Update on Legal Professional Privilege

Published: 14/12/2016

The past few weeks have seen a number of important decisions in relation to Legal Professional Privilege ('LPP').

The past few weeks have seen a number of important decisions in relation to Legal Professional Privilege ('LPP'). The extent to which LPP vests in trustees in bankruptcy was determined by the Court of Appeal in November 2016 in Avonwick Holdings Limited and Ors v Mikhail Shlosberg [2016] EWCA Civ 1381 (our analysis of that decision, where Enyo acted for the successful Respondent, can be found here). The scope of LPP was further considered – albeit not in great detail – in the recent decision of Astex Therapeutics Ltd v Astrazeneca AB [2016] EWHC 2759 (Ch). In Astex, a case which also addressed the detail a solicitor is required to go into when preparing a disclosure list on behalf of its client(s), Chief Master Marsh applied the established – but controversial – test as set out by the Court of Appeal in “Three Rivers (No 5)” [2003] EWCA Civ 474, despite acknowledging that the facts before him were different to those in Three Rivers (No 5). That test has been endorsed (and, if anything, narrowed further) by Mr Justice Hildyard in the The RBS Rights Issue case.

At its simplest, LPP is a privilege which belongs to the client and ensures that any confidential communications between a client and its lawyer, which have come into existence for the purpose of giving or receiving legal advice, remain confidential and can be withheld from production to a third party or to the court. The purpose of LPP is to enable a client to communicate freely with their lawyer without fear of those communications falling into the hands of an opponent. However, difficulties have arisen in relation to the definition of “client”. 

Three Rivers (No 5) involved a claim by the liquidators and creditors of Bank of Credit and Commerce International ('BCCI'), a Luxembourgian bank against the Bank of England ('BoE'). A dispute had arisen as to whether four categories of documents created by BoE employees as part of a private non-statutory enquiry into the BoE’s supervision of BCCI prior to its collapse were subject to LPP. Each of these four categories included documents prepared by BoE employees, with variations as to whether the documents were, in fact, sent to their lawyers, or whether the documents were sent to their lawyers irrespective of the dominant purpose of the creation of the those documents being to obtain legal advice.  At first instance, Tomlinson J held that all four of the categories of document were subject to LPP. The Court of Appeal, however, overturned the first instance decision and ruled that all four categories of document fell to be disclosed. This included, for example, documents prepared for the dominant purpose of litigation but which were not, in fact, sent by the BoE employees to their lawyers.

Mr Justice Hildyard faced a similar position in the RBS Rights Issue case. Here, the claimants sought disclosure of two categories of documents (together 'the Interview Notes'):

Transcripts, notes or other records of interviews conducted by RBS with employees and ex-employees in response to two US Securities and Exchange Commission subpoenas; and

Transcripts, notes or other records of interviews conducted by RBS as part of its investigation into allegations made by an individual concerning RBS’s marketing of Super Senior CDO’s.

The Interview Notes were prepared by various RBS in-house lawyers and external solicitors, and the employees interviewed were of various levels of seniority. It was not disputed that RBS authorised these individuals to participate in the various interviews. RBS resisted the disclosure of these documents on various grounds, including that the Interview Notes were subject to LPP and/or were lawyers’ working papers (and so attracted privilege). It is worth noting that RBS did not assert that the Interview Notes were part of a communication between RBS and its lawyers in which advice was sought or given. RBS also accepted that the interviews were of an information gathering nature. Nonetheless, on the basis that the individuals had been authorised by RBS to attend the meetings and provide the information, RBS maintained that the Interview Notes attracted LPP. The “authorisation” point was intended to allow the judge to distinguish between this case and Astex, in which a distinction was made between all employees (whose communications with lawyers would not necessarily attract LPP) and those authorised to give instructions to lawyers (whose communications would attract LPP).

Mr Justice Hildyard determined that the Interview Notes were not subject to LPP and fell to be disclosed. He concluded, at paragraph 91 of his judgment, that:

“(1) the client for the purposes of [LPP] consists only of those employees authorised to seek and receive legal advice from the lawyer and (2) [LPP] does not extend to information provided by employees and ex-employees to or for the purpose of being placed before a lawyer.”

The judgment went on to reject RBS’s other arguments as to why the Interview Notes were not disclosable.  Mr Justice Hildyard confirmed that for an argument that the Interview Notes were lawyers’ working papers to succeed, the Interview Notes could not simply be verbatim transcripts and the burden would (as is always the case) be on the party asserting privilege to demonstrate that the notes went beyond that and comprised legal advice. The judge also declined to exercise the Court’s overriding discretion to not order the production of the Interview Notes, albeit the judge expressed some slight discomfort that the employees who were interviewed had been told at the time by the interviewees that the Interview Notes would be, and would be kept, confidential and would be subject to “attorney-client privilege.”

The practical effect of the RBS Rights Issue litigation remains to be seen, but companies will certainly need to be mindful of the decision, particularly when undertaking an initial fact-gathering exercise. Employees who are not expressly charged with seeking and receiving legal advice on behalf of a company should be aware that what they say might be disclosable further down the line. Companies may wish to consider giving serious consideration at the outset of a matter as to which employees should be given the express ability to seek and receive legal advice in relation to a particular issue, and strictly regulate communications between lawyers and employees outside of that ‘inner circle’. A more practical solution would be to ensure that any notes taken by the solicitor are interspersed with legal advice, therefore making it more likely that an argument that the documents were lawyers’ working papers containing legal advice, and therefore not disclosable. Designating an entire workforce as the ‘inner circle’ seems unlikely to succeed, as it would be a transparent attempt to circumvent the Three Rivers (No 5) decision.

RBS is expected to appeal the decision. If that is the case then further clarification of the LPP principle will not be far away.

Please note that the information in this article is for general information purposes only and does not constitute legal advice.  

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