The Privilege Checklist

Due to the expanding role that attorneys play in their client’s businesses today and the general proliferation of documentation, it is necessary for businessmen to understand the extent to which such documented communications are protected, or “privileged”,

The Privilege Checklist<
Article by Des Williams and Rudolph Raath of Werksmans Incorporated

Below we discuss the ambit of the protection afforded to your communications with your legal advisers and third parties. We explain the difference between privilege and confidentiality, and conclude with a checklist of the issues which should be considered whenever sensitive documents are created.

Introduction

In order to obtain accurate legal advice one must be free to communicate openly and honestly with one’s attorneys. This requires not only the assurance that communications with one’s attorneys will be treated in confidence but also that a court of law will not order the disclosure of the contents of such communications, no matter how relevant they may be. It goes without saying that one will have the same sensitivity about communications with third parties in anticipation of, or arising from, legal advice.

Protection of such communications has become particularly important in this age of SMS’s and e-mails, the increasing use of voice recognition word processing and the recording of telephone discussions.

 

Where in former years writing a letter required time, planning and effort, it is today possible to document our thoughts almost as and when we think. Furthermore, documentation electronically stored does not decompose and attempts to tamper with or destroy such information are often easily exposed.

Due to the expanding role that attorneys play in their client’s businesses today and the general proliferation of documentation, it is necessary for businessmen to understand the extent to which such documented communications are protected, or “privileged”, as it is referred to in law. As will be shown, the law does not afford blanket protection to all communications between attorneys and clients, and affords restricted protection only to communications with third parties.

What is privilege?

Privilege should not be confused with confidentiality undertakings. Privilege arises as a matter of law, whereas a confidentiality undertaking is a contract. The mere agreement between parties that certain communications will be treated as confidential does not preclude a court from requiring the disclosure of documentation that is relevant to a matter forming the subject of litigation. Our law of evidence, which is largely derived from English Law, considers certain communications to be privileged. The privilege may be raised by a party in court proceedings to resist disclosure.

 

Legal professional privilege, is based on the general rule that communications between a legal advisers and his/her client are privileged if the legal adviser was acting in a professional capacity at the time, the adviser was consulted in confidence, the communication was made for the purpose of obtaining legal advice and the advice does not facilitate the commission of a crime or fraud.

 

Litigation privilege, is the privilege attaching to materials obtained in anticipation of litigation, and which serves to protect from disclosure communications between the client or the legal adviser and third parties, if those communications were made for the legal adviser’s information for the purpose of pending or contemplated litigation.

 

Negotiations privilege, is the privilege relating to statements made expressly or impliedly without prejudice in the course of bona fide negotiations for the settlement of a dispute.

It has been held in South African courts that a salaried legal adviser employed by a single organisation may be said to be acting in a professional capacity for the purpose of legal professional privilege. The courts have, however, stressed the importance of the distinction to be drawn between communications made by such employees in their capacity as legal adviser and other communications which would not be of a privileged nature.

 

Two important issues relating to legal professional privilege have recently been considered by the courts ofEngland. These are the meaning of “clients” (as communications with third parties are not protected by legal professional privilege) and the meaning of “legal advice”.

Three Rivers District Council & Others v The Governor and Company of the Bank ofEngland [2003] EWCA Civ 474 and [2004] UKHL48

 

The Bank of England (“the Bank”) had participated in an enquiry into the role of the Bank in the collapse of The Bank of Credit and Commerce International SA (“the BCCI”). It created a special Enquiry Unit (“the Enquiry Unit”) consisting of three Bank employees to assume responsibility for the Bank’s presentation at the enquiry. During the course of preparation for the enquiry litigation was not contemplated. The activities of the Enquiry Unit were aimed only at preserving the reputation of the Bank. A large volume of documents were created, including –

  • communications of the Enquiry Unit with other employees and agents of the Bank in preparation for the enquiry; and
  • correspondence between the Enquiry Unit and the lawyers of the Bank, advising the Enquiry Unit on how best to conduct the presentation.

Pursuant to the enquiry, legal action was instituted against the Bank by the liquidators of the BCCI for alleged misfeasance in public office. The Bank refused to disclose its communications with employees and agents of the Bank and with the lawyers of the Bank on the ground that legal professional privilege applied.

 

The judgments restated the principles of legal professional privilege without cause for controversy. The courts confirmed that communications between a client and lawyer seeking legal advice were privileged.

The Court of Appeal’s interpretation of these two concepts are, however, noteworthy.

 

Insofar as the meaning of client was concerned, however, a very narrow interpretation was adopted in terms of which the court held only the three members of the Enquiry Unit qualified as a client of the Bank’s lawyers. All internal correspondence between members of the Enquiry Unit and other employees of the Bank (even the Governor of the Bank) were regarded as third party correspondence and therefore not capable of being covered by legal advice privilege. The fact that such communications were presented by the Enquiry Unit to the Bank’s lawyers did not assist the Bank.

 

Insofar as the meaning of legal advice was concerned the Court of Appeal also adopted a restrictive approach. It held that the advice regarding the Bank’s presentation at the enquiry did not relate to the Bank’s rights and obligations. It was merely concerned with how to protect the Bank’s reputation in the public eye by presenting it in the most favourable light. The advice did therefore not qualify as legal advice and the Bank could not claim privilege. On appeal, the House of Lords rejected this narrow interpretation of “legal advice”. Advice qualifies as legal advice, when it is given in a “relevant legal context”, in other words, where your attorney is wearing his “legal spectacles” rather than acting as a “man of business”. The House of Lords held that communications between the enquiry unit and its lawyers were privileged as the advice related to rights, liabilities, obligations or remedies of the client either under private law or under public law.

United States of America v Philip Morris Inc [2004] EWCA Civ 330

In this English case privilege was claimed in respect of advice given by a lawyer, Mr Foyle, on his client’s document management policy in relation to major tobacco litigation in the USA. An order was sought in England compelling Mr Foyle to submit to questioning by representatives of the USAgovernment. The request was opposed on the ground that the questioning would relate to privileged communications.

 

The court found that litigation privilege did not apply. A real prospect of litigation, as distinct from a mere possibility, is required, although litigation need not be more likely than not. Considering legal professional privilege, the court refused to grant Mr Foyle blanket protection where segments of the communications in issue constituted legal advice and others not. The court expressed doubt as to whether advice on a client’s document management system, albeit in respect of sensitive documents, amounted to legal advice about rights and obligations, or that it required knowledge of the law. Mr Foyle was accordingly compelled to give evidence but remained entitled to claim legal advice privilege under examination as and when questions relating to privileged communications were posed.

The checklist

These decisions demonstrate that the mere involvement of one’s attorneys does not necessarily render related communications privileged. It is therefore important to take care when any form of communication is documented to consider whether or not it is privileged and, if not, what the impact of having to reveal such documents at a later stage may be. Without attempting to provide an exhaustive list, we recommend that the following issues should be considered whenever a document is created –

  • When there is a concern about potential litigation, this should be clearly stated, an attorney should be involved and witnesses should be interviewed in the presence of the attorney;
  • Be wary of recording communications regarding sensitive issues in documentation where the communication is not in anticipation of litigation;
  • Do not consider communications to be privileged merely because they are copied to (or even channelled through) an attorney. Unless the requirements of legal professional privilege or litigation privilege are met such communications are not protected;
  • Insofar as your attorneys render business advice to you, take steps to ensure that business advice rendered by your attorney is documented separately from legal advice;
  • Do not refer to “without prejudice” communications in correspondence which is not privileged;
  • Do not respond to e-mails in the heat of the moment. Take time! Hasty and emotional responses can often be damaging. If possible, discuss an appropriate reply with an attorney or in-house corporate lawyer;
  • In the face of crisis or possible censure, refrain from sharing your predicament with all and sundry via e-mail. Excuses often contain admissions which should not be made;
  • Always ask yourself whether you would be embarrassed or prejudiced if the document which you intend producing were to be disclosed in court. If the answer is affirmative, don’t create the document!

Nothing in this publication should be construed as legal advice from any lawyer or this firm. The articles published are general summaries of developments or principles of interest, and may not apply directly to any specific circumstances. Professional advice should therefore be sought before action based on any article is taken.

Specific Questions relating to this article should be addressed directly to the author.

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