Legal Advice Privilege

25 November 2004

Catherine Milton

What is Legal Advice Privilege?

Good question.It is a form of legal privilege intended to preserve the confidential nature of the solicitor/client relationship by protecting from subsequent disclosure communications passing between the solicitor and his client.

It is to be distinguished from litigation privilege which applies when adversarial proceedings are contemplated or underway and which, critically, additionally protects from disclosure certain communications between the solicitor and third parties.

What is a communication passing between a solicitor and his client?

It has long been taken for granted that legal advice privilege could protect a wide variety of “documents” created by the “client” for the purpose of obtaining legal advice from the solicitor. Moreover, in the commercial context, the assumption was that it mattered not whether those documents were created by the person actually corresponding with the solicitor or by some other employee or office holder in the organisation. These assumptions have recently proved to be ill-founded.

Why is it topical?

The precise nature of the requisite “chain of communication” between the “client” and the solicitor came under scrutiny last year by the Court of Appeal in course of the Three Rivers litigation. The particular facts of that case highlighted considerable uncertainty as to what type of documents could be said to constitute “communications between a client and his solicitor” sufficient to attract legal advice privilege.

It had been hoped that the House of Lords would take the opportunity to clarify the position in its recent judgment on another aspect of legal advice privilege (see Privilege Revisited – House of Lords gives its reasons in the Three Rivers Case). However, as the issue is extremely complex and was not strictly in issue before the court (since leave to appeal from the Court of Appeal decision had been refused), the House of Lords this month declined to comment.

What, then, is the current state of the law?

The Court of Appeal judgment (known as Three Rivers No. 5) – which represents the current state of the law – made it clear that legal advice privilege does not apply to documents communicated to a client or his solicitor purely for advice to be taken upon them but only to actual communications passing between that client and his solicitors (whether or not through an intermediary) and documents evidencing such communications.

The distinction is not easy. However, the important message from the Court of Appeal’s judgment is that a document prepared by an employee or office holder, for instance, to record the facts or sequence of events or to record that individual’s recollection of events will not be privileged:

  • even if that document is prepared with the intention that it be sent to lawyers;
  • even if it is sent to lawyers; and/or
  • even if it is prepared for the dominant purpose of being shown to lawyers.

When is this most likely to cause a problem?

The Court of Appeal judgment highlights the need for great care to be taken in producing documents of any nature whenever a company is faced with an inquiry or inspection which is not adversarial. This might, for instance, include a visit by Serious Fraud Office, the Financial Services Authority, the Inland Revenue or the Department of Trade and Industry or even, perhaps, an internal audit or due diligence exercise. If any employee, of whatever seniority, prepares a document which, for instance, records relevant events, recites a chronology or expresses opinion or recollection it should now be considered discloseable.

What steps can I take?

The only way to guarantee that such documents will be protected from disclosure is not to write them in the first place. Obviously, this advice is impractical and entirely artificial in a commercial setting but it should nevertheless ideally form the basis of any internal policy. Think first, write second is the message.If there is something potentially damaging to say, consider not recording it in writing.

What about in-house or external lawyers?

One way to “buy” protection is, at the earliest opportunity, i.e. upon the first point of contact by the investigating authority or upon the relevant facts first coming to light, to instruct a lawyer – internal or external – to advise on the company’s position. The lawyer can then meet directly with the relevant individuals and record the factual information presented to him orally in a document which should attract legal advice privilege.

If an in-house lawyer is used in the first instance and a decision is subsequently taken to instruct external lawyers, communications between the in-house and external lawyer should remain privileged. The in-house lawyer should not, however, be used merely as a post box. His/her involvement should be real.

Would it help to identify the “client”?

Another ploy may be to identify a group of individual employees (comprising those who were involved in the relevant events or who have the relevant information as well as managers and other office holders critical to the decision making process) to act as “the client” for the purpose of obtaining legal advice on the relevant issue. The idea would be that a document prepared by a member of this group and sent to a lawyer – internal or external – would constitute a communication between the client and the solicitor which would form part of the necessary exchange of information for the giving of legal advice.

The group should be sufficiently wide and be clearly defined and care should be taken to ensure that no relevant documents are prepared by individuals outside the “client” group.

Recognise, however, that such a structure is artificial and may not achieve the desired aim. Although it could be of great effect if managed well, a document prepared by an individual identified as the “client” for the purpose of obtaining a particular piece of legal advice may nevertheless still be discloseable if it does not truly constitute a communication between the client and his solicitor. It is the nature of the document which is key - not the designated status of the employee.

For further information or advice, please contact Catherine Milton, partner, dispute resolution on 020 7415 6147 or by e-mail catherine.milton@twobirds.com

Checklist for protecting sensitive information during investigative proceedings

  • keep written communications to minimum; avoid wide dissemination
  • mark all correspondence "strictly confidential and for the purposes of obtaining legal advice”
  • instruct in-house or external lawyers at the first opportunity and allow them to carry out the investigation
  • ensure that legal retainer letters (including instructions to in-house lawyers) clearly identity which individuals comprise the “client” for relevant purposes
  • ensure that witness statements are taken by the lawyers responsible for providing legal advice on the matter in hand
  • if it is unfeasible or undesirable for lawyers to perform the fact-gathering exercise in person, have the “client” employees gather the relevant information orally and record it only in a letter addressed directly to the legal advisors which itself seeks legal advice
  • keep all legal advice received confidential and only disseminate it on a strict “need to know” basis. Ideally the legal advice should be communicated orally or, if in documentary form, in its entirety. Executive summaries written by non-legal employees could loose the protection which the advice would otherwise attract.
  • if producing minutes for Board or other meetings during which legal advice is discussed, attach a copy of the legal advice by reference and do not attempt to record its contents in the minutes
  • if in doubt, don’t write it down