privileged and will thus be disclosable in any European Commission competition investigation, following the decision in Akzo Nobel Chemicals Ltd v European Commission (2010).
Although in-house lawyers will be covered by privilege in proceedings in England and Wales, the scope of privilege is narrower for in-house lawyers. Privilege only extends to communications of in-house lawyers which relate to their legal function. It is therefore prudent for in-house lawyers to separate documents containing legal advice from those only relating to business or management functions.
It is also worth bearing in mind that in certain civil law jurisdictions, such as France, communications and/or documents exchanged between in-house lawyers and their corporate entities may not be covered by privilege.
Legal professional privilege extends only to communications between a client and lawyers. LPP does not apply to legal advice given by other professional advisers. In R (Prudential PLC) v Special Commissioner of Income Tax & Another (2013), tax advice provided by accountants was held to be disclosable to the HM Revenue & Customs.
How does legal professional privilege work?
Legal professional privilege protects oral or written evidence to which LPP applies from production to a third party or to the court.
Once privilege has been established, an absolute right to withhold the document arises and the court cannot be called upon to exercise any discretion.
No adverse inference may be drawn from a valid assertion of LPP.
In litigation, the litigant’s entitlement is to withhold inspection of privileged documents but pursuant to the Civil Procedure Rules, there is still an obligation to list the documents.
How can legal professional privilege be waived?
Privilege may be waived in a number of ways: by placing privileged material before the court, by loss of confidentiality in the material or by express or implied waiver. The waiver may be on a full or limited basis.
A party may decide to expressly waive privilege in a document or part of a document if it is helpful to its case. However, privilege should only be waived after careful consideration because the waiver may result in an obligation to disclose the whole document or other related privileged documents, known as collateral waiver. This ensures that the court has the ’full picture’ and avoids ’cherry picking’.
An implied waiver occurs when the client’s LPP is inadvertently waived. A privileged document which has ceased to be confidential can no longer be the subject of a claim for privilege. Confidentiality is a prerequisite for LPP and privilege will be lost if communications have entered the ‘public domain’, which is subject to interpretation by the court.
If a document has been disclosed to only a limited number of third parties on express terms that it was to remain confidential, then privilege will not necessarily be lost.
The Civil Procedure Rules on disclosure of documents provide that a party may inspect documents referred to in an affidavit, witness statement or expert report, unless the references to documents form part of the expert’s instructions. An expert is therefore required to clearly state the substance of his instructions in his expert report.
Tips on maintaining and protecting legal professional privilege
Kingsley Napley LLP is an internationally recognised law firm based in Central London with legal expertise in all areas of business and private life.
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