In our publication, "Paradise Lost: Glencore, Legal Professional Privilege and Disclosure", we discussed the recent High Court of Australia decision in Glencore International AG v Commissioner of Taxation. The decision is a timely reminder of the importance of legal professional privilege. This update recaps legal professional privilege, and provides some tips for dealing with privileged information.
What Is Legal Professional Privilege? A Recap
Privilege covers a document because of the content and purpose behind the creation of the document. It arises by the operation of the law; this means you cannot make privilege exist where it otherwise would not exist.
Legal professional privilege attaches to confidential communications between a client and their legal practitioner and to documentation (e.g. letters, memoranda, reports, advice, etc.) created for the dominant purpose of receiving legal advice or in contemplation of legal action.
The general position is if a document is subject to legal professional privilege, you do not have to produce it to governmental bodies or parties to litigation where you could otherwise be compelled to do so. The Glencore decision demonstrates how legal professional privilege is a shield (i.e. a right invoked in a defensive manner), and not a sword (i.e. not a right that can be enforced through legal suit).
You can waive privilege intentionally or inadvertently by acting in a way that is inconsistent with maintaining privilege over a document. Once this happens, you can no longer refuse to produce the document on the basis of the privilege.
Ensuring Legal Professional Privilege Applies
It is difficult for modern businesses to avoid creating documents (e.g. emails) that discuss openly and frankly issues that may become the subject of investigations by regulators or litigation. An example is internal investigations into an operational incident by management to assess what, if any, operational changes are required to minimise the risk of further incidents. These internal investigations are often the first port of call for regulators in their investigation into a potential breach of a company's statutory duties.
The key to ensuring legal professional privilege exists over sensitive documents is recognising the need to maintain privilege early, and putting in place protocols relating to how documentation and communications are dealt with to ensure documents are created in a manner that attracts and maintains privilege.
Putting these protocols in place is more difficult in multinational businesses. This is because there may be important differences between the law of a foreign country and Australia relating to the privilege. In those circumstances, you should seek legal advice to ensure any protocols take account of this conflict of laws to increase the likelihood that documents created globally are protected by the privilege.
The best way to attract and maintain privilege is to engage an external lawyer in any process where documents are being created. Whether privilege attaches to communications and documentation exchanged between a client and their in-house counsel is less straightforward. For instance:
- It may be relevant whether the in-house counsel is entitled to practise in their own right, like a lawyer in an external legal firm
- The court may consider the capacity in which the in-house counsel received the communication from their client (the company), and whether the in-house counsel was acting as an independent (albeit, directly employed) adviser of the client
Marking emails and documentation as "confidential" and "subject to legal professional privilege" ensures that if potentially privileged documents need to be reviewed as part of litigation, it is easier for the in-house team to quickly identify the documents that may be privileged. Those documents can then be reviewed, as efficiently as possible, to determine if they are privileged.
To ensure that privilege applies to the broadest scope of documents possible, company personnel should ensure that they do not "mix" potentially privileged and non-privileged communications. For instance, personnel should not forward an email that is subject to privilege and include in the forwarded email content that does not relate to the core of the privileged subject matter.
Avoiding Losing Legal Professional Privilege
Privilege can be lost through deliberate or inadvertent waiver. Inadvertent waiver can occur where a party treats information or a document that is privileged inconsistently with maintaining that privilege for example, by telling a third party what the privileged document says.
Because of this, documentation that may attract privilege should be treated as highly confidential, and information and documentation that is privileged should be shared sparingly in-house and on a "need-to-know" basis.
As the Glencore decision demonstrates, maintaining security over data internally and externally is critical. If privileged information is obtained by a third party and then disseminated to the world at large, it is difficult to protect the information further by legal suit.
If privileged documentation is required to be sent external from a business to another person or organisation (e.g. an auditor), it is advisable to seek legal advice as to whether privilege or the confidentiality of the documentation may be inadvertently waived.