Privilege – Never gonna give you up!

Introduction

Rick Astley may have been on to something in 1987 when he released the cult-hit ‘Never Gonna Give You Up’. This is because that phrase is what some lawyers say to many of their privileged communications, sometimes incorrectly.

In this edition of a three-part series on Evidence, we discuss Privilege.

The first two articles under this series can be found here:

• Evidence – Prove it or lose it.
• Discovery – Show me what you got!

This topic is particularly important for many of our clients, especially in-house counsel and senior managers, because there is sometimes confusion or concern about whether a document needs to be ‘handed over’ to an opposing party or a third party enquirer should a dispute arise.

Privilege is quite a complicated area of the law, and it is applied differently in different forums and jurisdictions. Therefore, this article is not to be construed as legal advice.

Types of privilege

Statute and common law recognise two types of privilege, being:

1. Client legal privilege or legal professional privilege, commonly referred to as advice privilege; and
2. Litigation privilege.

Basically, the former protects confidential communications between a client and a lawyer, and the latter protects material prepared for the dominant purpose of legal proceedings.

What makes something privileged?

There have been countless arguments and court decisions about privilege in various jurisdictions across tribunals to courts. However, at its core, for a communication to be privileged, it needs two things:

1. The communication was confidential.
2. The dominant purpose for the communication was for ‘legal reasons’.

Legal reasons can be further broken down into two categories:

1. First, the dominant purpose for the communication was to provide or obtain legal advice.
2. Second, the dominant purpose for the communication was for actual or anticipated litigation.

Advice privilege

Advice privilege is a common law right. It is designed to protect the administration of justice and the right of individuals/organisations to obtain confidential advice about their legal circumstances. It protects legal advice given by a lawyer to their client. Hence the name – advice privilege.

By protecting such communication as being confidential, it allows individuals/organisations to be frank, open and honest about their circumstances with their advising counsel. In turn, this assists lawyers to fulfil their primary duty to the Court.

Referring to advice privilege as client legal privilege should help the reader remember that the privilege belongs to the client, not the advising lawyer. This means that a lawyer may only disclose privileged communications if they are instructed to do so. Again, advice privilege does not exist to benefit the client, but to promote the efficient administration of justice.

The Law Council of Australia said in a publication on Regulation of the Profession and Ethics:

“The proper administration of justice requires that clients are able to communicate freely and frankly with their lawyer, without fear of disclosing any information relevant to the legal advice they are seeking … in the absence of the privilege, legal proceedings may be delayed or even miscarried as lawyers may not be able to properly represent their client, or bring relevant matters to the attention of the court. Ensuring candour and honesty in such communications is important, because we live in a complex society and our laws and legal system are at times very complicated. It is in society’s interest that people (including corporations) seek legal advice about their affairs and in seeking advice feel free to disclose all relevant facts …”

Litigation privilege

Litigation privilege protects:

1. Confidential communications between a client and another person, or a lawyer acting for the client and another person; or
2. The contents of a confidential document, where the document was prepared for the dominant purpose of providing the client with professional legal services in relation to an actual or anticipated legal proceedings.

In relation to actual or anticipated legal proceedings, it is important that the client is, may be, was, or might have been, a party to the legal proceedings.

Are there any exceptions to privilege?

As with most things in law, there are some exceptions to privilege.

The common exceptions are:

1. Waiver of privilege (express or implied).
2. Unlawful or improper conduct by the lawyer or their client.
3. Statutory exclusions or requirements.
4. The dominant purpose was not for legal reasons.

Examples of the exceptions include:

1. Disclosing privileged information to a third party who has no interest in the dispute.
2. Communication passing between a client and the client’s lawyer regarding fraudulent business activity.
3. Section 30(2) of the Personal Injuries Proceedings Act 2002 (Qld) states that investigation reports prepared by insurance companies must be discovered “even though otherwise protected by legal professional privilege”.
4. An investigation report is commissioned by an insurance company so that policy coverage may be determined, but the insurance company belatedly attempts to claim privilege over the investigation report because legal proceedings are brought against the insurance company’s customer at a later date.

Tips regarding privilege

Rather than discussing some of the many authorities which have considered privilege, we distil below some of the key takeaways from these decisions.

A client may inadvertently waive privilege over an advice if the client discusses or discloses that advice to a third party.

A lawyer may inadvertently waive privilege over a privileged document by referring to, citing or relying upon that privileged document in communication with an opposing party or third party.

Clients and law firms should ensure that files and large bundles of documents are clearly marked such that privileged documents and letters are kept separated. IT software for electronic files now have the capability for documents to be marked or coded as privileged.

At board meetings, boards must be careful how legal advice is presented, discussed or recorded such that privilege is not waived.

For legally trained senior executives, care must be taken as to whether ‘legal advice’ provided by such executives does attract advice privilege, especially if financial, strategic or operational matters are being discussed in the one report.