Court holds firm against attempt to push the boundaries of legal advice privilege as defendants ordered to disclose documents generated by claims consultants

The Court has always fiercely guarded the principle of legal advice privilege and any attempt to expand its scope has been consistently rejected.  The recent case of Walter Lilly & Company Limited v Mackay & Anor [2012] EWHC 649 (TCC) (15 March 2012) shows that nothing is set to change in this regard as the Defendants' attempt to withhold disclosure of documents generated by a claims consultant was firmly rejected by the Court, notwithstanding their plea that the claims consultant had been acting as their legal adviser. Consequently, it is clear that those who make use of the services of claims consultants and claims management companies cannot expect to receive the same level of protection or legal privilege as that which will be afforded to practising solicitors and barristers.

Facts

In the Walter Lilly case, the First Defendant, Mr Mackay, engaged the services of building specialists in order to construct a substantial property in London. Having become disillusioned with the process, Mr Mackay appointed claims consultants, Knowles Limited ("Knowles") to assist. A dispute then arose and court proceedings were commenced. During the course of the proceedings, the Defendants withheld documents created by and exchanged with Knowles on the grounds that Knowles were their legal advisers and the documents were therefore protected by legal advice privilege.

In an attempt to defeat an application for disclosure, Mr Mackay submitted a witness statement stating that Knowles answered questions posed to them which were "of a legal nature" and that he believed his principal contacts were holding themselves out as "Lawyers". However, critically, Mr Justice Akenhead found that the purpose of Knowles' appointment was to provide the Defendants with "contractual and adjudication advice". Consequently, the fact that Mr Mackay honestly believed his contacts were practising lawyers was immaterial.  As a result, the documents were not protected by legal advice privilege and should have been disclosed.

The Law

This case follows the principle already established by the Court of Appeal in R (Prudential Plc and another) v Special Commissioner of Income Tax [2010] EWCA Civ 1094 in which Lord Justice Lloyd refused to accept that advice provided by accountants on the tax implications of a proposed transaction was covered by legal advice privilege.  His view was that the court was "bound to hold that [legal advice privilege] does not apply, at common law, in relation to any professional other than a qualified lawyer; a solicitor or barrister, or an appropriately qualified foreign lawyer." He refused to accept any suggestion that the principle could be developed in an ad hoc fashion, commenting that "it is not open to the court to hold that [legal advice privilege] applies outside the legal profession, except as a result of relevant statutory provisions".

The Walter Lilly case is another reminder that the Court can be relied upon to take an uncompromising approach when anyone attempts to challenge the well established principle of legal advice privilege.

Commentary

It is becoming increasingly common for parties to involve third parties such as claims management companies and claims consultants in matters which might previously have been handled exclusively by solicitors or barristers. The Walter Lilly case will therefore play a helpful role in retaining clarity over what could otherwise have become a somewhat blurred principal in the current legal climate. For those facing attempts to avoid disclosure of third party documents on the grounds of alleged legal advice privilege moving forwards, questions should be asked around the reason for the third party's appointment. Those engaged to do anything other than provide legal advice and assistance are unlikely to be able to rely on legal advice privilege as their reason for non-disclosure, regardless of whether or not solicitors or barristers are employed by the third party in question.

It should be remembered that the Walter Lilly decision only impacts on the principle of legal advice privilege. Mr Justice Akenhead did not consider litigation privilege or advice given by claims consultants in connection with adjudication proceedings, which he referred to as a "possible outstanding issue".