Legal professional privilege (LPP), sometimes known as ‘client legal privilege’, is a fundamental legal right. In house lawyers need to be particularly aware of the idiosyncrasies involved in their line of work, which arise out of the fact that their employer and client are one and the same. Here, we give a brief refresher on what LPP is, and the main risks for in-house counsel and tips for maintaining LPP.
Key takeaway points
- This Rede sets out the general concepts and challenges involved in managing legal professional privilege as part of everyday commercial operations and sets out some practical guidance to assist.
- Legal professional privilege (LPP), sometimes known as ‘client legal privilege’, is a fundamental legal right. In house lawyers need to be particularly aware of the idiosyncrasies involved in their line of work.
- The same principles of LPP apply to both external lawyers and in-house lawyers, but there are differences in practical application because of who the ‘client’ is.
- In-house counsel and executives within the organisation must take special precautions to maintain LPP over advice given or received.
What is legal professional privilege?
LPP is the legal right that exists between lawyer and client which allows the client to resist giving information or producing documents that would reveal communications with their lawyer that are:
- confidential;
- made in the course of the lawyer-client relationship; and
- made for the dominant purpose of;
- giving or obtaining legal advice; or
- use in relation to existing or reasonably anticipated legal proceedings.
The client in the in-house context is the organisation for whom lawyers are employed and provide advice.
LPP applies not just to the processes of discovery and inspection and the giving of evidence in judicial proceedings, but wherever the exercise of coercive powers of investigatory or regulatory authorities call for compulsory disclosure, unless expressly and unambiguously abrogated by statute.
Risks for in-house counsel
The same principles of LPP apply to both external lawyers and in-house lawyers, but there are differences in practical application because of who the ‘client’ is. For a communication to satisfy the three requirements above in the in-house context, it must be shown that the lawyer:
- was acting in their capacity as a lawyer – the lawyer, properly qualified and registered to practice, must have given or received the communication in their capacity as a lawyer, and not in any other capacity, such as where the lawyer performs both legal and commercial roles in the organisation;
- made or received the communication for the dominant purpose of giving legal advice – communications sent by lawyers with dual roles, or that have had input from both legal and non-legal advisors, risk failing the dominant purpose test if found to be for ‘mixed’ purposes (such where they discuss commercial issues or considerations);
- was independent – the relationship between the lawyer and their employer must not compromise the independence of legal advice given. There must be no risk that the lawyer’s advice may be compromised by virtue of the employment relationship, and the lawyer must be sufficiently removed from commercial decision making.
Waiver
Once privilege is in place, it remains in place until it is waived, and then it is gone for good.
Privilege will be waived where the conduct of the privilege holder is inconsistent with the maintenance of confidentiality, which can be conscious and express, or inadvertent or implied (such as providing the communication to third party).
Unrestricted disclosure of the substance of legal advice can also result in the entire advice ceasing to be privileged on the basis that it is no longer confidential (compare “we have legal advice that we will win on appeal” versus “we are confident of winning on appeal”).
Tips for maintaining LPP
In-house counsel and executives within the organisation must take special precautions to maintain LPP over advice given or received. To mitigate the particular risks identified earlier, these include:
Acting in your capacity as a lawyer
- ensure you are properly registered, your practicing certificate is up to date in the relevant jurisdiction, and sign off with your name and position in correspondence (e.g. Mary Smith, Lawyer).
- if you wear two hats (such as ‘General Counsel’ and “Company Secretary’), sign off solely in your lawyer role if the communication is intended to be privileged (e.g. ‘General Counsel’, rather than ‘General Counsel/Company Secretary’).
- when attending meetings, clarify your role. State clearly that you are an advisor (if wishing to provide legal advice), or a member (if wishing to provide policy advice). Ensure internal reports and meeting minutes record your role.
Satisfying the dominant purpose test
- only discuss legal issues in documents intended to be privileged, and avoid discussing commercial issues, and involvement in commercial decision making, where possible.
- obtain written instructions (i.e. an email or memo) from a senior executive confirming that the dominant purpose is for legal advice before performing tasks.
Maintaining independence
- ensure pureness of advice – do not allow non-lawyers to ‘approve’, ‘settle’ or ‘endorse’ your work.
- in-house counsel should have a reporting structure which allows them to consult and report directly to senior management (i.e. their ‘client’). Anyone holding a practicing certificate should report to the General Counsel, otherwise they should not.
- if you sponsor or champion a transaction, do not advise on it, and don’t advise on matters if you have a material personal interest (e.g. employee rights under the staff superannuation scheme).
- review the organisation’s employment agreements, employment structure, chain of command, bases for remuneration, and performance review process, all of which may cast light on the nature of the relationship in question and lawyers’ independence.
Generally
- circulate potentially privileged documents on a limited (i.e. ‘need to know’) basis. If sharing is considered necessary, make sure it is clearly done so on a confidential basis and state that it is not to be circulated freely or externally.
- do not refer to and disclose the substance of legal advice in communications, or non-confidential documents (e.g. in meeting minutes or media releases).
- limit copies of any potentially privileged documents, avoid ‘replying all’ or cc’ing half the building, consider circulating privileged materials in hard copy, or utilize IT controls to reduce distribution.
Closing statement
LPP can be a complex, nuanced area, particularly in respect of the issue of waiver. As such, whilst the above serves as a good refresher of the things to look out for ‘in-house’, it is important that all practitioners have a solid grasp on the fundamentals of LPP and do extra reading (or seek assistance) where necessary as maintaining, or losing, a claim to LPP can mean the difference between a good and bad outcome in a dispute.
If you would like to discuss this topic, or for any assistance on other matters, please get in touch with any member of our Disputes team.
