Opinion: The privilege view

Lawyers will have to watch their steps for the foreseeable future in the legal professional privilege minefield

Extensive disclosure is a key distinction between common law jurisdictions and most others. Inevitably tension between disclosure and privilege continually creates new flashpoints.

The latest is waiver of privilege. The Highland Capital and Abramovich cases have underlined how selective disclosure at interlocutory stages can then result in wider disclosure. The courts are resistant to cherry-picking on fairness grounds. Once you have opened the bottle by making use of parts of privileged materials it is difficult to put the genie back. Given the twists that proceedings often take, claiming and waiving privilege is difficult territory. A strategic view may be preferable to immediate tactical advantage.

Waiver is a potential pitfall throughout litigation. Often this stems from failure to consider properly the status of documents at the outset. References in pleadings, expert reports and disclosure lists all create risks. Limited or accidental references may not be fatal, although these are problems best avoided.

The pending appeal to the House of Lords in Prudential emphasises how prized privilege is as a protection. Accountants have repeatedly sought to challenge its connection to the legal professions and the tax field is at the sharp end of this debate. The growing significance of intention in reviewing the lawfulness of tax schemes makes privilege of renewed importance. Despite the anomalies it seems unlikely that the scope of privilege will be extended further given public policy interest in constraining it and objections that accountants do not owe the same duties to the court as do lawyers.

The ongoing relevance of privilege is also seen in international disputes, where it is an important consideration in forum shopping and in regulatory actions. The lack of consistency between jurisdictions and regulatory regimes is a headache for global business, as highlighted by AkzoNobel, which gained a high ­profile in view of the pressure by ­corporations to secure the benefit of privilege for advice given by in-house lawyers in the context of competition investigations by the European ­Commission.

The European Court of Justice judgment in the Commission’s favour means, for example, that such advice will remain privileged in a dawn raid in the UK if by the OFT, but not by the Commission.

The last great privilege battle in our courts was in Three Rivers, which for some years threw the scope of legal advice privilege into real doubt. Even now the failure of the House of Lords to fully resolve the question as to who is ’the client’ entitled to claim privilege leaves a residual uncertainty for companies. Is the client to be regarded as the whole of the relevant legal entity or, as the Court of Appeal suggested, only some smaller group responsible for directing the conduct of the case. The consequences as
to how internal communications should be handled in large organisations remains in doubt, notwithstanding practical arguments in favour of keeping the rules simple and workable.

It is anyone’s guess as to where the next issue on privilege will take us, but we can be confident that we will not have long to wait.