Legal advice privilege attaches not just to those communications between lawyer and client which have as their purpose the giving or receiving of legal advice, but also extends to material which “evidences” the substance of those communications. The High Court has recently provided welcome clarity on the level of “evidencing” that is required for secondary material to be rendered privileged. The secondary material must contain a definite and reasonable foundation from which the legal advice can be inferred. There is no need for the legal advice to be directly referenced: In The Matter Of Edwardian Group Limited  EWHC 2805 (Ch)
This privilege issue emerged during unfair prejudice proceedings brought by the petitioners six years after the alleged acts of unfair prejudice. They sought to explain their delay in bringing proceedings on the basis that they had been unable to finance the litigation themselves and had only recently secured suitable funding.
On the issue of improper delay, the court ordered (as part of standard disclosure) disclosure of the petitioners’ communications with the potential litigation funders from whom they had sought financing. However, the petitioners withheld or redacted much of those communications on grounds of privilege – namely that the substance of the legal advice they had received could be inferred from their content.
The respondents challenged this claim to privilege on the basis that such an inference to legal advice was not enough to render the communications with potential funders privileged.
What is material that “evidences” privileged communications?
Morgan J noted that it is well-established that material which “evidences” the substance of communications covered by legal advice privilege is also caught by the same privilege1 (eg potentially board minutes to the extent they evidence such communications).
But what level of evidencing is sufficient for such a claim to privilege? The judge contrasted two previous cases:
- FSCS v Abbey National  EWHC 2868 (Ch) – legal advice privilege only attaches to those communications between a lawyer and client which have as their purpose the giving or receiving of legal advice in either their “original form or in a summarised or paraphrased form”. Inference of those privileged communications is not enough (unless perhaps the inference is obvious and inevitable in which case the document is in substance a statement of the communication).
- Lyell v Kennedy (No 3)  27 Ch D 12 – the Court of Appeal refused to order disclosure of a selection of documents made by a party’s solicitor on the basis that the selection would give the other party a clue to the legal advice given. Or, as later put in the case of Ventouris v Mountain  1 WLR 607, the selection would betray the trend of legal advice given.
Morgan J believed that the correct approach was that taken in Lyell. Inference of legal advice was enough to render material privileged. As to the level of inference necessary, he ruled that it must have a “definite and reasonable foundation”. Something that would merely cause “one to wonder or speculate” about the existence or content of legal advice would not be sufficient.3
Did the funding communications betray the trend of legal advice?
Morgan J then considered whether the petitioners had correctly applied the Lyell test (of betraying the trend of legal advice) to the funding communications. He concluded that the petitioners’ solicitor had correctly described the test but that he had doubts about whether the test described had in fact been applied.
However, a cautious approach should be taken when doubting a solicitor’s claim for privilege.4 A claim to privilege in a solicitor’s witness statement is conclusive unless it can be concluded with “reasonable certainty” that the test has been incorrectly applied.
Although the judge had doubts about the correct application of the test, as he was not able to say with “reasonable certainty” that the solicitor had misapplied the test, he would not go behind the claim to privilege. Even if he had been persuaded with “reasonable certainty” that the test had been incorrectly applied, he noted that the most he would have been persuaded to do would have been to order the petitioners’ solicitor to provide more detail as to the claim to privilege.
Not proportional to redo redaction exercise anyway
The petitioners also sought to argue that if they were incorrect in their claim to privilege they should not be ordered to redo the reaction exercise on proportionality grounds. Interestingly, the judge agreed (albeit this was obiter). He considered that the advantage to the respondents if the redaction exercise was carried out a second time would probably be slight and may result in the trial date being lost.
Given recent high-profile cases taking a restrictive line on the boundaries of privilege, this decision is to be welcomed. A relatively expansive approach can be taken when looking at what constitutes “evidence” of privileged communications. That said, there are still limits. Although an inference of legal advice in a document is sufficient to justify a claim to privilege, that inference must be reasonable and definite and cannot merely result in wonder and speculation as to the legal advice. As the High Court said in RBS Right Issue Litigation  EWHC 3161 (Ch) in relation to lawyers’ working papers, there is a real difference between merely reflecting “a train of inquiry”, which is not enough for a claim to privilege, and reflecting or giving a clue as to the trend of legal advice.