A recent decision of the Federal Circuit Court in an adverse
action claim, has served to remind us of the pitfalls of lawyers
carrying out investigative work for clients and then giving them
legal advice based on their investigation. In this case legal
professional privilege was held to have been waived.
Generally, communications between solicitors and their clients
are protected by legal professional privilege, allowing
communications between the parties to be frank and honest without
fear of disclosure. The privilege of confidentiality belongs to the
client and therefore can be waived or lost by the client's
actions in relation to the communication.
Legal professional privilege can be waived where it is perceived
that the client has acted in a manner that is inconsistent with the
maintenance of the privilege. Cases of inconsistency commonly arise
where clients disclose either orally or in writing to a third party
or the public at large, the content substance or gist of advice, or
conclusions contained within the advice.
LEGAL PROFESSIONAL PRIVILEGE AND THE TERMINATION OF
The Federal Circuit Court of Australia was recently asked to
determine whether legal professional privilege had been waived in a
case concerning advice given to an employer by their solicitor in
the form of a report relating to an independent workplace
investigation. The report ultimately recommended as an option, the
termination of the employee under investigation.
The employer in this case, Doutta Galla Aged Services Ltd,
engaged the services of a law firm to investigate and provide
advice to its Board of Directors into the conduct of one of its
employees. An investigation was carried out and a report was
provided to the Chairman of the Board which also contained legal
advice and the firm's recommendations. The partner of the law
firm also addressed the Board on the matters set out in his
The Board considered the advice and recommendations contained
within the report and made four recommendations to the CEO of the
Company, one of which was to terminate the employee. In a sworn
affidavit the CEO referred to the existence of the report and
stated that the Board had given consideration to the report before
issuing four recommendations. The CEO also referenced his decision
to terminate, to the Board's recommendations.
The former employee submitted that the reference to the report
by the CEO in his affidavit showed that the Board had clearly been
influenced and had made the recommendation to the CEO to terminate
the employment, based on the contents and recommendation of the
report. The former employee further submitted to the Court that he
was therefore entitled to see the documents relevant to the state
of mind of the Board, including the report supplied by the law firm
which undertook the independent investigation.
The Court agreed with the former employee. The Court quoted with
approval, earlier authority in Liquorland (Australia) Pty v
Anghie  VSC 73 for the proposition that "It is
clearly not sufficient that a mere reference to legal advice will
amount to disclosure. Nor could a mere reference to a decision
having been made after consultation with lawyers, amount to a
disclosure of the contents of that advice. Where, however, the
client has put in issue their state of mind and it appears that
legal advice was given at the relevant time, the privilege was lost
where it can be shown that there is a likelihood that the legal
advice contributed to that state of mind".
It was clear in this case that the recommendations contained
within the firm's report and basis for them, had some bearing
on the views and conclusions arrived at by the Board members when
deciding to recommend (as one of the options) termination of the
former employee. The Court held in these circumstances that it
would be unfair to the former employee not to allow discovery of
the report and ordered its production to the former employee.
POINTS TO TAKE AWAY
This case serves as a reminder that it can be dangerous to mix
the provision of legal advice and the carrying out of an
investigation. One attracts legal professional privilege, the other
does not. By mixing them, the client runs precisely the risk that
was realised in the above case, namely that the privilege is held
to have been waived.
Lawyers involved in an investigation and preparation of a report
may in some situations determine that it is wise to assume that the
report may ultimately become the object of scrutiny, and
acknowledge that it is safer to allow another law firm to provide
the legal advice. Alternatively, they could stick to providing
legal advice and have a third party carry out the investigation and
This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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