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
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
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
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.
Questions? Give us a call.
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Businesses should review their standard form contracts for unfair terms to ensure they do not fall foul of the new laws.
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