Ireland: Waiving Goodbye To Privilege?

Last Updated: 28 April 2016
Article by Richard Willis and Keith Smith

Waiver of privilege can sometimes have unanticipated consequences. If legally privileged communications are referred to in evidence in court, the privilege attaching to those communications and to related communications may be lost. The English High Court recently considered the knock-on effect of waiver of privilege in Commodities Research Unit International (Holdings) Ltd & others v King and Wood Mallesons LLP.

WHAT IS PRIVILEGE?

Legal professional privilege has a number of forms, including legal advice privilege which protects the confidentiality of communications between a lawyer and a client for the purpose of seeking or giving legal advice. If a communication is privileged, it does not have to be disclosed to the other side in litigation.

However, privilege may be lost if a party refers to or seeks to rely on the contents of a privileged document in the course of legal proceedings. The Commodities decision shows how this can happen.

THE COMMODITIES DECISION: WHAT HAPPENED?

The defendant is a firm of solicitors that advised the claimant companies in relation to the cessation of employment of their CEO. On foot of this advice, the claimants entered into a severance agreement with the CEO and a side letter relating to his entitlement in the event of a sale of the business.

When the business was later sold, the CEO sued the claimants, seeking a percentage of the sale price. The claimants instructed a different firm of solicitors and counsel to advise them in these proceedings. The proceedings were ultimately settled, with the claimants paying the CEO £1.35m.

The claimants then sued the defendant solicitors for professional negligence, seeking to recover the settlement sum, the costs incurred in defending the underlying proceedings and an additional sum for management time expended on the proceedings.

In support of their claim, the claimants relied on witness statements of:

  1. Counsel who represented them in the underlying proceedings. This statement exhibited a letter in which counsel set out the advice given to the claimants about the settlement.
  2. The companies' chairman stating that he agreed to the settlement offer of £1.35m on foot of the advice he received from the solicitors in the underlying proceedings. The chairman expressly stated that he was not waiving privilege over this advice.
  3. The companies' CFO stating that the proceedings caused substantial additional work for the companies. This statement exhibited a schedule of communications between the claimants and their solicitors in the underlying proceedings. The CFO expressly stated that he was not waiving privilege.

The defendant solicitors applied for discovery of all communications between:

  • the claimants and their counsel, including his advice on the merits of the underlying proceedings, and the documents and other information on which he formulated this advice; and
  • the claimants and their solicitors in the underlying proceedings, including the solicitors' advice on the merits of the case.

WAS PRIVILEGE WAIVED?

Counsel's advice (see 1 above): As the written statement of the counsel referred to the content of the legal advice, the Court found that privilege over the advice had been waived. The claimants therefore had to disclose any record of the advice given by counsel as to the merits of the settlement, including any record of his oral advice.

Solicitors' advice (see 2 above): As the chairman stated that he had followed the advice of his solicitors, the claimants had to disclose any advice which those solicitors had given on the merits of the settlement. They also had to disclose the instructions given to their counsel and their solicitors.

The defendant solicitors also sought discovery of advice given by the claimants' solicitors at an earlier stage in the proceedings. However, the Court refused to order this, stating that advice on the merits at one stage of litigation should not necessarily be seen as part of the same sequence of advice on the merits at an earlier stage.

Communications between claimant and solicitors (see 3 above): The Court held that the claimants had waived privilege over a number of communications to, and from, their solicitors in the underlying proceedings. This was because the CFO referred to these communications to justify the expenditure of management time. The Court said that, as the defendant solicitors had not admitted this part of the claim, it was an issue in, and central to, the proceedings.

WHAT ARE THE KEY PRINCIPLES?

  • It is a matter for the court to assess, based on the conduct of the parties, whether there has been a waiver of privilege.
  • "Cherry-picking" is not possible. A party cannot choose to waive privilege over part of a document while maintaining it in the remainder.
  • However, if there are severable parts of a document in exchanges with legal advisors, a waiver of privilege in relation to one of those parts does not mean that it is waived in respect of other parts. Confining the waiver in such a way is not cherry-picking.
  • A lawyer's record of the dates and times at which he met his client is not privileged and references to the dates and times of lawyer/client meetings do not waive privilege in what took place at those meetings. However, where the references are included to prove a substantive part of the claim being made (in this case, expenditure of management time in dealing with the underlying proceedings), privilege may be waived.

HOW CAN YOU AVOID 'WAIVING GOODBYE' TO PRIVILEGE?

To avoid unwittingly waiving the right to privilege, litigants should:

  1. Avoid referring to, or relying on, the content of privileged communications, unless absolutely necessary.
  2. Where it is necessary to rely on privileged communications, consider any potential knock-on effects and whether they can be avoided.
  3. Remember that it is not sufficient to simply state that a document is privileged and that you are not waiving this privilege. Waiver is a matter for the court to assess, based on the particular facts of each case.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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