- Introduction
Corporations, individuals and institutions may find themselves navigating troubled waters if by their conduct, they unwittingly waive legal professional privilege (“LPP”) over confidential communications. Such events can easily arise. Internal investigations can give rise to complex privilege issues, especially when they overlap with potential civil or criminal proceedings.
Consider a scenario where a company is involved in both a criminal investigation in the UK and a class action lawsuit in the USA. In the UK, the company might agree to a limited LPP waiver to cooperate with regulators or law enforcement agencies. While prudent in the UK, this limited waiver might not be recognized by US courts, potentially resulting in wavier of LPP in the US class action lawsuit. The result being that the company’s legal advice and case theory could be used against it. This example illustrates just one of the numerous challenges posed by cross-jurisdictional LPP issues.
This article will outline how conduct may breach confidentiality, and the possible ripple effects or consequences of these actions, including abrogation of LPP.
- Legal Professional Privilege
Where LPP applies to a communication or a document, you are generally not required to disclose it, including in response to a regulatory notice or in court proceedings.
III. The Dominant purpose test
Occasionally, privilege may extend to communications between the client or lawyer and a third party, provided the dominant purpose was for the client to receive legal advice.
LPP extends to communications with foreign lawyers, provided the dominant purpose for the communication is obtaining legal advice.
- Implied undertaking of confidentiality in English civil cases
Under Civil Procedure Rule (CPR) 31.22, parties may only use disclosed materials in civil proceedings for the purposes of those specific proceedings. However, there are several derogations from the rule.
Section 17 of the CPIA 1996 restricts the use of documents disclosed in criminal proceedings, and Section 18 provides that contravening Section 17 is a contempt of court.
In civil proceedings, using documents or information for a collateral or improper purpose can breach an implied undertaking. An application may be made under CPR 31.22 (1) (b) for the Court’s permission to use the documents for other purposes.
Breaching any of the above may amount to a contempt of court and in consequence may also amount to an abuse of process.
In one case[1], the parent company of one of the parties was served with a subpoena by the US courts, requiring it to provide documents within its control to the FBI which, under US corporate law, included documents held by its subsidiaries. Those subsidiaries were parties to English proceedings and had received documents which had been disclosed to them by the defendants during those proceedings.
The subsidiaries sought permission from the English court to provide those documents to the FBI and argued that they should not be put in a position where they would be unable to comply with the subpoena and potentially be in contempt of the US courts.
The English court refused permission for the subsidiaries to comply with the US subpoena. There were no cogent and persuasive reasons to outweigh the public interests that a litigant’s right to privacy and confidentiality should be preserved.
In another case[2], an Iranian bank contended that it had a right to withhold inspection of documents which it had disclosed in redacted form, because production of the documents in unredacted form would expose it to the risk of criminal prosecution in Turkey, Iran and South Korea.
The Court found that although the disclosure by the Iranian bank of unredacted documents said to contain confidential customer information would constitute a breach of Iranian law, the court had rightly ordered their production, albeit subject to various confidentiality provisions. Concern as to the actual risk of prosecution faced by the bank in Iran was trumped by the documents’ importance to the fair disposal of the trial. The English court’s ability to conduct its proceedings in accordance with its own law and procedures should not be overridden by foreign law.
- Waiver of LPP
LPP is a common law right. Waiver occurs when the privilege holder behaves inconsistently with confidentiality.
When multiple parties share a common interest, privileged communications may be shared, but the dominant purpose must remain legal advice or litigation.
Examples of situations where waiver may occur include:
- Referring to the existence of legal advice in open correspondence or publicly. Touching on the existence of, but not revealing the nature of the advice, e.g informing a third party that you have obtained legal advice that a party to a dispute has not breached any laws. Mere mention of obtaining advice, however, will not result in privilege being abrogated, as you have alluded only to the fact that you have received legal advice, without disclosing (expressly or impliedly) the substance of the advice.
- Producing copies of documents without objection, or without being compelled to do so, for example, freely handing over documents at the request of a regulator.
- Where there is evidence of illegality or improper purpose, opponents may challenge LPP under the “crime fraud” or “iniquity” exception. For example, without prejudice communications may be disclosable if demonstrating a malevolent purpose for bringing a private prosecution in support of an underlying civil claim. For the consequences that may follow disclosure of otherwise confidential communications, see the decision of the Court of Appeal in Morjaria v Westminster Magistrates Court [2023] EWCA Civ 1338.
- Where the communication is designed to frustrate the due process of the law or where conduct is in furtherance of an offence.
- Communications with in-house lawyers in the UK and US are generally privileged, provided the legal adviser is consulted in a professional legal and not a business capacity. Difficulties can arise where the in-house counsel performs more than one function, for instance, communications pertaining to the provision of non-legal business advice by in-house lawyers will not be protected by LPP. In most civil law systems (aside from Spain, Turkey, Mexico, and Korea where they do extend protection of professional secrecy to in-house counsel), communications with in-house counsel are not privileged. It is, therefore, crucial that thought is given to the jurisdiction and role that in-house counsel is performing when sending confidential communications and who the client is in relation to the given instructions.
LLP is an immunity rather than an actionable right (e.g. leaks after the release of the ‘Paradise Papers’, in other words it is a shield not a sword). Inadvertent disclosure followed by steps to ensure confidentiality may not waive privilege.
Waiver can be deliberate, unintentional or implied, including:
- “Disclosure waiver” over the whole advice where the substance, gist or conclusion is disclosed.
- “Issue waiver” over privileged material forming the basis of a case brought or assertion made.
- “Associated material waiver” of material relevant to the same issue or subject matter as a disclosed document.
The test is whether the privilege holder has acted inconsistently with maintaining confidentiality, suggesting intent to abandon the privilege.
Privilege can be waived in limited circumstances when disclosed to the police or other authorities. Only the client or someone authorised by them can waive privilege. In some circumstances, law enforcement may seek to demand waiver of privilege.
Risks with Limited Waivers
There is a risk of the material being used against the privilege holder, for example in a prosecution regarding a matter where limited waiver had been agreed, but the waiver was more extensive than intended. Waiver is judged objectively and therefore there is scope for the waiver to exceed the scope that was intended – e.g. if a law enforcement authority wants to share with another, even an express term may not necessarily stop the court from permitting disclosure.
Cherry-Picking
Where parties disclose favourable parts of privileged documents, while continuing to assert LPP over less favourable aspects, deliberate use must occur for the cherry-picking principle to apply.
In Gorbachev v Guriev [2024] EWHC 622 (Comm) a claimant’s waiver of privilege over a chronology resulted in a collateral waiver of privilege in a updated version, together with associated documents.
- Inadvertent disclosure
When it comes to inadvertent disclosure, under CPR 31.20, if a privileged document is accidentally inspected, the inspecting party may only use it with court permission.
In Belhaj v DPP [2018] EWHC 514 (Admin), Lord Justice Irwin noted that case law on inadvertent waiver doesn’t entirely reflect CPR 31.20, and that lawyers should resolve such issues themselves, unless fraud allegations are involved.
VII. Whistleblowing – protected Disclosures
S43B(4) of the Employment Rights Act 1996 exempts disclosures made in the course of obtaining legal advice from whistleblower protections.
VIII. Redacted Documents and the Scope of Privilege Afforded
In civil litigation there are two grounds for redaction: (i) Privilege and (ii) Irrelevance to the proceedings (confidentiality). In criminal litigation, redactions usually only occur when there is a public interest immunity issue, and occasionally where commercial interest immunity has been held by the Court to be appropriate.
IX.. Conclusion
Legal matters at the intersection between civil and criminal matters, present significant challenges for lawyers when seeking to protect client confidentiality. Understanding the principles of LPP and the specific rules governing its application is crucial to effectively navigate these complexities and ensure that privileged information remains protected.
[1] ACL Netherlands v Lynch [2019] EWHC 249
[2] Bank Mellat v HM Treasury [2019] EWCA Civ 449
Written by Natalie Todd, Partner at Cooke Young and Keidan, and Mark Rainsford KC, Barrister at 33 Chancery Lane.