In a case of potentially significant consequence for litigants and their advisors, the High Court has drawn a stark distinction between the advice given by claims consultants and that given by solicitors and barristers when it comes to the disclosure of documents and legally privileged communications.

In the recent case of Walter Lilly and Company Limited -v- Mackay and DMW Developments Ltd [2012] the High Court ruled that advice given by a claims consultant was not privileged and therefore must be disclosed to the opposing party in a connected dispute.

The Law of Privilege

So what is legal privilege, and why does it matter? During court proceedings there will come a point where all parties will usually have to disclose all the evidence held that is relevant to the case, whether it supports their position or not. However, if a document is privileged then a party can withhold this evidence from the other party and the Court.

Legal is a general term covering both legal advice privilege and litigation privilege.

In very simple terms, legal advice privilege applies to confidential communications between a party and their lawyer for the purpose of giving or receiving legal advice.

Litigation privilege is distinct. Litigation privilege applies to confidential communications for the purpose of obtaining advice in relation to a dispute where litigation exists, is pending or at least is reasonably contemplated at the time and is between:

  1. a party and their lawyer; and
  2. a party or their lawyer and a third party.

Privilege is obviously incredibly important. A party is unlikely to welcome having to disclose the details of their private discussions with their lawyers or other parties during proceedings. Privilege is absolute in its application in that the Court cannot exercise any discretion as to whether to compel the disclosure of a privileged document.

Accordingly, the application of privilege is relatively narrow and has its limits.

Privilege and the Claims Consultant

So does privilege extend to communications between a party and a claims consultant? The issue of litigation privilege is still up in the air, but the High Court has now ruled in Walter Lilly and Company Limited -v- Mackay and DMW Developments Ltd [2012] that legal advice privilege does not apply to such communications.

In this case Walter Lilly was engaged by the Defendants to construct a house and when it became apparent that there was to be significant delay, the Defendants sought "contractual and adjudication" advice from Knowles Ltd, a well-known claims consultant. A dispute then arose in the subsequent proceedings as to whether the communications between the Defendants and Knowles attracted legal advice privilege. The Defendants argued that the advice which was provided by Knowles was from individuals who held themselves out as lawyers and was legal in nature and therefore was privileged.

The judge in this case looked at the facts and past authorities and drew a number of conclusions:

  • Legal advice privilege only applies to lawyers and no other professionals save in very specific, exceptional circumstances.
  • Although Knowles employed "legally qualified persons," it did not hold itself out as a legal practice and was retained to provide "contractual and adjudication advice", not legal advice. Knowles' terms also included a provision for the engagement of an external solicitor.
  • The Defendants engaged Knowles for claims and project handling advice and the mere fact that two of the people with whom the Defendants were dealing were 'legally qualified', and whether the Defendants honestly believed them to be solicitors or barristers, was immaterial because they were not engaged to provide the services of solicitors or barristers.

Points to Take Away

Where a consultant is engaged to provide contract, claims or project handling advice then communications between a party and that consultant are unlikely to attract legal advice privilege and therefore may potentially be disclosable in any subsequent court proceedings. Legal advice privilege is something which is still very much the preserve of solicitors and barristers practicing as such.

The only sure-fire way to ensure that your communications regarding the legal aspects of a dispute are privileged and will not have to be disclosed is by engaging a solicitor or barrister to provide that advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.