The challenges for in-house counsel are to ensure
privilege attaches – and stays attached.
With organisations increasingly relying on their in-house legal
teams, and in-house counsel taking on more commercial
responsibilities, it has never been more important to understand
how legal professional privilege applies to work performed by
This is the first in a two-part article on legal privilege, with
a focus on tips for in-house counsel. In this first part, we
outline the principles governing legal privilege (particularly in
the case of in-house advice), and give some practical tips for
establishing privilege in communications between an organisation
and its in-house legal team.
Legal professional privilege
Broadly speaking, legal professional privilege applies to
confidential communications created for the dominant purpose of a
client obtaining legal advice, or for use in actual or anticipated
Particular issues arise in relation to documents prepared by
in-house counsel. In-house counsel often have legal and non-legal
responsibilities (particularly if they have a dual role, such as
general counsel / company secretary). Privilege will only apply to
work performed by the in-house counsel in their legal capacity.
Even where in-house counsel are clearly acting in their legal
capacity, privilege will only apply if they are sufficiently
independent from the organisation to be truly acting as an
independent legal adviser. For example, in Rich v Harrington (2007)
245 ALR 106, the Federal Court held that there was no privilege in
advice given by the general counsel of PricewaterhouseCoopers,
where she was also a partner of the firm and therefore a likely
respondent to the claim on which she was advising.
Tips for in-house counsel to ensure privilege attaches
to your work product
There are some easy steps that in-house counsel can (and should)
take to maximise the likelihood their legal advice will be
1. Keep a current practising certificate
It is prudent to keep a current practising certificate, as this
will help to demonstrate you are acting in a professional legal
capacity and have the necessary independence from the organisation
you are advising (which is also likely to be your employer). While
not fatal to a claim for privilege, not having a practising
certificate can make it easier for a court to infer that you
perform non-legal work and were performing such work when making
the communication in question.
2. Don't attempt to wear two hats at
If you have both legal and non-legal roles, keep those roles as
separate as possible, or you risk your legal advice being viewed by
a court as commercial advice to which privilege does not apply.
Only mark a document "privileged" when you are genuinely
performing your legal function – overuse of the
"privilege" label can diminish its effect when used in
communications to which privilege genuinely applies.
3. Keep legal and non-legal communication
Keeping legal and non-legal communications separate helps
minimise any risk that the legal purpose will not be the dominant
one in any document which deals with legal matters. It also makes
it clearer to readers that the document dealing with legal matters
is privileged, and thereby reduces the risk of inadvertent
disclosure of the document (which could lead to a waiver of
4. Document the dominant purpose of the
When commissioning a document from a third party for the
dominant purpose of actual or anticipated litigation, privilege
will not apply unless the organisation (not just the in-house
counsel) had that as its dominant purpose – see, for
example, Sydney Airports Corporation v Singapore Airlines Ltd
 NSWCA 47. Any request for such a document should be set out
in writing from the board or a senior executive of the organisation
to the in-house counsel, and should state that the document is
being sought for the relevant (legal) dominant purpose. Subsequent
use of the report should also be consistent with that purpose.
Once privilege applies to a document, it is crucial not to do
anything inconsistent with the confidentiality of the document, as
this could waive privilege. In the next issue we'll discuss the
principles relating to waiver of privilege, and give some practical
tips to help organisations avoid a waiver.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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