UK: Information Gathering By In-House Lawyer In Order To Obtain External Advice May Not Be Protected By Legal Advice Privilege

Last Updated: 12 November 2018
Article by Herbert Smith Freehills

In a recent decision, the High Court has held that an in-house lawyer's communications with an employee of the business, who was accepted to be her in-house "client" for some purposes, were not protected by legal advice privilege where those communications were to seek and obtain information to provide to external solicitors in order to obtain their legal advice: Glaxo Wellcome UK Ltd v Sandoz Ltd [2018] EWHC 2747 (Ch). In doing so, Chief Master Marsh applied the narrow interpretation of "client" established by the notorious Three Rivers No 5 decision as recently confirmed by the Court of Appeal (albeit with reluctance) in the ENRC case (considered here).

Significantly, the decision illustrates that an individual can be a lawyer's "client", and therefore entitled to communicate information to the lawyer under protection of privilege, for one purpose but not others.

The decision underlines the importance of considering, in any given context, who is likely to be considered the lawyer's "client" for that particular purpose. Where an external lawyer is advising, and the in-house lawyer is the relevant "client" for that purpose, the in-house lawyer's internal information gathering exercise may not be privileged (unless litigation privilege applies, as in that context a lawyer/client communication is not essential). The position may be different where the in-house lawyer's advice is sought in addition to that of the external lawyer.

The decision also contains important messages as to how evidence should be presented in supporting a claim to privilege.

Background

The privilege challenge arose in the context of a passing off claim relating to an inhaler product. The defendants' external lawyer, Mr Collins, served a witness statement in support of the defendants' claim to privilege.

The claimants challenged a claim to legal advice privilege made by the defendants in respect of two documents, described as follows in a list exhibited to Mr Collins's statement:

"11. Email from Susanne Groeschel-Jofer internal to the Sandoz group seeking information to provide to Bristows for the purposes of Bristows giving legal advice. ...

14. Email from Susanne Groeschel-Jofer internal to the Sandoz group seeking information to provide to Bristows for the purposes of them giving legal advice, along with internal Sandoz group email providing the information requested."

Ms Groeschel-Jofer was a German-qualified in-house lawyer employed by a company in the Sandoz group, the fourth defendant to the action. It was later clarified that both emails were between Ms Groeschel-Jofer and a Dr Malaun, who was employed by the same group company as a drugs regulatory affairs manager.

It was accepted that another email between the two, item 13 in the list, was subject to legal advice privilege. That email was described as "Email from Michael Malaun to Susanne Groeschel-Jofer requesting legal advice, along with a note of legal advice given by her".

The claim to privilege in respect of items 11 and 14 was set out in Mr Collins's initial witness statement as follows:

"Having inquired of the Sandoz defendants, I have been informed that ... members of staff employed within the Sandoz group, such as those involved in the communications in which privilege is claimed, were authorised to request and receive legal advice where relevant to the performance of their job functions."

In a further statement, Mr Collins added:

"A request by a legal adviser for information for the purposes of providing legal advice to the client necessarily discloses the substance of the matters on which legal advice is being sought, as does a response by the client providing information sought for that purpose. ... there is no need for a person to be authorised to receive legal advice in order to be able to respond to a request for information which assists a lawyer in providing legal advice."

That statement went on to confirm that the emails were between Ms Groeschel and Dr Malaun, and that Dr Malaun was authorised to request and receive legal advice where relevant to the performance of his job functions, and to provide information for the purposes of obtaining legal advice. It added that the claim to privilege was further maintained because the items evidenced the nature of the legal advice sought.

Separately, the court considered whether the claimants should be required to return to the defendants a privileged document which the defendants said had been disclosed by mistake. The court was satisfied that the mistake would have been obvious to a reasonable solicitor reviewing the document, and accordingly should be returned. That aspect is not considered further in this post.

Decision

The High Court (Chief Master Marsh) found that the two emails, items 11 and 14 in the list, were not protected by legal advice privilege, saying that the evidence fell some way short of discharging the burden on the defendants to establish the claim to privilege. His reasoning was, essentially, as follows:

  • Bristows provided legal advice to the second defendant, not the fourth defendant which employed both Mr Groeschel-Jofer and Dr Malaun.
  • There was nothing to indicate that Dr Malaun was authorised to seek legal advice from external lawyers acting for the second defendant.
  • It seemed more likely that Ms Groeschel-Jofer was given the task of obtaining legal advice from Bristows and she was obtaining information for that purpose.
  • In that event, her exercise in gathering information from Dr Malaun would not be subject to legal advice privilege. Dr Malaun's communications in order to provide information would not be privileged unless he was the client for the purposes of him obtaining legal advice.

As for Mr Collins's statement that a request by a legal adviser "to a client" for information, and a response "by the client" providing that information, necessarily discloses the matters on which legal advice is sought, the Chief Master said this did not grapple with the underlying question of who is the client for these purposes.

The Chief Master was also critical of Mr Collins's evidence in support of the application. He accepted that, if more than one party is claiming privilege, it may be convenient for the witness statement to be provided by the solicitor who acts for all the relevant parties. He noted, however, that a disclosure statement must be signed by the party concerned, rather than its lawyers, and expressed the view that, in general, the court should insist on evidence in relation to a privilege challenge being given by the party concerned, in order to match what is required in the disclosure statement.

As the claimants had not raised the point, however, Chief Master Marsh said it could be put on one side apart from two observations: (i) if the solicitor provides the evidence on instructions, it is essential that the requirement to state the source of those instructions is strictly complied with, which Mr Collins's statement had not done; and (ii) the evidence should be clear about which party is claiming privilege and the basis for their respective entitlements should be explained, which again had not been done here.

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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