A loss of confidence

“Privilege” is the concept that a document or advice that ordinarily would have to be disclosed to other parties can be held back because it was prepared or issued in a certain context, normally in the course of giving or receiving legal advice. The basis for such a privilege is that a party should be able to talk to their adviser in confidence, without the fear that such confidence may be set aside. The trouble is, too much reliance is placed on the blanket nature of privilege without proper consideration of the risk that it may either not apply, or not apply to the extent that it is believed.

There are two forms of privilege. Litigation privilege is attached to confidential communications between client, lawyer and third parties where the purpose is obtaining legal advice, or collecting evidence, in relation to litigation that already exists or is likely to exist.

Legal advice privilege relates to confidential communications carried out between a client and lawyer (but not third parties) in the course of obtaining legal advice.

In Alan Jackson vs Marley Davenport, the issue before the Court of Appeal was whether earlier drafts of an expert report were to be disclosed. The proceedings concerned a fall from a ladder while at work. The expert had prepared a draft report to be used in a conference with lawyers. However, a final report was subsequently served that suggested the expert might have changed his view since the draft. The defendant sought disclosure of the draft report and the claimant was required by a district judge to disclose it. There was then a successful appeal against that ruling, which was followed by a further appeal to the Court of Appeal.

The Court of Appeal held that where an expert made a report for legal advisers for the purposes of a conference, such a report was indeed subject to litigation privilege. But the fact that a challenge to seek disclosure of such a report got as far as the Court of Appeal shows the privilege concept is no longer accepted at face value.

The court’s decision challenged the long-established right of clients to seek advice from lawyers in confidence

The Court of Appeal has also been involved in deciding other issues in relation to privilege in Three Rivers DC vs Bank of England. The judgment in case five of this series gives a narrow meaning of the term “client” in the context of deciding whether lawyer–client communications are privileged. The court held that the client was not the Bank of England itself but a special unit set up to deal with the inquiry into the bank’s role in the collapse of the BCCI in 1991. The inquiry was not litigation, so litigation privilege did not apply. Legal advice privilege was not available for documents prepared by employees or ex-employees of the bank outside the specialist unit, even though they assisted in gathering information, because they did not liaise with external lawyers. As the client was the bank’s special unit and not the bank generally, such documents were not privileged.

The question in Three Rivers (case 10) was whether the Bank of England had to disclose communications with a firm of solicitors made during the inquiry into BCCI. The legal advice was given in the context of how matters should be presented to an inquiry, rather than as to substantive rights and obligations. The inquiry process was not an adversarial one (such as a trial in court), so litigation privilege did not apply. The court decided that legal advice privilege could not apply either. The court held that privilege would only arise where the primary object of the client–lawyer relationship was to obtain advice that required knowledge of the law, such as advice in relation to rights and liabilities. Advice on presentations before a tribunal such as the inquiry did not qualify under this test.

The Court of Appeal decision created waves as it challenged the long-established right of clients to seek advice from lawyers in confidence. Care is needed as to who exactly is the client – a difficult issue where a business has an in-house lawyer who instructs external solicitors. Care is also required as to who is producing documents for whom and what purpose.