Know your client: Why legal professional privilege is not without its flaws

Addressing a breakfast meeting last week, Lord Neuberger cautioned his audience that changes in the corporate and commercial spheres were creating complications for the concept of legal professional privilege, particularly among in-house corporate lawyers whose sole 'client' is their employer. 'Particular problems appear to have arisen from the marked increase in the domestic and international fields when it comes to regulatory and criminal sanctions in the corporate environment,' he said.

Most notably, Lord Neuberger highlighted that claiming LPP within the context of a corporate internal investigation requires careful, premeditated and consistent thought about just who constitutes 'the client', as only documents and communications between the lawyer and their client will be subject to litigation and legal advice privilege. According to Lord Neuberger, the implication of this restriction is potentially that communications and documents between a company lawyer and various employees or agents of the company outside upper management and the board may not be subject to LPP, meaning that any documents connected with those individuals in the instance of an internal probe (for example, witness statements or interview transcripts) would need to be made available to external parties should they be sought.

This challenge becomes even more pertinent in circumstances where communications are documented for purposes other than prospective litigation, Lord Neuberger explained, using a recent competition probe involving supermarket chain Tesco by way of example:

'When carrying out investigations into whether Tesco had entered into two separate 'concerted practices' in relation to the supply of cheeses, following a whistle-blowing report, the [Office of Fair Trading] sought documents from Tesco which were all to do with obtaining evidence of employees and others in relation to the alleged price-fixing scheme. The [Competition Appeals Tribunal] held that it would have refused disclosure as a matter of discretion, but in any event, it would have to refuse disclosure. This was because the evidence was obtained by solicitors for the dominant purpose of contemplated adversarial proceedings, as the OFT was threatening proceedings against Tesco, which were adversarial, and LitP applied.'

In situations where litigation privilege cannot be claimed, Lord Neuberger said, the CAT may be forced to decide that witness statements taken from employees of a given company are disclosable in so much as that they are taken from employees who are not 'the client' and as such fall outside the net of legal advice privilege. 'It is also worth remembering that, if the documents are not privileged, they may not only be sought by the relevant regulator, but also by co-defendants in any proceedings (including a criminal case) and, indeed, by adversaries in other contexts,' he warned, citing commercial litigation as a potential example.

To keep LPP as airtight as possible in situations where LitP does not apply, Lord Neuberger suggested that company lawyers need to decide and define from very early on exactly which individuals constitute 'the client', and thus which documents may be protected under LPP. However, he warned against casting the net too widely:

'The bigger the group, the more unwieldy and the greater the risk of loss of confidentiality, and I suppose that if the court thought the group was artificially big, it might hold that not all members were genuinely 'the client'... It may well [be] possible to justify varying the membership of the group with the passage of time, although I expect a court would be unimpressed if it thought that the variation was essentially tactical.' Sources: Law Society Gazette; Legal Business;