Legal privilege reviewed as 'Three Rivers' litigation resurfaces

The Court of Appeal handed down a judgment last April which defined the scope of privilege more narrowly than previously assumed when they held that documentation and internal memoranda prepared by employees was not protected (Three Rivers District Council v Bank of England). Following on from that, just before Christmas Judge Tomlinson determined that communications between solicitor and client on presentational matters, where there was no litigation in the offing, would have to be disclosed if relevant to subsequent litigation.

"It is a judgment that is crying out for clarification now by the Court of Appeal," said Phillippa Bennett, a litigation partner at DLA. "It is the correct forum for these issues to be addressed." The Appeal judges have reserved judgment on the matter. The Three Rivers litigation arose from the collapse of the Bank of Credit and Commerce International in 1991. Shortly after, a private inquiry was conducted by Lord Justice Bingham to consider its supervision. The Bank of England formed a unit to coordinate its response to the inquiry known as the Bingham Inquiry Unit (BIU) which obtained advice from external lawyers. The claimants sought disclosure of certain papers from the Bank and, as proceedings before the Bingham inquiry were not adversarial, litigation privilege did not apply. The question was whether legal advice privilege could extend to communications between the BIU and the lawyers as the presentation of factual material.
"The way the legal profession normally view legal advice provided is that it is effectively confidential communication between a lawyer and their client," Bennet said. "In the context of the BCCI litigation, the Court of Appeal narrowed down what the definition of the client was which effectively meant that it could only apply to a small number of senior employees. Whereas previously it had been thought that it could cover many people in an organisation that you are acting for."

In a separate High Court decision, Three Rivers (No 10), Judge Tomlinson considered the issue of what constitutes legal advice (Three Rivers Council v Bank of England). Once again, the scope was diminished. Legal advice was given a strict interpretation and was held to encompass only advice on rights and obligations and not advice on how evidence should be presented. "But also, and importantly, he made some other comments to the effect that legal advice privilege may only be limited to advice which is or may become litigious," said Bennett. "And that is a very important restriction if it's upheld in the Court of Appeal."

Sanjay Bhandari, senior associate, Baker & McKenzie, argued in The Lawyer last month that the Tomlinson ruling, should it stand, could "paradoxically result in lesser, rather than greater, transparency" (Opinion on Three Rivers). He contended that it would "encourage applications for disclosure" and business would have to be careful as to how it obtained advice on the presentation of factual material which would lead to evidence being presented in "its most raw form".