The test for legal professional privilege (LPP) is that the 'dominant purpose' of the communication over which privilege is claimed must be for legal advice or litigation.

The recent case of Wingecarribee Shire Council v Lehman Brothers Australia Limited (in Liquidation)may strike fear into the hearts of in-house lawyers of corporate groups in relation to whether or not advice given is covered by LPP. Fear not. You can retain your LPP even if you advise within a corporate group. Well, provided you don't do what Lehman's lawyer did.

Lehman Brothers Australia (LBA) was previously Grange Securities until it was bought by certain "Lehman entities". Our hero was the inhouse lawyer for LBA.

He was asked by LBA to give advice on whether there were grounds for legal claims by "Lehman entities" in relation to financial product sales predating the acquisition.

The Court found that LBA could not claim LPP over the advice which the lawyer prepared. It was advice provided for the benefit of the Lehman entities, and could not be said to be legal advice given to LBA (the lawyer's actual client) because:

  • Advice was not provided to LBA (the client who sought the advice);
  • The advice was actually foreign to LBA as it was not in relation to claims available to it; and
  • LBA had no joint interest with the Lehman entities in the advice.

Therefore the advice was not brought into existence for the dominant purpose of providing legal advice to LBA but for multiple purposes, so LBA kissed goodbye to LPP and had to produce it.

It was a bit tricky, but essentially the problem was that the LBA inhouse lawyer couldn't demonstrate that he had a lawyer-client relationship with the "Lehman entities" and there was no common interest between them and LBA. This could have been avoided with a bit of extra care.

So, if you advise a corporate group:

  • Know which group entity/entities are your client; and
  • Ensure advice provided to one or more clients within a corporate group is separated out for each client, so the dominant purpose of each advice is clearly legal advice for the client.

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