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First published in the 1LoD Global Benchmarking Survey & Annual Report 2019
Privilege is a fundamental legal right. It allows individuals and corporate entities to resist disclosure of confidential and sensitive material. There are strict rules on when privilege applies under English law: not all communications with lawyers and other advisers will be protected. Privilege can be lost by circulating privileged material without adequate safeguards.
Privilege is a fundamental legal right and a powerful legal tool under English law, granting individuals and corporate entities the right to resist disclosure of confidential and potentially sensitive material in the context of arbitration, litigation and investigations. There are two main types of privilege under English law: legal advice privilege and litigation privilege. There are strict rules for when each type applies.
Whether a document is privileged is a question of substance rather than form: simply marking documents as privileged and confidential, or forwarding them to a lawyer, cannot make a non-privileged document into a privileged one. The rules and definitions set out below clarify when privilege will apply as a matter of English law. It should not be assumed that all communications with lawyers and other non-legal advisers will be protected from disclosure. While privileged documents can be circulated under English law, this must be done with the utmost care. Confidentiality is key, and privilege can be lost by circulating privileged material in the absence of adequate safeguards.
Legal advice privilege protects (written or oral) confidential communications between a lawyer and a client for the purpose of giving or receiving legal advice. Legal advice privilege also protects documents which reflect such a communication.
There must be a lawyer in the communication for legal advice privilege to apply. While this is widely defined to include solicitors, barristers and foreign lawyers admitted to practice in their home jurisdiction, the term ‘lawyer’ does not extend to other professionals such as accountants, even where they are purporting to provide legal advice. Where a lawyer is not involved, legal advice privilege will not apply.
“The loss of confidentiality will lead to a loss of privilege.”
English law does not draw any distinction between in-house lawyers and lawyers in private practice. The European Court of Justice, however, has held that communications between a company and its in-house lawyers in the context of EU competition investigations are not protected by legal advice privilege; this is on the basis that in-house lawyers, unlike external lawyers, are not deemed sufficiently independent.
Only communications between a lawyer and a client will be protected by legal advice privilege. This does not mean that all communications which the lawyer has with any of the employees at the corporate client will necessarily be privileged. The term ‘client’ is narrowly construed under English law to refer only to individuals who, as a matter of fact, are authorized to give instructions to and receive advice from the lawyer concerning the issue in hand.
Under litigation privilege, communications between lawyers and employees who are not part of the corporate client group may be privileged under English law. This is explained below.
As a general rule, for legal advice privilege to apply under English law, there must be a communication between a lawyer and a client, or a document which reflects such a communication.
Preparatory material of the client which is not communicated to the lawyer may not be privileged. By contrast, a lawyer’s preparatory material is privileged. The general rule is that if a lawyer commits to paper, during the course of her retainer, matters which she knows only as a consequence of the professional relationship with her client, those papers will be privileged even if they are not sent to the client.
Legal advice privilege under English law arises in the context of giving or receiving legal advice. The term ‘legal advice’ is widely construed to cover advice given in ‘a relevant legal context’: this includes advice on how to present a case to an inquiry but may not cover situations where the lawyer is acting as general business adviser and advising on, for example, investment or finance policy or other business matters. This is where difficulties can sometimes arise in practice when assessing whether or not a particular piece of advice provided by an in-house lawyer attracts legal advice privilege.
Litigation privilege protects confidential written or oral communications between client or lawyer (on the one hand) and third parties (on the other), or other documents created by or on behalf of the client or his lawyer, which come into existence once litigation is in contemplation or has commenced and which is for the dominant purpose of use in the litigation.
The term ‘litigation’ includes arbitration here.
Litigation privilege is wider than legal advice privilege and can protect communications with and documents prepared by accountants and other non-legal advisers in preparation for arbitration. Unlike legal advice privilege, which requires a lawyer in the communication, communications with or material produced by non-legal advisers can be privileged under English law where litigation privilege applies.
Litigation privilege only applies where litigation (or arbitration) is afoot or contemplated. There does not have to be a greater than 50 per cent prospect of litigation, but litigation must be more than a mere possibility: it is not necessarily sufficient for there to be a distinct possibility that sooner or later someone might make a claim.
Even once litigation can be said to be ‘in contemplation’ or to have commenced, the dominant purpose of the communication must be for use in the actual or contemplated litigation. The term ‘dominant purpose’ has been described as the ruling, prevailing, paramount or most influential purpose. Where a communication has more than one purpose, a court will assess its purpose objectively, taking into account all the relevant circumstances.
Sometimes, it may be necessary for legal advice to be circulated outside of the client group (those individuals within the client who are dealing with the matter on a day-to-day basis)—for example, to the board of directors, who may not constitute ‘the client’ for legal advice privilege purposes. This is possible under English law, but it must be done carefully.
Confidentiality is a fundamental component of privilege. The loss of confidentiality will lead to a loss of privilege. It is therefore important to not circulate privileged material too widely.
When you do circulate privileged material, it is important to mark the document as ‘confidential and privileged’ and not for onward circulation, and to emphasize to the recipients the importance of treating the material as confidential.
The sender should refrain (so far as possible) from providing any written commentary on the advice, as that commentary may not itself be privileged. The exception to this is where the sender is an in-house lawyer giving legal advice.
The same risks arise when circulating legal advice to third parties outside the corporate client, including to regulators and prosecutors. In addition to the above safeguards, it will be prudent to specify the limited purpose for which the advice is being disclosed and to make clear that no broader waiver of privilege is intended. Confidentiality agreements may also be appropriate.
As a practical measure, labelling can help to maintain privilege—at least by helping to prevent inadvertent wider circulation of privileged material. Portals and/or ‘read only’ documents can be used in appropriate cases.
It is prudent to avoid, as far as possible, the transmission of particularly sensitive information by email, as it is more difficult to control the limits of distribution. Put IT safeguards in place to minimise risks.
Ffion Flockhart is a partner and Yasmin Lilley is a senior associate in the London office of Norton Rose Fulbright.
First published in the 1LoD Global Benchmarking Survey & Annual Report 2019
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