In R (Ford) v FSA  EWHC 2583 (Admin), the FSA, for the first time, lost a judicial review into one of its own investigations. Ford examines the impact of privilege on situations where advice is provided both to a company and its directors whose interests conflict. It also provides a helpful discussion as to how privilege can be shared. For legal advisers, it warns of the danger of employing retainers that fail to properly identify the client – especially when advice to the ‘client’ morphs from advice to the corporate entity to the directors in their personal capacity.
A law firm was retained by a company, Keydata, to advise in relation to an FSA investigation being conducted against it. Later, when the FSA extended their investigation to the directors themselves, the law firm began providing advice to the directors in their personal capacity, notwithstanding that there was not yet a formal retainer in place for them.
Following publication of the FSA’s report into the directors, it was discovered that the report relied on privileged e-mails which had been sent between the law firm and the directors before the investigation into the directors had commenced (i.e. when no joint retainer existed). The FSA had been provided with these e-mails by the company which had waived its privilege over these documents.
The High Court held that both the company and its directors had a joint interest in the e-mails. The e-mails were privileged communications and as such attracted joint interest privilege. Given that the directors had not waived privilege, the FSA was unable to rely on the e-emails.
By way of reminder, joint interest privilege may arise in circumstances where (i) there is a joint retainer, or (ii) where (as in the case of Ford) there is no joint retainer but the parties have a joint interest in the subject matter of the communication in issue at the time that it comes into existence.
In Ford the court looked at the reality of the situation. Despite the absence of a joint retainer, the legal advice provided in the e-mails was relevant to both the company and its directors and the law firm was advising both. The court gave a reminder that best practice requires a retainer to clearly identify the client to whom legal advice is being given. Any changes to the scope of the client should be recorded in an updated retainer letter. If not, the ability of a company to waive privilege over advice that it receives may be lost where that advice also impacts on individuals who may also share a personal and conflicting interest in documents.
Lawyers and clients (including in-house lawyers) need to bear in mind who is being given the legal advice. It is important that the retainer letter clearly specifies this point and if the position changes then this should be recorded in either a new or extended retainer letter so that the position in respect of privilege is clear. Where advice is being provided to a company and to certain individuals within it, those individuals should be advised that they will have to obtain separate legal advice in their personal capacity where their interests conflict or there is a significant risk of conflict with the company as the lawyer will no longer be able to represent them.