Privileged Documents

This article looks at recent case developments concerning document retention and legal advice privilege.

Many companies will be viewing the latest bout of tobacco or obesity litigation and wondering whether such cases will affect them. Even if the subject matter may not be directly applicable to your company, the cases are showing that it is of great benefit to review the company's document

retention policies.

Normally legal advice privilege has meant that documents need not be disclosed in later litigation. The rules of 'privilege' have been recently re-examined by the courts in the Phillip Morris US case [United States of America v. Phillip Morris & BAT, QBD. Lawtel 10.12.03]. In 1985 the volume of tobacco litigation was increasing in the US. British American Tobacco (BAT) wanted to put its house in order because of 'a general apprehension of future litigation'. They believed there was a 'distinct possibility' that sooner or later BAT would be sued and so they instructed their lawyers (Lovells) to advise them on a document retention strategy. No proceedings were brought against companies in the BAT group until late 1990. However, in a spin off from some tobacco litigation in the USA, the American courts sought to examine a solicitor from BAT's lawyers in respect of the advice given to BAT in the mid-80's. A recent decision in the BCCI / Three Rivers litigation [Three Rivers District Council v. Bank of England (May 2003 and November 2003)} narrowed the scope of legal advice privilege in non-adversarial proceedings. In the Lovells case the High Court held that when considering a claim of legal professional privilege, it had to be satisfied that:

• the communication is between the lawyer and his client;

• it is confidential; and

• it is for the dominant purpose of obtaining or giving legal advice (in the sense of advice on rights and obligations as opposed to presentational advice).

Applying this test the Court considered that many of the communications between the solicitor and BAT were properly protected by legal advice privilege such as communications between the solicitor and the former company secretary concerning the law relating to disclosure and inspection of documents and related matters. However advice and assistance given by Lovells on matters such as the organisation and implementation of the review of documents was less likely to be covered by legal advice privilege. Furthermore, the Court held that because the identity of the person with whom the solicitor communicated was sometimes unclear, it was not possible to say whether that person was properly to be regarded as the 'client'. The Court also considered the extent to which litigation privilege would apply in respect of documents created between 1985 and 1998 relating to document review procedures. It held that 'a general apprehension of future litigation' was not sufficient to entitle BAT to claim litigation privilege in respect of communications made for that purpose. Applying the test set out in Waugh v British Rail (1980) the Court held that in 1985 litigation was not 'in reasonable prospect' but this might not be so in respect of documents created in the late 1990s. BAT will likely have to disclose documents which - at the time they were created - were thought to be covered by legal professional privilege.