What is legal professional privilege?
Legal professional privilege, also known as client legal privilege, is a client’s immunity from being compelled to disclose certain confidential communications between themselves and their lawyer. In some cases this extends to communications between a client and a third party, or a client’s lawyer and a third party.
The types of communication covered by legal professional privilege
There are two main types of communication which are covered by legal professional privilege.
The first type is ‘advice’, which refers to confidential communications made in the course of a professional relationship between lawyer and client for the dominant purpose of the client seeking legal advice or the lawyer providing legal advice.
The second type is ‘litigation’, which refers to communications from a lawyer, a client or a third party that are made for the dominant purpose of use in or in relation to existing or anticipated legal proceedings.
Legal professional privilege also covers communications from a third party to the lawyer or the client, where they are made at the client’s request for the dominant purpose of being used to assist the lawyer providing legal advice.
Communications or documents that are made in aid of one of the above purposes can also attract legal professional privilege, which would indicate information collected for instructions to a lawyer and a lawyer’s research notes.
Legal professional privilege for in-house lawyers
The fact that in-house lawyers can claim privilege over communications to their client is a long-established principle of law. However, in‑house lawyers face difficulty because they are employees of their client and it is often problematic separating the role of an employed legal counsel as a lawyer advising in-house and their participation in commercial decisions. As a result, in-house lawyers must take care to be able to demonstrate that they are truly independent of their employer and that their advice is not influenced by personal loyalties, interests or duties to their employer.
A number of Federal Court cases have considered the question of whether in-house lawyers are sufficiently independent from their employer to satisfy the requirements of legal professional privilege. This question was given particular consideration in the recent decision of Dye v Commonwealth Securities.
Overview of Dye v Commonwealth Securities
Vivienne Dye, a former employee of Commonwealth Securities, made various workers compensation claims against the company. To help substantiate her claim, Ms Dye sought access to documents in the possession of Commonwealth Securities, over which they had asserted a claim for legal professional privilege.
A number of these documents involved communications from Mr Fredericks, who was an in-house lawyer for Commonwealth Securities. Mr Fredericks’ role involved providing both legal and non-legal human resources advice. Ms Dye argued that because Mr Fredericks’ role included providing non-legal advice, none of his communications could be privileged.
The Court adopted the following approach of testing the dominant purpose of the communications:
- Communications made by a lawyer who also had some non-legal functions could still be privileged.
- An examination of the capacity in which the lawyer was acting at the time of the communication is key. The fact that a communication was provided by a lawyer in the course of providing legal services to the client should be applicable to all lawyers, external or in-house.
- The Court had reservations about whether the ‘independence’ requirement required the lawyer to establish that the advice was of an ‘objectively independent character’.
Ultimately, the documents over which Mr Fredericks’ claimed privilege failed to satisfy the dominant purpose test of seeking legal advice. Consequently, Legal Professional Privilege was lost on many of the documents over which privilege had been claimed. Some of those documents contained both legal and non-legal purposes. It was maintained that a document can only attract privilege if it is created with the dominant purpose of providing legal advice.
Arising from the Dye decision: what is independence?
The decision in Dye shows that even where in-house lawyers succeed in acting independently of the interests of their employer, their increasingly common participation in commercial decisions creates uncertainty over whether the dominant purpose of a piece of work is sufficiently legal to attract privilege.
We set out below 10 practical measures that in-house lawyers can take to reduce the possibility of an adverse finding on legal professional privilege.
To ensure communications maintain their independence:
- Include an independence clause in your in-house lawyers employment contract.
- Develop a company independence policy relating to the legal department.
- Adopt a practical reporting line for legal communications.
- As a suggestion the appropriate reporting line should be via the general counsel to the CEO .
- Ensure in-house counsel report to legal, not commercial supervisors for their legal work.
- The general counsel should be able to consult the Board on any issue and the Board should be able to seek advice directly from the general counsel on any issue.
- The Board should ratify the dismissal of the general counsel advice (which should be included in the Board Charter).
- Be sure of the capacity in which you are acting and label communications accordingly. Do not abuse the label “confidential and privileged”.
- Draft separate advices on legal and commercial matters clearly marking the document title accordingly.
- Mark your correspondence ‘subject to legal professional privilege’ (this is not conclusive, but is persuasive).
- Use different signatures on legal and commercial documents.
- Maintain control over the distribution of documents containing advice, in particular the use of ‘cc’ and ‘bcc’ in e-mail correspondence.
- Implement written protocols for staff and educate them on their roles and the implications of waiving privilege.
- Maintain a practising certificate.
In-house counsel should be aware of the qualifying requirements for a claim of legal professional privilege when providing legal advice. Implementing a few practical measures like those suggested above should assist in demonstrating a documents independence and maintain its Legal Professional Privilege status.