One of main principles of the lawyer and client relationship is that clients have the right never to have information which they provide their lawyer and the advice received disclosed without their consent. Without this assurance, clients would not provide all the facts which would allow them to receive proper legal advice.
The above is the basis of the doctrine of Legal Professional Privilege. This goes beyond duties of confidentiality owed by all professional advisors to their clients and provides particular protection to the client and solicitor relationship.
What is Legal Professional Privilege?
In the context of judicial proceedings, or certain regulatory investigations (for example, those conducted by the FSA or HMRC) all relevant communications, even if confidential and with a professional advisor, must be disclosed to the client’s opponent in litigation/the regulatory body and can be inspected by them unless they are “privileged”, in which case the client has an absolute right not to have them inspected at all by any third party. No adverse inference can be drawn by the courts if a client asserts the right to legal privilege.
One of the most important ways communications are privileged is if the rules in respect of Legal Professional Privilege (“LPP”) apply. There are two types of LPP:
- Legal Advice Privilege – Where communications are confidential and are exchanged between lawyers and clients for the purposes of giving or receiving legal advice.
- Litigation Privilege – Where communications are confidential and are exchanged between the lawyer or the client, or between either the lawyer or the client and a third party, for the dominant purpose of litigation which is existing, pending or reasonably contemplated.
How these definitions work in practice is not straightforward. Common problems which clients should be aware of in respect of Legal Advice and Litigation Privilege, and practical steps to adopt to address them, are as follows.
CONFIDENTIALITY
In respect of both Legal Advice Privilege and Litigation Privilege the communications have to be confidential. If a privileged document is disclosed to the world at large it ceases to be confidential and it will no longer be privileged.
Solutions:
- Mark documents made in respect of legal advice or litigation as “confidential and legally privileged – do not circulate”.
- Circulate documents made in respect of legal advice or litigation on a need to know basis only.
- Avoid making unnecessary copies or forwarding on e-mails including legal advice.
- Where documents are disclosed, particularly to third parties, do so under a non-disclosure agreement.
LEGAL ADVICE PRIVILEGE.
Particular problems in respect of Legal Advice privilege are:
Legal Advice not given by Lawyers
Legal Advice Privilege only applies to communications between lawyers (or those acting under the direction or supervision of qualified lawyers) and clients. It does not apply to legal advice given by other professionals. This can only be protected by Litigation Privilege.
This means that confidential (and perhaps unfavourable) advice provided by professionals who are not lawyers, at a time before matters become litigious, will have to disclosed if a legal dispute does arise in future, to the detriment of the client.
This is a particular problem for accountants and other professional advising on tax issues. Where such advice is not given in the context of litigation then it may be disclosable if a dispute subsequently arises with HMRC, which is far from ideal.
Solutions
- Use lawyers for legal advice! In respect of tax advice, use a firm (such as Gannons) which has lawyers that are dual qualified, both as lawyers and tax advisors.
- If other professional advisors are involved, arrange for them to give legal guidance orally to your lawyers. Subsequent written communications between the lawyer and client may be privileged.
Who’s the Client?
The definition of who a lawyer’s client is, is often narrower than appreciated. For organisations and companies, it is only those who have direct and particular responsibility for instructing the lawyer. This cannot be all the employees within the organisation.
If documents are prepared by an employee who is not the client for the purposes of obtaining legal advice, such as briefing notes or letter of instruction or the results of investigations, they will not be covered by legal advice privilege (although they may be covered by litigation privilege).
Solutions
• Define and record who the client is (don’t try and include everybody).
• Make sure that only defined clients are responsible for instructing the lawyer.
• Where the client needs assistance in carrying out an investigation consider using lawyers. Documentation generated can be protected by legal advice privilege, even if litigation privilege doesn’t apply (see below).
Are the Communications for the Purposes of Legal Advice?
For legal advice privilege to apply communications have to be made for the purposes of giving or receiving legal advice.
Communications about legal advice, such as comments on the merits of the advice or on next steps, are not privileged, nor are agreements and legal instruments generated as a result of the advice given.
Solutions
- Mark communications privileged and confidential and for the purposes of obtaining legal advice.
- Avoid written records of comments on or analysis of legal advice (e.g. including making notes on letters of legal advice).
Not all Advice given by Lawyers is Legal Advice.
To be legally privileged the advice has to be in the context of a client’s legal rights and obligations, liabilities and remedies. Advice on presentational, strategic or commercial issues is not privileged.
Solution
- Lawyers should be wary about exceeding their remit – always advising in a legal context, rather than providing stand-alone advice on non-legal matters.
LITIGATION PRIVILEGE
Litigation Privilege has the advantage, as compared to Legal Advice Privilege, of applying to communications between the lawyer or client and third parties (including employees of the client). However, particular problems applying to Litigation Privilege (and practical steps to deal with them) are as follows.
It only applies to Litigation
For litigation privilege to apply the purpose of the communication has to be in relation to adversarial proceedings.
This won’t include internal disciplinary or grievance proceedings or investigations conducted in respect of such proceedings.
Solution
- Consider engaging lawyers to conduct investigations in respect of non-litigious matters, taking advantage of Legal Advice Privilege.
Has Litigation started or is it Contemplated?
The dominant purpose of the communication has to be actual, pending or reasonably contemplated litigation.
“Reasonably contemplated” mean the real likelihood of a claim rather than the possibility of a claim. A mere threat of litigation may not be sufficient.
This can cause problems, particularly with regard to investigations. Where an incident has occurred it may only be discovered during the course of the investigation that litigation is likely. Information that gave rise to that conclusion (collected before litigation was reasonably contemplated) may not be protected by litigation privilege.
Solutions
- As soon as litigation is contemplated, mark documentation privileged and confidential, recording the reason for claiming privilege.
- Consider engaging lawyers to carry out pre-litigation investigations to take advantage of Legal Advice Privilege.
What’s the Dominant Purpose?
Even if the communication is in the context of litigation, for litigation privilege to apply it still has to be shown that the dominant purpose of the communication is litigation. Problems arise where communications are for a mixed purpose.
For example, a report prepared to establish whether problem loans can be recovered and so the trading position of the company is for a dual purpose. To the extent that the dominant rationale of the report is to establish the trading position of the company (which will depend upon the facts) the report won’t be protected by litigation privilege.
Solutions
- Consider the purpose (or purposes) of the report and record it, asserting that its purpose is contemplated litigation.
- Where there are multiple purposes, consider a separate report in respect of prospective litigation.
In Summary
The rules governing privilege are of real complexity and we have only addressed some of the main issues in respect of legal professional privilege. There are other instances where clients can claim privilege (for example in respect of without prejudice correspondence) each within their own rules and complexities. What is clear, however, is that where there is a legal dispute or the material prospect of one occurring, it best to get your lawyers involved at an early juncture to best protect your position against your opponents and, where possible, obtain legal advice from suitably qualified lawyers, not other professionals.