Legal advice privilege: Not as wide as you think?

Background

This note concentrates on the RBS Rights Issue Litigation case, but as both decisions applied the landmark Court of Appeal judgment known as Three Rivers (No 5), we first recap the decision in that case. In Three Rivers (No 5), the creditors of BCCI sued the Bank of England in relation to its supervisory functions. They sought disclosure of certain documents produced for an inquiry into the Bank’s supervision of BCCI conducted by Lord Justice Bingham. The Bank had established a unit of three officials, the Bingham Inquiry Unit (“BIU”), to deal with communications between the Bank and the Bingham Inquiry. The Court of Appeal considered that the BIU was the lawyers’ client for the purpose of the inquiry. On this basis, the Court held that documents prepared by Bank employees not part of the BIU and sent to lawyers were not subject to legal advice privilege. In the context of a company, the effect of Three Rivers (No 5) was that information gathered from an employee was no different from information obtained from third parties, even if the information was collected for a lawyer, to enable legal advice to be given to the lawyer’s client.

Astex Therapeutics v Astrazeneca AB

Astex Therapeutics concerned a claim for privilege over notes of conversations with a client’s employees made by in-house and external lawyers. The conversations were part of a contract review undertaken by Astrazeneca. Chief Master Marsh, giving judgment, said that where there was no dispute, the review of a contract, by seeking information from employees and former employees, was unlikely to be protected by legal advice privilege.

The RBS Rights Issue Litigation

The litigation was brought by various shareholders concerning a rights issue in RBS taken up in 2008. The shareholders sought to recover losses arising from what they said was an inaccurate prospectus. They sought disclosure of transcripts, notes and other records of interviews conducted by or on behalf of RBS with RBS employees and ex-employees, principally in relation to RBS’ response to two US Securities Exchange Commission subpoenas. RBS resisted disclosure on the basis that the documents were subject to legal advice privilege. The basis of RBS’ claim for privilege was that the notes recorded communications between a lawyer and a person RBS had authorised to give instructions to its lawyers. RBS argued that the fact that their employees were authorised to take part in the discussions with the lawyers, and that the notes were notes of communications, meant that the employees should be treated as the client of the lawyers. However, RBS did not assert that the interviewees were seeking or being given legal advice.

The Court disagreed with RBS. It said that the client, for the purposes of privilege, consisted only of those employees authorised to seek and receive legal advice from lawyers, as opposed to being authorised to take part in a fact finding exercise. Further, legal advice privilege did not extend to information provided by employees and ex-employees to or for the purpose of being placed before a lawyer.

Comment

The judgment in Three Rivers (No 5) gave litigators something of a jolt when it came out in 2003. This was tempered by the criticisms made of the decision, and the dearth of case law applying it subsequently. The decisions in Astex and RBS sharply bring back into focus the questions of (a) who is the client for the purposes of legal advice privilege, and (b) what type of communication does legal advice privilege protect. Where there is no dispute, and so litigation privilege is not engaged, a fact finding exercise will most likely not attract legal advice privilege, even if the exercise is carried out with the assistance of lawyers. Businesses cannot assume that the mere fact that a lawyer is involved will mean that interviews with their employees will be protected from subsequent disclosure. The Court, and opponents, will look to the identity of the person taking part in the interviews and the purpose for which the interviews took place.

We understand that an appeal by RBS, with a leapfrog certificate to the Supreme Court, will now no longer be pursued. The decisions in Astex and RBS are therefore likely to remain key influences for the foreseeable future in the application of legal advice privilege.