English High Court Rules Intra-Client Documents Can Attract Privilege
Introduction
It appears that legal advice privilege ("LAP") under English law may be on the move. The English High Court recently ruled1 that LAP can attach to internal communications between members of a corporate "client group" - so-called "intra-client documents" - even where no lawyer is a party to the communication, provided the documents were created with the dominant purpose of seeking legal advice.
Although subject to appeal, this is an important expansion to the existing doctrine. The judgment is of direct relevance to businesses engaged in internal and regulatory investigations, white-collar proceedings which are not yet adversarial prosecutions, and nascent disputes where litigation is not yet in contemplation. In these circumstances, the ability to communicate internally under the protection of privilege is of critical importance.
Key Legal Takeaways
1. Intra-client documents can attract legal advice privilege. The Court held that LAP applies to any document sent between or created by members of the "client group" for the dominant purpose of seeking legal advice. This extends beyond the two narrow categories previously understood to attract such privilege, namely documents that disclose the substance of a privileged lawyer-client communication or documents intended to be sent to a lawyer but not in fact communicated. There is now no need for a lawyer to be involved.
2. The dominant purpose test is the governing standard. However, the document must have been created with the dominant purpose of seeking legal advice. The Court accepted that, as a matter of principle, it would be illogical to deny privilege to intra-client documents that identify an issue on which the client proposes to seek legal advice, while affording privilege to an engagement or instruction letter that performs precisely the same function. Similarly, it would be unprincipled to distinguish between a memo intended to be sent to a lawyer and one containing information intended to be communicated to a lawyer by another route e.g., orally.
3. The restriction on non-client documents remains intact. The judgment does not disturb the established rule that communications between individuals outside the client group and lawyers do not attract LAP unless those individuals were specifically tasked with seeking and receiving legal advice on behalf of the corporation.
4. Multi-Addressee Communications. The judgment also provides helpful guidance on the treatment of multi-addressee emails, confirming that such emails should generally be analysed as separate communications between the sender and each recipient. Where the dominant purpose of a particular communication to a non-lawyer recipient is to settle the instructions to the lawyer or to disseminate legal advice, that communication will attract LAP (subject to point 3 above). Conversely, where the dominant purpose is to obtain commercial (rather than legal) input, it will not be privileged, even if a lawyer is copied.
Practical Impact on Businesses
Litigation and Dispute Resolution
The judgment provides meaningful additional protection to parties engaged in nascent disputes and internal and regulatory investigations that their internal processes for gathering information, formulating instructions, and preparing for legal consultations can attract the protection of LAP.
Prior to this decision, there was a real risk that internal memoranda, emails between executives, and preparatory notes circulated within a client group in advance of taking legal advice would fall outside the scope of privilege. The Court's reasoning that there is no principled distinction between a draft instruction letter and an internal note identifying the issue on which advice will be sought provides a more coherent and workable framework for privilege claims.
The decision is also of particular significance in the context of disclosure exercises. The Court's ruling provides clearer guidance on the boundaries of legitimate privilege claims over internal documents, which should assist both disclosing and receiving parties in managing what are often protracted and costly disclosure disputes.
Regulatory and Internal Investigations
The implications for businesses facing regulatory investigations or criminal proceedings are potentially even more significant. When a company becomes aware of potential wrongdoing - whether through an internal whistleblower, a regulatory inquiry, or media reporting - one of the first steps is typically the convening of an internal group to assess the position and instruct lawyers. The communications within that group created for the dominant purpose of instructing external lawyers, even before any lawyer is contacted, will now benefit from LAP protection.
What Should Businesses Do Now?
Review internal protocols for seeking legal advice. Companies should ensure that, where a client group is designated to instruct lawyers, the boundaries of that group are clearly defined. The judgment does not extend LAP to communications involving employees outside the client group.
Record the purpose of internal communications. The dominant purpose test is the gateway to protection. Businesses should encourage those within the client group to be clear that, where applicable, internal memoranda, emails, and notes are being prepared for the purpose of seeking legal advice.
Exercise care with multi-addressee emails. It remains the case that the inclusion of lawyers or indeed the client group on internal email chains to broad groups does not by itself render those communications privileged. Businesses should consider whether the dominant purpose of each communication is genuinely to seek or convey legal advice, rather than to obtain commercial input. Where both purposes are in play, separating legal and commercial communications would be prudent. Further, where the recipient list is broader than the client group, privilege may not extend to those who received it outside of that group.
We are monitoring whether this judgment will be appealed and will report on any such developments. If you have any questions about this judgment or its implications on your business, please get in touch with one of the authors or your usual Mayer Brown contact.
