When you visit your doctor’s surgery to discuss a personal medical problem, you automatically expect that the conversation between you will be confidential. The same thinking applies when a client visits a lawyer’s office to discuss a legal problem. Everything said will be treated as strictly confidential – advice is given without any risk that the details will one day be revealed for scrutiny by others.
My experience as a litigator and a commercial lawyer since the early 1980s used to be based on this understanding. But, English law does not always work that way. It changed with a landmark decision made in 2004 by the House of Lords, now the Supreme Court: Three Rivers District Council and Others v The Governor and Company of the Bank of England  UKHL 4) (“Three Rivers”). As every lawyer knows, this judgment significantly undermined the longstanding principle relating to the confidentiality of communications between lawyer and client which stretches back several centuries.
The threat to Legal Professional Privilege (LPP) has been of concern to lawyers for some years. It falls under two main headings: Legal Advice Privilege (LAP), which protects discussions between a lawyer and his or her client, and Litigation Privilege (LP) which protects exchanges between a lawyer, a client and a third party – where the dominant purpose is advice given in anticipation of an expected dispute, or documents which come into existence after litigation has already started.
The Three Rivers decision stated that, for exchanges between a lawyer and his or her client to attract LAP, the client would need to have given express authorisation. Without it, that advice might not be confidential, and may have to be disclosed.
This is not just a theoretical problem. Sometimes an individual’s legal qualifications, as well as their professional standing and authority can be rigorously examined to determine whether the relevant documents are eligible for LAP. In the 21st century, the practical issue is whether such an antiquated concept is suited to the needs of international businesses which operate across borders and in multiple jurisdictions, where the rules and expectations are very different.
As an example, consider the following: the directors of an off balance sheet Special Purpose Vehicle (SPV) based in Brazil receive instructions from a family office based in Monaco. Meanwhile, the in-house lawyer of that family office takes instructions from an ultimate beneficial owner (UBO). Here, the SPV’s board of directors are taking instructions from, rather than giving instructions to, the lawyer. Where the lawyer is not legally qualified and they then share their advice with other colleagues who are also unqualified, to whom does confidentiality attach? And when is it lost?
Although advice has definitely been given, it is neither being directed towards, nor given at the request of, the board of directors. Nor is it necessarily given by an individual who manifestly fulfils a clear definition of a “lawyer” who is expressly charged with giving advice.
An additional problem occurs when litigation is being contemplated. If a company conducts an internal investigation or one is undertaken on behalf of a company, when does that investigation become protected by dispute confidentiality, and as a result, protected from any subsequent disclosure obligation?
Consumers of legal services need to know when discussions with their lawyer(s) – or someone they consider to be their lawyer – are treated as confidential, and when they are not. This applies both to private individuals and to company representatives. After all, LP and LAP are protections which are afforded to the client, not the lawyer. It is sometimes forgotten that these are clients’ rights, not privileges afforded to legal professionals.
Much has been written about another recent court decision, Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd  EWCA Civ 2006 (“SFO v ENRC”). Here, the Court of Appeal considered that LP does apply to internal investigations that are undertaken in contemplation of litigation. Accordingly, when a company conducts an internal investigation, during which potentially sensitive information is willingly disclosed, it is now less likely that such investigations will need to be disclosed in the event that the matter subsequently proceeds to court.
The way ahead is clear: for dispute confidentiality to have any real bite, it must be made apparent at the outset that any investigations are being conducted in contemplation of litigation and that they should always be under the supervision of a qualified lawyer. An unambiguous record of litigation being contemplated should be kept and recorded in each material note or communication; this can easily be evidenced in the minutes of a meeting, attendance notes, etc.
On the issue of commercial confidentiality, the obvious advice is to make sure that documents are never circulated to a wide audience, and only on a strictly need-to-know basis. Clients need to make sure that they are always aware of anyone within their company who is communicating with lawyers (either in-house or external), and ensure that each individual has the appropriate authority.
The following are a few suggested steps:
- Restrict the distribution of information and mark all sensitive documents as ‘Confidential and Privileged’.
- Restrict circulation to those who have been expressly authorised to give and receive communications from a lawyer.
- Make sure that every in-house and external lawyer has been expressly authorised in writing by the board of directors to discharge their functions, such as conducting investigations or giving legal advice. Even simple steps, such as making sure the in-house lawyer’s business cards accurately record their job function (i.e. Head of Legal) might help.
- Ensure that all communications relating to any current or future investigation, or any advice in connection with an anticipated dispute, clearly state that the dominant purpose is ongoing or anticipated litigation. Ideally, get an external lawyer to provide advice to that effect.
- If there is any doubt over how to proceed, always seek the advice of a lawyer with the appropriate experience and expertise.
Let’s hope that Three Rivers is reviewed at the earliest available opportunity by the Supreme Court, because the continuing uncertainty is unacceptable: it causes difficulties we can all do without.
This article was originally published in Law360 and can be accessed here, behind a paywall.