Source: https://communities.lawsociety.org.uk/civil-litigation-features-and-comment/the-long-read-legal-professional-privilege-a-guide/6000999.article
Timestamp: 2020-08-08 03:44:42
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The long read: legal professional privilege – a guide | Feature | Communities - The Law Society
Legal professional privilege – a guide
By Andrew Wanambwa2020-05-05T08:14:00+01:00
Legal professional privilege is a fundamental part of English law. Andrew Wanambwa from Lewis Silkin LLP provides an overview, practical steps to preserve privilege and a handy flowchart.
The law of privilege allows parties to maintain confidentiality in their legal communications. In particular, parties may rely on the law of privilege to refuse to produce documents or answer questions from third parties.
Legal professional privilege has two parts:
Legal advice privilege, which is available in contentious and non-contentious situations, concerns confidential communications between a lawyer and client for the dominant purpose of giving / receiving legal advice. Each aspect is considered below.
Confidentiality is the touchstone of legal advice and litigation privilege. Documents which are not confidential will not be privileged. Confidentiality may therefore be regarded as a necessary (but not sufficient) condition for privilege to exist.
Communications between lawyers and their clients will ordinarily be confidential, given that a lawyer owes a duty of confidence to their client.
Communications include direct lawyer / client communication such as letters, emails, telephone calls and meetings. But the concept of communication goes further and captures documents intended to be communicated between a lawyer / client which were never actually sent, as well as documents evidencing lawyer / client communications (such as an attendance note of oral advice).
In order for legal advice privilege to apply there must be a relevant communication between a lawyer and a client. “Lawyer” includes not just members of the Bar and the Law Society, but also properly qualified legal executives, licensed conveyancers and foreign lawyers. Privilege can also extend to non-qualified employees (such as trainees and clerks) acting under the supervision of a qualified lawyer. Privilege will not, however, extend to other professionals (such as accountants) who advise on legal matters.
There is no difference between in-house and private practice lawyers, save that privilege will not apply to in-house lawyers in the context of European competition investigations. Nor will privilege apply if a lawyer (whether in private practice or in-house) is acting, not as the client’s legal adviser, but as the client’s “man of business” or otherwise acting outside his capacity as a lawyer.
Legal professional privilege belongs to the client.
Where an individual instructs a lawyer they are the client. It is more difficult to identify the “client”, however, where a large corporate entity instructs a lawyer. In Three Rivers No 5 [2003] EWCA Civ 474, the Court of Appeal held that neither the corporate entity itself nor the employees per se will be the “client” when assessing matters of privilege. Instead, only those within the corporate entity who are authorised to instruct the lawyer, and seek / receive legal advice, are to be treated as the client. Therefore only communications between a lawyer and that group of authorised individuals will be cloaked in privilege.
The practical impact of the Three Rivers (No 5) decision is that communications passing between a lawyer and “non-client” employees of the instructing corporate entity will not benefit from legal advice privilege. Such communications will not be privileged even if the corporate entity specifically authorises a non-client employee to communicate with the lawyer. For example, if litigation privilege does not apply (see below) then internal investigatory interviews between lawyers and “non-client” employees will not attract privilege.
In the case of Director of theSerious Fraud Office (SFO) v Eurasian Natural Resources Corporation Limited (ENRC) [2018] EWCA Civ 2006, the Court of Appeal was pressed with the argument that Three Rivers (No 5) is wrong. The Court of Appeal indicated that it could see “much force” in the argument and expressed concern that the case made it more difficult for large corporate entities to claim legal advice privilege. The Court of Appeal also expressed unease about the fact that some other commonwealth jurisdictions had not followed the case. Notwithstanding its reservations, however, the Court of Appeal did not overturn Three Rivers (No 5).
In R (on the application of Jet2.com) v Civil Aviation Authority [2020] EWCA Civ 35, the Court of Appeal also doubted the analysis and conclusion in Three Rivers (No 5) but did not overturn the case.
Three Rivers (No 5) therefore remains good law until such time as the Supreme Court revisits this issue.
It should also be noted that legal advice privilege can apply where a client uses an agent to communicate with a lawyer. However, the definition of an “agent” in this context is narrow and great care should be exercised when a client chooses to communicate with their lawyer via an agent.
Legal advice includes telling the client the law. But it is much wider than that. Privilege attaches to legal advice which relates to the rights, liabilities, obligations or remedies of the client. Privilege is also available for advice about what should prudently and sensibly be done in the relevant legal context. For example, in Three Rivers (No 6) [2004] UKHL 4 it was held that privilege could apply to advice relating to the content and presentation of a statement to be made to a public inquiry.
Privilege also applies to all material forming part of the continuum of lawyer / client communications, even if the communications do not expressly seek or convey legal advice.
In Balabel v Air India [1988] Ch 317 it was held that the test is whether the relevant communications “are part of that necessary exchange of information of which the object is the giving of legal advice as and when appropriate”.
In Jet2, the Court of Appeal found (although the relevant authorities did not speak with one voice) that case law supported the proposition that someone claiming legal advice privilege must show that the communication’s dominant purpose was to give or receive legal advice.
This means that it is not enough simply to show that a purpose of a communication between a lawyer and their client involved giving or receiving legal advice, you must show that this was the dominant purpose of the communication. If a document has been produced for multiple purposes it is necessary to identify the dominant purpose. If there were two reasons for the creation of a document, and both reasons carried equal weight, then the “dominant purpose” test will not be met.
This raises particular difficulties in multiple addressee emails, where lawyers and non-lawyers are sent an email that has both commercial and legal purposes. In these circumstances the purpose(s) of the communication need to be identified. If the dominant purpose is to obtain the commercial views of the non-lawyer addressees, then the communication will not be privileged, even if a subsidiary purpose is simultaneously to obtain legal advice from the lawyer addressee(s).
Even if a multi-addressee email was not sent for the dominant purpose of legal advice, however, it will nevertheless be treated as privileged where it might realistically disclose the content of legal advice.
Litigation privilege is based on the idea that parties should be free in adversarial proceedings to prepare their case as fully as possible without the risk that their opponent will be able to recover the material generated by their preparations.
Litigation privilege applies to confidential communications between parties, their lawyers and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation when, at the time of the communication in question, the following conditions are satisfied:
the communications are made with the sole or dominant purpose of conducting that anticipated litigation, and
It will be appreciated from the above points that litigation privilege is wider in its scope than legal advice privilege in certain key respects.
can apply where communications are between a client (or his lawyer) and a third party, and
will apply even when legal advice is not sought or received.
The above concerns about communications with non-client employees, and the “identity” of corporate clients, therefore do not arise if litigation privilege can be claimed. Communications with non-clients will be privileged provided the above tests are met.
Each part of the test for litigation privilege is explained briefly below.
In the context of legal advice privilege, it will often be a relatively straightforward matter to show that communications are confidential (particularly given that a lawyer owes a duty of confidence to his client).
In the context of litigation privilege, which often involves communications with third parties, documents will be confidential if they are not properly available for use. Communications between clients / lawyers and third parties (such as experts and witnesses) which take place in the context of preparations for litigation will invariably have the necessary quality of confidence.
Litigation privilege is only triggered once proceedings are in progress or in contemplation. Given the rationale behind litigation privilege, the relevant proceedings must be adversarial in nature.
Claims before the English courts or arbitration conducted in accordance with English procedural law will be deemed to be adversarial and capable of generating litigation privilege.
Litigation in progress / contemplation
Litigation privilege cannot be claimed if proceedings do not exist or are not in contemplation. Therefore a key question is this: when will litigation be “in contemplation”? The answer is that a mere apprehension of proceedings will not be enough to generate litigation privilege. Although there does not need to be a greater than 50% chance of adversarial proceedings, litigation must nevertheless be “reasonably in prospect” in order to claim litigation privilege. The person claiming litigation privilege must show that he was aware of circumstances which rendered litigation between himself and particular persons a real likelihood rather than a mere possibility.
In SFO v ENRC the court considered when litigation would be reasonably in prospect in the context of a criminal investigation. The case was heard at first instance and on appeal. The High Court and Court of Appeal, however, reached diametrically opposed conclusions.
In the High Court it was held that a criminal investigation by the SFO does not constitute adversarial proceedings. It was held that such an investigation was merely a preliminary step and that, although such an investigation might create a general apprehension of future litigation, that was insufficient to justify a claim for litigation privilege. The High Court explained its approach to privilege by reference to the way in which criminal proceedings are commenced and stated that:
Criminal proceedings cannot be started unless and until the prosecutor is satisfied that there is a sufficient evidential basis for prosecution and the “public interest” test is met.
Litigation privilege therefore cannot be claimed (that is, criminal prosecution cannot reasonably be contemplated) until the proposed defendant knows enough to appreciate that a prosecutor is likely to unearth enough evidence to stand a good chance of securing a criminal conviction.
In other words, the High Court found that litigation in criminal proceedings cannot be claimed by a defendant until such time as the defendant is aware that prosecution (as opposed to mere investigation) is reasonably in prospect.
The Court of Appeal disagreed with the High Court and found the distinction between civil and criminal proceedings to be “illusory”. The Court of Appeal instead found that when determining whether litigation is reasonably in contemplation, “[e]ach case turns on its own facts and will be judged in light of the facts as a whole”. In the context of criminal proceedings, the fact that a formal investigation has not commenced will be part of the factual matrix, but will not determine whether litigation is reasonably in contemplation.
This Court of Appeal decision, which brings the law on litigation privilege in a criminal context back into line with the position on civil claims, has been widely welcomed. Corporations are once again able to carry out internal investigations in the context of criminal proceedings safe in the knowledge that (subject to the ordinary requirements of litigation privilege), documents produced as a result of those investigations will be protected from disclosure.
In order to attract litigation privilege, it must also be shown that the dominant purpose of the relevant communication or document was to obtain advice / information in connection with the litigation, or to conduct or assist in the litigation.
If a document has been produced for multiple purposes it is necessary to identify the dominant purpose. As mentioned above, if there were two reasons for the creation of a document, and both reasons carried equal weight, then the “dominant purpose” test will not be met.
The court will examine all circumstances to determine the subjective purpose of the person claiming privilege over relevant evidence.
At first instance in SFO v ENRC, it was suggested that if a party prepared a document with the ultimate intention of showing that document to the opposing party or seeking a settlement of proceedings (rather than conducting contemplated adversarial proceedings) it would be difficult to claim litigation privilege. The Court of Appeal in SFO v ENRC, however, doubted the correctness of that approach. Instead, the Court of Appeal found that in both the civil and the criminal context, legal advice given so as to head off, avoid or even settle reasonably contemplated proceedings is as much protected by litigation privilege as advice given for the purpose of resisting or defending such contemplated proceedings. The same reasoning applied to documents. The Court of Appeal made it clear that the exercise of determining dominant purpose in each case is a determination of fact, to be undertaken using a realistic, indeed commercial, view of the available evidence.
Finally, it must be shown that the relevant evidence over which litigation privilege is claimed came into existence for the sole or dominant purpose of either giving or getting legal advice with regard to the litigation or collecting evidence for use in the litigation. This condition is connected with the idea that parties must be allowed to take advice, collect evidence and prepare their case as fully as possible without the risk that their opponent will be able to inspect such preparatory material.
In WH Holding Ltd v E20 Stadium LLP, the key issue was whether litigation privilege extended to documents which did not seek advice or information for the purpose of conducting litigation
If this condition cannot be met then litigation privilege will not be available. For example, in the case of WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652 the parties were engaged in a dispute. During a period when litigation was in reasonable contemplation the board members of E20 Stadium LLP (E20) exchanged emails which discussed commercial proposals for the settlement of the dispute, that is, members of the board were emailing each other to discuss settlement (the “settlement emails”). During the course of later proceedings WH Holding sought disclosure of the internal E20 settlement emails. The key issue in the case was whether litigation privilege extended to documents which did not seek advice or information for the purpose of conducting litigation.
The Court of Appeal held that the settlement emails did not attract litigation privilege because they did not involve E20 seeking advice or information with regard to the litigation or collecting evidence for use in the litigation. Importantly, the Court of Appeal stated that it could not see any justification for covering all internal corporate communications with a blanket of litigation privilege.
The ruling in this case confirms that litigation privilege cannot be claimed over communications simply because they concern the conduct of litigation generally. It should be noted, however, that even where material is not strictly concerned with a party seeking advice or information with regard to the litigation or collecting evidence for use in the litigation, privilege may nevertheless be claimed where the document contains relevant advice or information which “cannot be disentangled”, or the document would “otherwise reveal the nature of such advice or information”. It should also be remembered that even if a document cannot be brought within the scope of litigation privilege, it may still be covered by legal advice privilege.
The general rule is “once privileged, always privileged”. This means that once a communication becomes privileged, the party to whom the privilege belongs may continue to claim privilege over that communication in different proceedings or investigations. This right continues indefinitely, unless the privilege is lost.
The main ways in which privilege may be lost are as follows:
mistaken disclosure.
If a document loses its confidential nature it will cease to be privileged. However, just because a document has been shared with third parties does not mean that confidentiality or privilege is automatically lost. In Gotha City v Sotheby’s ([1998] 1 WLR 114) it was said that: “If A shows a privileged document to his six best friends, he will not be able to assert privilege if one of those friends sues him because the document is not confidential as between him and the friend. But the fact six other people have seen it does not prevent him claiming privilege as against the rest of the world.”
Given the above decision, parties who wish to share a document while maintaining its confidential / privileged nature can (in principle) do so by sharing it with a limited number of third parties. It is usual in such circumstances for privileged material to be circulated only to a limited number of named individuals, for a specific purpose and on confidential terms which are agreed and documented. In these circumstances privilege will be lost as against the recipients of the document but can nevertheless be maintained against the rest of the world.
Sometimes a party will choose to reveal, during the course of proceedings, a document (or part of a document) which is otherwise privileged. In such circumstances there is a risk that the party might be forced to disclose the whole document or other connected privileged documents.
The key point is that if a person deploys material which would otherwise be privileged, the other party and the court must have the opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. Without full disclosure of the relevant privileged material, there is a risk that partial evidence could be “plucked out of context”, resulting in a risk of injustice through its real weight or meaning being misunderstood. As a matter of fairness, a party is therefore not entitled to “cherry pick” the privileged material it deploys in court – a party to whom privileged information is provided is entitled to have the full contents of what has been supplied in order to see that cherry picking is not taking place.
In order to engage the above principle (known as collateral waiver) the disclosing party must have done more than simply refer to the fact that privileged material or advice exists. Collateral waiver occurs in circumstances where the disclosing party crosses the line and relies upon or deploys the privileged material in connection with the substantive merits of the claim or defence. In those circumstances it is considered just that the party to whom privileged material is supplied should be able to invoke the principle of collateral waiver and see all relevant material.
Sometimes a party will not choose to reveal privileged material, but will do so by mistake. In such cases the starting point is that confidentiality has been lost and the recipient of the material is entitled to assume that privilege has been voluntarily waived. It will generally be too late (following disclosure) to claim privilege or attempt to make a retrospective claim for privilege.
However, the court does have jurisdiction to intervene to prevent the use of privileged documents which have been made available by mistake. The court may grant an injunction to prevent use of the material if it has been made available as a result of an “obvious mistake”. A mistake is likely to be held to be obvious where the documents are received by a solicitor and:
the solicitor appreciates that the document has been disclosed by mistake, or
it would be obvious to a reasonable solicitor in his position that a mistake has been made.
Although it is not conclusive, if a solicitor receives privileged material and, following detailed consideration, concludes that the documents have been disclosed otherwise than by mistake that will militate against the grant of an injunction. In Rawlinson and Hunter Trustees S.A., Vincent Tchenguiz and others v Director of the Serious Fraud Office ([2014] EWCA Civ 1129) it was held that “once it is accepted that the person who inspected a document did not realise that it had been disclosed by mistake, despite being a qualified lawyer, it is a strong thing for the judge to hold that the mistake was obvious.”
In other words, it will be more difficult to obtain an injunction if the receiving solicitor has actively considered the matter and concluded that privileged material has been disclosed otherwise than by mistake.
Privilege will not apply in certain exceptional circumstances, where:
the “iniquity exception” applies, and
legislation limits the application of privilege (the “statutory override” exception).
As regards the iniquity exception, the rule is that legal professional privilege does not apply to:
documents which are in themselves part of a criminal endeavour, or
communications made in order to get advice for the purpose of carrying out fraud.
The “iniquity exception” applies whether or not the solicitor was ignorant of the fact that he was being used for the iniquitous purpose. No privilege applies because there is no public interest in the protection of such evidence.
In connection with the statutory override exception, the rule is that privilege can be modified or abrogated, but only in circumstances where the legislation in question clearly achieves that effect. An intention to override privilege must be expressly stated in the legislation or appear by necessary implication
In Sports Direct International Plc v The Financial Reporting Council ([2020] EWCA Civ 177), the Financial Reporting Council (FRC) argued that a further exception to privilege applied. In particular, the FRC argued that where a regulator has a statutory power to request documents then either:
there is no infringement of privilege when documents are handed over in response to a request made under that power (‘the no infringement exception’), or
any infringement of privilege is technical only.
The Court of Appeal rejected the FRC’s arguments, holding that neither the no-infringement principle nor the technical-infringement principle is good law. The only question in such regulatory matters is whether the relevant statute contains a recognised statutory override. In theSports Direct case the legislation upon which the FRC relied contained no relevant override provisions and the FRC was not entitled to obtain privileged material.
Preserving privilege – practical steps
There are a number of steps that can be taken to preserve and protect privilege. It is impossible to set out every step in this guide, and the steps necessary to preserve privilege will depend on each case, but the following are some practical matters for clients to take into account when handling privileged material.
Conducting interviews in order to gather evidence, especially in the context of criminal or regulatory proceedings, raises complex issues relating to privilege.
If a corporate entity is in the early stages of an investigation, and litigation privilege cannot be claimed, then interviews with third parties or employees who are not designated as “the client” will be unlikely to attract legal advice privilege.
Therefore it is usually prudent to create a non-exhaustive or flexible list of the limited number of employees who are deemed to be the “client” for privilege purposes, and to update the list as matters progress. When conducting interviews with non-clients before litigation privilege can be claimed, some clients choose to take full interview notes in the knowledge they will be disclosable at a later stage. However, the following practical options can be considered by way of alternative to creating full interview notes.
Take no notes of witness interviews
This option should be adopted with some caution. In certain scenarios it is necessary for clients to explain their decision-making process and demonstrate that a discretion has been exercised on a rational basis. The absence of any interview notes or other evidence showing how a decision was taken can be problematic. A judge might well have difficulty deciding whether a decision was taken rationally unless he has seen evidence of what was actually taken into account.
Partial notes selected by a lawyer
Producing a note which only records parts of the interview selected by a lawyer might allow the client to claim that the note is privileged because it tends to betray the trend of advice being given by the lawyer.
Record the lawyer’s view
Produce a note which records the lawyer’s views on the evidence. If the note contains a genuine mixture of selected items of evidence and the lawyer’s views on that evidence there could be an increased chance of claiming legal advice privilege.
It is also prudent to ensure confidentiality by informing the interviewee at the beginning that:
the interview is confidential and privileged
privilege belongs to the company and can only be waived by the company
they may not disclose the contents of the interview to any third party.
Finally, a careful watch should be kept on when it can fairly be said that litigation is in reasonable contemplation. Once litigation privilege can be claimed then interviews with ordinary employees and third parties can be privileged. In the case of Bilta (UK) Ltd v RBS and another a “watershed” moment occurred and the client instructed external lawyers specifically to obtain advice in respect of a likely dispute. The instruction of external lawyers was cited as evidence that the client’s dominant purpose in generating evidence was for the purpose of conducting litigation and that litigation privilege could be claimed from that point onwards.
Privilege flowchart
Source: Lewis Silkin
The original version of this guide was produced by Andrew Wanambwa and the dispute resolution team at Lewis Silkin and is reproduced with kind permission.