Litigation is unfortunately a reality for many businesses. If you or your business becomes involved in a dispute, it is important to understand the concept of Legal Professional Privilege (Privilege).
Privilege refers to the legal doctrine that prevents the disclosure of confidential communications between:
- a lawyer and their client; and
- a lawyer and third parties (for the benefit of the client),
that were created for the dominant purpose of either:
- initiating or defending existing or anticipated litigation; or
- obtaining legal advice.
Subject to limited exceptions, communications which are protected by Privilege do not have to be provided to the opposing party/ies in a dispute by way of discovery. Similarly, privileged documents are not required to be disclosed under Right to Information (RTI) requests.
What is the “dominant purpose” test?
Whether a communication was created for the dominant purpose of litigation (or obtaining legal advice), is a matter that is objectively determined by reference to an individual’s subjectiveintention or purpose in creating the communication or document. Ask yourself: “What was the intended use or uses of the document which accounted for it being brought into existence?”
Simply “copying in” your lawyer to an email thread or labelling a document as “privileged”, does not automatically mean that the email thread or document will be protected by Privilege.
Can Privilege be “lost”?
Privilege over a communication or document can be “lost” if it is waived by the client. Privilege can be either expressly waived (e.g. giving a privileged document to somebody else) or impliedly waived (e.g. openly referring to the gist of your lawyer’s legal advice). Privilege will only be waived where the disclosure of the confidential communication is inconsistent with the maintenance of confidentiality. For example, a company that released an ASX statement that said “The Board’s lawyers have been instructed to vigorously defend the claim and have advised that the plaintiffs’ claim will not succeed” was held to have waived Privilege over that advice 1.
Privilege will not, however, be waived as a result of an inadvertent disclosure of a communication or document where there is no intentional act which is inconsistent with the right of Privilege. For example, where a privileged document is accidently provided to the other side as a result of a technical error during an electronic discovery process.
Common issues that arise with Privilege
In-house lawyers
Whilst it is now well established that an in-house lawyer is able to claim Privilege on behalf of his or her employer as a client, challenges to claims of Privilege commonly occur, due to the fact that many in-house lawyers have both legal and commercial duties. The dominant purpose test is therefore likely to be rigorously argued by an opposing party. Only communications which arise from an employer consulting their in-house lawyer in their professional capacity as their legal adviser, will be protected by Privilege.
Expert reports
Assuming the dominant purpose test is satisfied, expert reports prepared for the purpose of litigation attract Privilege. However, once the report ceases to be confidential (e.g. when it is disclosed to the opposing side), Privilege can also be impliedly waived over documents that form part of the confidential communications between the expert and the client’s lawyers, such as the initial brief to the expert.
Board papers
Disclosing board papers that refer to the gist of legal advice received by the company, can waive Privilege over the advice referred to. In the decision of Seven Network Limited v News Limited (No 12) [2006] FCA 348, a party to the litigation disclosed board minutes to the other side which stated: “Our legal advice is that the risk of damages being awarded against X is low.”. The legal advice related to the proceedings on foot. The court held that by disclosing that board paper, the party had waived Privilege over the advice and the party was ordered to provide a copy of that advice to the party on the other side.
Practical steps to maximise Privilege
- Ensure that you always treat communications between you and your lawyer as strictly confidential and privileged. As noted above, even referring to the essence of your lawyer’s advice can amount to a waiver of Privilege.
- In-house lawyers should retain a current practising certificate and any communications directed to in-house counsel from their employer should specify whether the advice is sought in their capacity as legal adviser or on a commercial basis. Legal and non-legal advice should also be delivered separately.
- When disclosing an expert report to the other side, keep in mind that the waiver of Privilege is likely to extend to all drafts of the report and all communications with the expert, including their initial instructions, that contributed to the content of the expert’s report.
- Careful steps should be taken when any legal advice is presented to a board. Legal advice should be separately annexed to the board minutes and clearly marked as “confidential and privileged” to avoid a potential waiver of Privilege.
If you have any queries or would like further information regarding this article, please contact:
Brett Cassidy
Principal
M: 0438 368 053
E: bcassidy@pageseager.com.au
1 Switchcorp Pty Ltd v Multiemedia Limited [2005] VSC 425 at [23].
Published: 16 October 2017
