Unpacking privilege: a UK perspective

September 2023  |  FEATURE | LITIGATION & DISPUTE RESOLUTION

Financier Worldwide Magazine

September 2023 Issue

The concept of privilege (i.e., between a lawyer and their client) is a legal rule protecting communications within certain relationships from compelled disclosure in court proceedings. It is applicable in all juridical settings and considered an absolute right throughout the justice system.

Under UK law, privilege is certainly a legal right and a powerful legal tool. “Privilege has long been recognised as a fundamental principle of UK law,” says Paul Dean, a partner at Holman Fenwick Willan LLP. “For several hundred years, the law of privilege has protected the right of clients to communicate with their lawyers in confidence, without fear that those communications will later be disclosed to third parties during the course of litigation.”

And while there are various types of privilege, Pinsent Masons, in its 2022 analysis ‘Legal professional privilege in the UK’ cites two – legal advice privilege and litigation privilege – as those most commonly practised by the legal fraternity.

Legal advice privilege, as the analysis explains, protects confidential communications, and evidence of those communications, between a lawyer and their client, but not communications with third parties, provided that the communications are for the dominant purpose of seeking and receiving legal advice in a relevant legal context.

Litigation privilege, by contrast, protects confidential communications, and evidence of those communications, between a lawyer and their client and a third party, or between a client and a third party, created for the sole or dominant purpose of obtaining information or advice in connection with the conduct of existing or reasonably contemplated litigation, including avoiding or settling, as well as defending or resisting, that litigation.

However, the scope of protection provided by privilege can be difficult to determine and is frequently the subject of litigation. The issue is compounded by an increasingly challenging regulatory environment (focusing on issues as diverse as anti-corruption, money laundering, sanctions, cyber crime, crypto, and environmental, social and governance (ESG) enforcement).

“These issues are particularly complex in the modern commercial context,” says Matthew Bruce, a partner at Freshfields Bruckhaus Deringer. “Many companies do not have clearly delineated compliance and legal functions, with in-house lawyers often acting in both legal and business capacities.

“For example, courts across jurisdictions have been grappling with the scope of legal advice privilege, situations in which an internal investigation can give rise to litigation privilege, circumstances in which an allegation of fraud or criminality can set aside the privilege and the consequences of waiver.”

Privilege debates

While UK courts generally treat privilege as a constitutional and fundamental right, as highlighted by Scottish Legal Complaints Commission v Murray (2022), that same year also saw several other cases debate the issue.

In Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe), the Court of Appeal held that the identity of those instructing lawyers is not inherently privileged, with Lord Justice Males confirming that the correct test is whether or not the disclosure of their identity would “inhibit candid discussion” between the lawyer and their client (or the person giving instructions on the client’s behalf).

Further debate was generated in Kyla Shipping Co v Freight Trading, in which the Commercial Court rejected a claim for litigation privilege over an expert report. Charles Hollander KC found that the dominant purpose of the report was not for litigation in reasonable prospect.

Another widely discussed privilege case of 2022 was Jinxin v Aser Media Pte Ltd, which concerned corporate officers and employees holding privileged material on work email servers and laptops. The thrust of this case was that a corporate policy allowing for the monitoring of the servers is not sufficient to destroy confidentiality, such that privilege can be maintained against the employer and anyone else.

“Overall, we can say that UK courts strive to protect privilege and are aware of modern contexts in which privilege issues often arise,” opines Mr Bruce. “But individuals and companies do need to be mindful about protecting privilege, for example by labelling privileged communications as such while not assuming that a mere label, or copying in a lawyer, will somehow create a privileged occasion. Additionally, legal and non-legal advice should be kept separate and privileged material confidential and reasonably restricting disclosure.”

Scope of protection

With any significant alteration to UK privilege not exactly recent, the likelihood is, in the short to medium term at least, the scope of protection provided will remain difficult to determine.

To locate the last major decision on privilege taken in the UK, one must look back to R (Prudential) v Special Commr of Income Tax (2013), in which the UK Supreme Court concerned itself with the question of whether non-lawyers can give privileged legal advice at common law – a judgement that ultimately decided to the contrary.

“Lawmakers have generally shied away from legislating on the law of privilege,” concludes Mr Bruce. “In the UK, while we have seen significant inroads by parliament into the separate privilege against self-incrimination, legal professional privilege has been left intact. So, we do not really expect any legislative changes and changes would need to come from the courts or from policies adopted by regulators.”

© Financier Worldwide

BY

Fraser Tennant