People often presume that all communications with their lawyers are subject to legal professional privilege and cannot be disclosed. However, this is not necessarily the case.
Imagine this situation. You are working on a large property transaction which is not going well. You ask for some urgent legal advice. The lawyer drafts an email advice which includes some very sensitive commercial information.
Despite your best efforts, the property transaction continues to sour and litigation ensues.
The email from the legal adviser is relevant to the proceeding and you assume that it is protected from disclosure thanks to legal professional privilege.
This is usually the case but in certain circumstances the privilege may be lost and you may need to disclose the legal advice.
We explain in this update, in general terms, some of the circumstances that may result in you losing the protection of legal professional privilege.
Legal professional privilege explained
Legal professional privilege protection arises in common law (law made by judges) and statute law (law made by politicians in the form of legislation). There are some technical differences between the two forms of the privilege but they operate in similar ways. For the purpose of this article we will talk in general terms about the privilege.
Legal professional privilege applies to communications that meet certain criteria. To attract the privilege, you need the following:
If the communication is privileged it is protected from disclosure in court proceedings or (in certain situations) from regulators with powers to ask for documents.
Now let us turn to how privilege might have never arisen in the first place and how it can be lost.
Legal professional privilege that never was
To make the obvious point, the communication needs to be confidential to be privileged. If you are talking with your lawyer over coffee in a busy café – it is not a confidential communication and it will not be protected.
The communication needs to be for the ‘dominant purpose’ of obtaining legal advice or to be used in litigation. For example, an email chain between business partners who are discussing a potential acquisition. The email chain is then forwarded to a lawyer for advice on one aspect of the transaction. The initial parts of the email chain were not prepared for the ‘dominant purpose’ of obtaining legal advice and may not attract the privilege. However, parts of the earlier email chain may attract privilege if disclosure would give away the content or nature of the legal advice sought.
On the other hand, if the first email in a chain is legal advice from your lawyer, which is then forwarded within your organisation, the whole email chain will be privileged whether or not the lawyer is copied. However, if the legal advice is very widely distributed within a large organisation, or otherwise loses confidentiality, the privilege may be lost.
Communications will not necessarily be privileged by simply copying your lawyer into an email chain. The ‘dominant purpose’ test will look at the intention of the communication. If it is clear that the email chain with the lawyer copied was not created for the purpose of seeking legal advice or preparing for litigation, it will not be privileged.
The same principle applies to communications from third parties. For example, an expert report. If the report was not commissioned for the purpose seeking legal advice or preparing for litigation but was later forwarded to your lawyer for legal advice it will not be privileged. However, if your lawyer asks you to obtain a report so they can provide advice, it is likely the report will be privileged.
The final situation we will address here is in-house-lawyers. Many in-house lawyers will provide legal advice and general commercial advice. If an in-house lawyer’s communication is purely commercial and not legal it is unlikely to be privileged. The question again is whether or not the dominant purpose of the in-house lawyer’s communication was to provide legal advice or prepare for litigation.
Legal professional privilege lost
Waiver
Privilege can only exist and be maintained when the conditions of the test for its existence are strictly complied with and continue to apply.[1]
The easiest way to lose legal professional privilege is to give it away. If you deliberately and intentionally disclose your legal advice, or its substance, the privilege is lost. This is an ‘express waiver’. The disclosure is inconsistent with the requirement of confidentiality so the conditions of the test do not exist.
Privilege can be lost because of an ‘implied waiver’. This could arise in the context of commercial negotiations. For example, if you disclose to the other side that you object to a condition on your lawyer’s advice and you provide the reason for this advice. It’s very likely that you will have waived your privilege over that advice. If you end up in court – you may need to disclose the advice.
Illegal or improper purpose
If the legal advice is prepared to guide an illegal or improper purpose, it will not be privileged. This is the case whether or not the lawyer who is preparing the advice is aware of the nefarious intention of the client.
Mistakes happen
If there is an unauthorised or inadvertent disclosure (for example, wrong email address) and the communication was clearly confidential, it’s likely that the privilege is not lost. In these circumstances it is important to act quickly. It is less likely you will lose privilege if you can demonstrate you acted in a way to maintain the confidentiality of the communication. If this happens, we recommend you seek legal advice as soon as possible.
General comment
Legal professional privilege is very powerful tool. No other professional adviser has this protection.
However, legal professional privilege needs to be carefully implemented. Further, once implemented, it needs to be protected as it can easily be lost – with potentially catastrophic results.
Therefore, carefully consider when and how you communicate with your lawyer in relation to sensitive information. We suggest you discuss with your lawyer how the communication is to be made before the sensitive information is disclosed to your lawyer. That way, protocols can be implemented to ensure the sensitive information is protected by legal professional privilege.
[1] Cantor v Audi Australia Pty Ltd [2016] FCA 1391, [57].
