United Kingdom: Three Rivers: Further Narrowing of Legal Advice Privilege Confirmed

Last Updated: 10 March 2004
Article by Neil Jamieson and Ivan Wilkinson

In its judgement of 1 March 2004, the Court of Appeal has (confirming last November’s High Court ruling on this issue) further narrowed the scope of legal advice privilege. In particular, the Court has confirmed that communications with lawyers in the context of public inquiries and other "non-adversarial" fact-finding processes will not be privileged unless relating to advice about legal rights and obligations – as opposed to advice on presentation.

The Court of Appeal’s latest decision in Three Rivers has confirmed an important further narrowing in the Courts’ interpretation of what is covered by legal advice privilege. We examine below the current state of the law in the light of this most recent development. 

SUMMARY Legal professional privilege, which protects certain documents from disclosure in litigation, can be of two types:

  • Litigation privilege: this protects documentary communications between a client and his lawyer (or between one of them and a third party), if they were created for the dominant purpose of getting/giving legal advice in relation to pending or contemplated litigation, or the collecting of evidence for such litigation. "Litigation" here means adversarial proceedings: for example court proceedings and arbitrations, as opposed to "fact-finding" processes, like inquiries. Litigation privilege has not been affected by the Three Rivers decisions.
  • Legal advice privilege: this protects documentary communications between client and lawyer made for the purpose of getting/giving legal advice, whether or not litigation is pending or contemplated. Documents sent to or from a third party are not covered. The Three Rivers decisions have established that this second category of privilege is subject to the following key limitations:
  • Documents which are not themselves communications between lawyer and client (or evidence of such communications) will not be covered by the privilege, whether they were created for the purpose of being passed on to the client’s lawyers or not. For these purposes "client" is likely to be construed narrowly, as meaning only those employees of the client who actually instruct the legal advisers. Communications from other employees to the lawyers may therefore not be privileged.
  • Even where documents are communications between lawyer and "client" (as narrowly defined above), they will only be construed as being "for the purpose of giving or obtaining legal advice" if they relate to situations where the main purpose of the lawyer-client relationship is the provision of advice about the client’s legal rights and obligations. Advice about the preparation or presentation of information (particularly in the context of an inquiry) is not "legal advice" for these purposes.

THE DECISION AND ITS HISTORY

After the collapse of BCCI, Lord Bingham conducted an inquiry (the "Inquiry") which covered the actions of the Bank of England (the "Bank"). Three individuals from the Bank, known as the Bingham Inquiry Unit ("BIU"), were appointed to deal with all communications between the Bank and the Inquiry, including obtaining advice from the Bank’s lawyers.

Subsequently, when the Three Rivers proceedings were brought against the Bank by depositors, it could not invoke litigation privilege, to resist disclosure of documents generated for the Inquiry, because the latter had not been adversarial. The Bank therefore had to rely on legal advice privilege. In April 2003, the Court of Appeal held that only communications between the BIU and the Bank’s lawyers (and documents evidencing such communications) could be protected by legal advice privilege. This was because only the three individuals comprising the BIU were deemed to be "the client". Communications from all other employees of the Bank were not deemed to be from "the client" for the purposes of assessing the privilege, even if intended for onward transmission to the lawyers, or even if sent directly from those other employees to the lawyers. The Court added that although it was unnecessary to express a view on the point, it considered that the dominant purpose of the internal documentation produced by the Bank was to achieve attractive presentation of the Bank’s evidence to the Inquiry, rather than obtaining legal advice.

At that time, the Court of Appeal was not asked to consider the follow-up question of which communications between the BIU and the lawyers were made for the purpose of obtaining legal advice, properly so-called. However, its decision opened up that issue and it was dealt with in a further judgment from the High Court dated 4 November 2003, now confirmed by the recent Court of Appeal judgement as follows:

  • Legal advice privilege only covers communications relating to advice about the rights and obligations of the client.
  • The dominant role of the Bank’s lawyers, concerning the Inquiry, was giving presentational advice to the Bank about how to present its evidence most effectively, not giving legal advice properly so-called. Such presentational advice did not attract legal advice privilege.
  • In this context, even if some of the communications between the Bank and its lawyers did involve advice about its rights and obligations (hence individually attracting legal advice privilege), this would not be enough to clothe the entirety of the lawyers’ advice in privilege.

PRACTICAL IMPLICATIONS

The Court of Appeal’s affirmation of the High Court’s decision will have important implications beyond those in the Three Rivers proceedings (which are likely to be serious in themselves: a large part of the communications between the BIU and the Bank’s solicitors may now be open to inspection in circumstances where, on previous authority, that would not have been anticipated). Clients seeking advice from lawyers in relation to non-adversarial matters, which may potentially include public inquiries, and inquiries by professional bodies, the FSA, Inland Revenue, DTI or SFO, must now take heed of the following points:-

  • Documents are likely only to be capable of being privileged if sent to or from individuals who would be construed by the Court as being the "client", as opposed to mere employees of the client. The guidance on who will be "the client" is sketchy, but it would seem to be only those individuals who actually instruct the lawyers. Solutions such as nominating a wide group of employees to be the "client" risk being ruled out as artificial. Care should therefore be taken to avoid employees, other than the key individuals who communicate with the lawyers, creating sensitive documents.
  • Second, and perhaps even more importantly, communications between a client and its lawyers will only be privileged if they seek advice as to the rights and obligations of the client. Where advice is sought on presentational issues, privilege will not apply.
  • In practice, the line between advice on rights and obligations and advice on presentation is likely to be very hard to find. For example, is a person’s reputation to be equated with his or her legal rights and obligations so that advice from a solicitor, for the purpose of protecting that reputation in the context of evidence given to an inquiry, attracts legal advice privilege? The Court of Appeal’s judgment provides little guidance. The judgement states that advice about public inquiries will "plainly" be subject to legal advice privilege where witnesses are "exposed to, and concerned about, the risk of legal liability as a consequence of their role in [a] matter under inquiry". Yet the Court did not consider that legal advice privilege applied on the facts of Three Rivers, where the Bank was seeking advice about how to present evidence to the Inquiry in a way which minimised the potential "criticism" it faced, and ended up being sued by the depositors.
  • For the time being the only safe course of action must be to assume, in cases of doubt, that advice will be construed as presentational and hence not privileged. In those circumstances, care must be taken to address the risk at the outset and guidelines should be put in place between clients and their lawyers in relation to the preparation and content of internal documents and communications between them.

It is hard to believe that this will be the end of the matter and we must wait to see if an appeal to the House of Lords follows. The Court of Appeal refused leave to appeal, even though it concluded that the law in this area is "unsatisfactory" and that it may be time for it to be reviewed. It should be said, however, that the Court of Appeal appears to have in mind even greater restrictions on the scope of legal advice privilege. In any event, as this latest decision may prove difficult or impossible to implement, a full review and some much needed clarity would be very welcome. 

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.

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Authors
Neil Jamieson
 
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