REUTERS | Michaela Rehle

Legal advice privilege: not just for legal advice

A recent High Court decision has provided reassurance to both lawyers and clients as to the scope of legal advice privilege, after an earlier decision (by a different judge) in the same case had arguably suggested a narrower scope for LAP than had been generally accepted.

The issue concerned the extent to which privilege in lawyer/client communications extends to content that is not in itself legal advice, or a request for such, but might be considered as ancillary to such communications. In particular, it concerned the status of factual information contained within lawyers’ communications to clients, which would not otherwise be privileged outside that context.

In Property Alliance Group Limited v The Royal Bank of Scotland Plc, Snowden J was called upon to assess RBS’s claim to privilege over certain documents which the bank had been ordered by Birss J to produce to the court for inspection.

The documents in question related to meetings of an Executive Steering Group (ESG) within the bank, which was a special committee formed in connection with the various regulatory investigations against the bank concerning alleged LIBOR misconduct and related litigation. The documents had all been prepared by the bank’s external lawyers, who attended the ESG meetings. Broadly, they constituted either:

  • Tables of information forwarded by the lawyers to the ESG members in advance of meetings, setting out the progress, status and issues arising in the various investigations. Much of the information was no more than a brief factual recital of past or scheduled events which would not, by their nature, have been privileged occasions or correspondence.
  • Notes/summaries concerning the discussions at the ESG meetings, prepared and circulated by the lawyers after the meetings.

Cause for concern

When the privilege claim was first considered by Birss J, he was not satisfied that the claim was correctly made. He considered that the question of whether the documents could be privileged would depend on whether the ESG’s role was solely to provide legal advice to the bank (on which he thought there was insufficient evidence at that time). If part of the ESG’s role included overseeing the investigations and reporting on them to the bank (that is, not purely the provision of legal advice), he could not see how memoranda prepared by the bank’s lawyers on the progress and outcome of reviews, investigations and findings would be privileged. Any legal advice contained in the documents would no doubt be privileged but, he said, “it does not follow from this that any factual summary in the document is privileged”. Accordingly, he took the “final resort” step of ordering RBS to produce the documents to the court for inspection by another judge.

Birss J’s view was of some concern, in that it appeared inconsistent with longstanding authority on the question of what communications between a solicitor and client can be protected by privilege. In particular, in Balabel v Air India the Court of Appeal confirmed that privilege is not limited to communications specifically conveying legal advice or requesting such advice. It acknowledged that not all communications between a solicitor and client in an advisory relationship will necessarily be limited to the express giving or seeking of legal advice and that, in most solicitor/client relationships, there will be a continuum of communication and meetings. The court confirmed that “Where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach.”

That is, of course, subject to the requirement that the relationship between the solicitor and client is in a relevant legal context, rather than some other context, such as the provision of purely business or financial services. In other words, the lawyers must be “being asked qua lawyers to provide legal advice” (Three Rivers No 6). But, provided that legal context is present, it has generally been accepted that all information exchanged in the continuum of communications can be covered by privilege, without the need to carve out “advice” portions from “non-advice” portions.

Snowden J’s judgment

Having inspected the documents and considered the relevant authorities (including Balabel), Snowden J accepted that all of the documents were privileged in their entirety.

It was clear that the external lawyers were engaged in a “relevant legal context” and that the documents in question formed part of a continuum of communication and meetings between solicitor and client, the object of which was the giving of legal advice as and when appropriate. The privilege therefore extended to references in the documents to public events or dealings with regulators which were not in themselves privileged occasions, and the records of which would not otherwise attract privilege. Similarly, it extended to the lawyers’ summaries of the discussions at the ESG meetings.

In addressing the issue, the judgment usefully recognises that the policy justification for legal advice privilege is not concerned solely with encouraging clients to disclose matters candidly to their lawyers. Lawyers are often also given the task of investigating, or are in possession of, relevant factual information. The lawyer must be able freely to communicate that information to the client to enable the client to make fully informed decisions. Further, when legal advice is then given, the lawyer must also be able to provide the client with an accurate record of the discussions and the decisions taken as a consequence. If a fear of communications being disclosable caused lawyers to refrain from committing such matters to paper, that would not serve the public interest in assisting clients to achieve an orderly arrangement of their affairs.

A welcome restoration of the status quo

The decision is therefore to be welcomed for its confirmation that, so long as there is a relevant legal context, privilege is not restricted to actual legal advice and will protect all communications forming part of the ordinary flow of information and instructions between lawyer and client for the purpose of the lawyer providing the legal advice.

That result is consistent with not only the policy underlying privilege, but also the realities of modern commercial litigation. Given the volume of documents required to be disclosed in even small scale litigation and regulatory investigations, it would be a significant additional burden on parties (and in tension with the objective of costs proportionality) if almost all solicitor/client correspondence had to be selectively redacted in order to claim privilege over the “advice” portions while disclosing the more ancillary ”non-advice” material. Plus, the redaction process would, of course, be fodder for more disputes, distracting from the real issues in the case.

Privilege in regulatory investigations

To that extent, Snowden J’s decision effectively restores the status quo, on which Birss J’s judgment had cast doubt. However, it is also worth noting that the judgment adds to the growing body of case law considering the availability of privilege in the specific context of regulatory investigations.

Snowden J helpfully took the opportunity to recognise expressly that the policy justifications for privilege (as described above) apply equally in the context of regulatory investigations, where the public interest will be advanced if regulators can deal with experienced lawyers who can accurately advise their clients how to respond and co-operate: “Such lawyers must be able to give their client candid factual briefings as well as legal advice, secure in the knowledge that any such communications and any record of their discussions and the decisions taken will not subsequently be disclosed without the client’s consent.”

Given the growth in both the volume and scale of contentious regulatory actions in recent years, including actions that potentially overlap with private litigation, those observations should provide some comfort to parties facing such investigations.

Herbert Smith Freehills Jan O’Neill

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