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What type of legal advice is privileged? 

The Law Lords' recent landmark ruling on the Three Rivers case clarifies what type of legal advice is privileged. However, Christopher Grierson, a partner at Lovells, tells Jon Robins the issue of litigation privilege is still ripe for review ...

The House of Lords last week delivered a landmark judgment on legal professional privilege in Three Rivers District Council and BCCI v The Governor and Company of the Bank of England BLD 1211044741. Christopher Grierson, a partner at Lovells, points out that this is the first significant judgment by the court on legal advice privilege in over 100 years. “Everyone will welcome clarification of what type of legal advice is privileged, but the Lords have ducked the issue of which contacts between clients’ employees and their lawyers are protected,” he says.

According to the solicitor, the Law Lords have “clarified the circumstances in which privilege can be claimed for communications between a lawyer and client made when there is no litigation in contemplation”, in other words legal advice privilege. This is distinct from litigation privilege which can be claimed when litigation is in prospect at the time of the communication.

The House of Lords also gave important guidance about when privilege can be claimed in the context of inquiries which, Grierson notes, is an area of growing importance in light of the increased use of inquiries to investigate issues of public concern. “The House of Lords has clarified that the law remains essentially as it was widely understood to be before the Three Rivers judgment in March 2004,” the solicitor explains. “Legal rights and obligations are the touchstone but the ‘relevant legal context’ is wider than this, and can include public law rights and advice or assistance to parties whose conduct, reputation or integrity, may be the subject of criticism by an inquiry.” The House of Lords acknowledged that there would “always be difficult cases on the margins” and said that the test was whether, “objectively speaking, it was reasonable to expect privilege to apply in the dealings between lawyer and client”, he added.

“In our view, this is likely to mean that, where the communication concerns a matter on which it is normal for lawyers to advise, legal advice privilege will protect it but this question has to be addressed whenever clients consult a lawyer,” Grierson explains.

It was accepted in Three Rivers that communications between the Bank of England and its solicitors relating to the Bingham Inquiry into the supervision of BCCI could not attract litigation privilege because the inquiry did not amount to “adversarial proceedings”. This was a test laid down previously by the House of Lords in the case of Re L [1997] AC 16. Nor could the Bank demonstrate that, at the time it instructed its solicitors, litigation was sufficiently within its contemplation. Grierson says that last week’s judgment suggests that the scope of litigation privilege “is an issue that is ripe for review”.

The House of Lords said that inquiries would inevitably present a ‘relevant legal context’. “[This] is likely to give great comfort to those asked, or compelled, to assist the growing number of such investigations as legal advice provided to them will be privileged,” he added.

The Appeal judges held in Three Rivers last year that only those employees of an organisation tasked with obtaining or receiving legal advice could properly be classified as ‘the client’ for legal advice privilege. It caused alarm for lawyers and their clients alike, all of whom had previously understood that the position was that the organisation itself should be classified as ‘the client’.

It is “disappointing” that the House of Lords has provided no further guidance, Grierson says. “It will increasingly be necessary to identify which employees of an organisation constitute ‘the client’ for a specific matter,” he adds.

.(22/11/04)

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Case annotations in other services:-
Re L [1997] AC 16; *Three Rivers District Council and others v Governor and Company of the Bank of England (No 5) [2004] All ER (D) 176 (Nov); [2004] UKHL 48.