Legal Briefing

Legal professional privilege in Scotland and elsewhere

The In-House Lawyer Logo

Public Sector | 01 September 2013

As readers of this magazine will know, legal professional privilege (LPP) is a shorthand expression for the main category of information that a court may not compel a party to produce, even if it would be relevant to a matter before the court.

This article summarises the status of LPP in Scots law (including the extent to which that is consistent with the approach taken in England and Wales), discusses some of the basics of LPP (including by reference to recent Supreme Court jurisprudence on the issue), and outlines the key issues most relevant to in-house practitioners.


THE SCOTTISH POSITION

The traditional Scottish term for 
the rules and principles governing 
non-compellable evidence is ‘confidentiality of communications’. While that concept is thought to encompass more than just LPP, privilege has always been its main component (and indeed the term ‘legal professional privilege’ has gained wider use in recent years). The place of LPP in Scots law was explained by Lord Reed, in the Inner House of the Court of Session, in Narden Services Ltd v Inverness Retail and Business Park Ltd & ors [2008]:

‘The notion of LPP… is enshrined in the common law of Scotland. There is (in broad terms) a right of absolute privilege in respect of communications emanating between a solicitor and a client relating to advice and also in respect of any documents… which were prepared in the contemplation of litigation.

LPP developed along very similar lines on both sides of the border, based on effectively the same policies, though Scots and English law seem to have begun from different starting points – the Scottish courts initially protected legal advice and then later conduct relating to litigation, while the English courts initially only extended privilege to advice relating to litigation.

Thus, in the 19th century Scottish case of McCowan v Wright (1852), Lord Justice Clerk Hope said:

‘I am ready to give full effect to the views stated by Lord Brougham in Greenough v Gaskell [a seminal 1833 English case, which extended privilege to advice independent of any litigation]… Indeed our courts adopted the same views in the [1811] case of Lady Bath’s Executors, long before the English Courts got rid of a limitation which, in principle, was indefensible’.

Lord Wood noted (somewhat sniffily) that the principle that LPP attached to legal advice:

‘… was substantially decided in the case of Lady Bath’s Executors in 1811. [The law of Scotland] therefore required no authority from the law of England to support that proposition’.

The Scottish courts have nevertheless placed a great deal of reliance on English authority over the years. While English judgments are of course not binding in Scotland, they are highly persuasive in areas where Scots and English law are broadly similar and Scottish authority 
is limited.

There have been far fewer Scottish than English judgments on questions of LPP, partly as a result of the much higher volume of cases in England and Wales and partly because the more onerous disclosure requirements of English litigation make privilege a ‘live’ consideration on a much more frequent basis. English case law can therefore usually be treated as articulating principles that apply equally in Scotland, and which the Scottish courts will tend to follow, unless Scottish case law would point in a different direction.

As Lord Reed commented in the recent Supreme Court case of R (Prudential plc & anor) v Special Commissioner of Income Tax & anor [2013] (more on which later):

‘… the law in this area developed separately in Scotland from in England. The two systems have however developed in the same direction. There are a number of differences in the case law in relation to particular aspects of the law, but the general principle, its fundamental importance, and the considerations of public policy which underlie it, are common to both systems.’

The essentials of privilege therefore unite the two jurisdictions.

LPP: THE BASICS

What does LPP protect?

LPP can be divided into two sub-categories: legal advice privilege (LAP) and litigation privilege. Both types of privilege attract the same protection from disclosure, but the difference is in how they arise.

LAP covers written and oral communications between lawyers and clients in which legal advice is sought or given. For a document or discussion to attract LAP it must have been, and remain, confidential between the lawyer and client.

In Three Rivers District Council & ors v The Bank of England [2005], a decision that is now one of the cornerstones of LPP jurisprudence, the House of Lords confirmed that LAP is extremely wide in scope. In that case, LAP was held to cover presentational advice about how best to present evidence so as to attract the least possible criticism from a public inquiry. Other types of advice the Lords thought would attract LAP included:

  • Documents, letters of instruction etc created by the client (but not a third party) for the specific purpose of obtaining legal advice.
  • The provision of advice to developers promoting, or those objecting to, planning proposals in a planning inquiry.
  • Advice to the promoters of, and objectors to, private legislation.
  • Advice from government lawyers to government departments about the promotion of a Public Bill in Parliament.

The second sub-category of LPP is litigation privilege. This applies to documents created, and discussions that take place, in contemplation of litigation (or, in the Latin still beloved of Scottish practitioners, communications post litem motam). This will be a question of fact, and the issue will often be timing: at what point was litigation in contemplation?

The privilege applies to documents created for the purposes of the potential litigation, such as expert reports, witness statements and precognitions, and no lawyer need be involved for litigation privilege to arise. No litigation need ever take place for the privilege to exist, and the privilege continues to apply after litigation has concluded (or been abandoned).

Why does LPP exist?

LPP is a creation of the common law rather than legislation, and a common thread running through the case law is the courts’ view that LPP is essential to the operation of the legal system and the administration of justice. As Lord Scott explained in Three Rivers:

‘… it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers’ legal skills in the management of their (the clients’) affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else…’

The application of LPP is not subject to any public interest test, and so the courts will respect LPP even where this may seriously affect the outcome of a case. As the late Lord Rodger (a Scottish Law Lord) explained in Three Rivers:

‘… from time to time, a tribunal will be deprived of potentially useful evidence but the public interest in people being properly advised on matters of law is held to outweigh the competing public interest in making that evidence available’.

Lord Rodger similarly explained the justification for litigation privilege as being:

‘… that legal proceedings take the form of a contest in which each of the opposing parties assembles his own body of evidence and uses it to try to defeat the other, with the judge or jury determining the winner. In such a system each party should be free to prepare his case as fully as possible without the risk that his opponent will be able to recover the material generated by his preparations.’

Who can claim LPP?

LPP ‘belongs’ to the party for whose benefit the privilege exists: the client who has received advice or the party contemplating litigation. While a legal adviser must assert privilege at least until the client’s instructions are taken, the adviser must nevertheless disclose it if so instructed.

Whose advice is privileged?

Historically, LAP was thought to extend only to advice from qualified solicitors and counsel (and those who work under their supervision). While both the UK and Scottish parliaments have legislated to extend a limited version of privilege to certain professions (eg patent agents, licensed conveyancers, executry practitioners and non-lawyer members of Alternative Business Structures), LAP has never been taken to apply at common law to advisers such as Citizens Advice Bureau volunteers, welfare rights advisers or accountants.

This approach was challenged, however, in the Prudential case mentioned above. Prudential had taken legal advice from PwC on a tax avoidance scheme, and HMRC sought disclosure of that advice. Prudential sought judicial review of disclosure notices served under the Taxes Management Act 1970, on the grounds that PwC’s advice was subject to LAP.

On 23 January 2013, the Supreme Court rejected Prudential’s challenge by a 
five-to-two majority, confirming that legal advice will only be privileged if it comes from the legal profession.

Despite finding against Prudential, Lord Neuberger in the leading judgment had a number of criticisms of the existing 
position. He accepted the expertise of accountants to advise on tax law, and described the traditional reasons for restricting LAP to advice provided by lawyers – privilege as a right of the client, designed to encourage full and frank communication between lawyers and clients and so promote broader public interests in the observance of law and administration of justice – as ‘weak but not wholly devoid of force’. He acknowledged that, from the client’s perspective, there was no principled reason why the client should have to disclose a piece of tax advice received from accountants that would not have to be disclosed had it 
come from lawyers.

Lords Sumption and Clarke (dissenting) believed there was nothing in the historical case law that necessarily limited LAP to advice from lawyers, and that the Court should therefore adopt a wider test of whether legal advice had been provided ‘in the course of a professional relationship with a person whose profession ordinarily includes the giving of legal advice’, regardless of the particular profession.

The majority were nevertheless persuaded that the existing principle only protected legal advice obtained from lawyers. They thought, firstly, that obliging courts to enquire into the status and abilities of professionals such as town planners, actuaries, architects and surveyors before deciding whether their advice was privileged may lead to uncertainty, inconsistency and increased client costs. The public interest inherent in LPP was such that clients should not be left unclear as to whether discussions with a particular adviser would be privileged (Lord Hope referred to ‘the inestimable advantages of clarity and certainty’). The majority also thought that changing the boundaries of privilege would be a public policy decision with potentially significant consequences (some perhaps unintended). That, plus the fact that Parliament had previously extended a quasi-privilege to certain professions, suggested that any decision on extending privilege to other professions should be taken by Parliament.

The Court therefore confirmed the law as it was always thought to have been, with LAP applying only to communications between clients and their lawyers.

The importance of Prudential to the various professions, as well as the significant public interest issues raised, was reflected in the interventions by a large number of professional bodies. The intervention by the Law Society of England and Wales examined the operation of LAP in a range of jurisdictions, and Brodies advised the Society on the Scottish position.

What about Scotland?

While Prudential is not technically binding in Scotland, with Lords Hope and Reed in the majority it is very likely that it would be followed should the same issue arise in the Scottish courts.

Lord Reed concluded that the Scottish authorities:

‘… do not foreclose the possible application of the privilege to advice given by accountants. Nevertheless, as in England and Wales, the general understanding is that the privilege applies only to members of the legal professions.’

He believed a Scottish court would have to make a policy decision if considering the question, keeping in mind the context of the Scottish parliament’s willingness to extend privilege by legislation in certain circumstances.

KEY PRIVILEGE ISSUES 
FOR IN-HOUSE LAWYERS

The Prudential decision emphasises the important role and status in-house lawyers have within their organisations, in protecting sensitive advice on legal issues from unwanted disclosure. This requires that advice be provided only by solicitors or counsel with current practicing certificates – trainees, and those who have legal training or experience but whose certificates have expired, will only be covered if they are directly supervised by and accountable to a qualified lawyer. Likewise, privilege will not apply to legally qualified employees acting other than in a professional legal capacity, such as in an executive or administrative role (in a case involving a town clerk who was also a qualified solicitor, communications with him in his role as town clerk were not privileged).

In-house lawyers also need to be careful that privileged material is not circulated too widely within an organisation, and certainly not discussed externally, as that can cause it to lose its confidential character and so its privileged status. Summaries of legal advice in internal reports or board minutes can jeopardise privilege, as can discussing that advice without a lawyer present. It is therefore good practice for in-house lawyers to be very clear about who their internal ‘client’ is, and to maintain fairly strict lines of communication with that client. Marking documents as ‘privileged and confidential’ can also be advisable from a risk-management perspective.

Common law jurisdictions (including Scotland and its ‘mixed’ system) make no distinction between in-house and external lawyers for LPP purposes. However, in-house lawyers should be aware of the European Court of Justice’s 2010 decision, in Akzo Nobel Chemicals and Akcros Chemicals v Commission [2010], that legal advice from an in-house lawyer is not privileged for the purposes of EU law. That reflects the (questionable) view taken in many civil law jurisdictions that in-house lawyers are not sufficiently independent of their employers for their advice to be worthy of attracting LPP. The only context in which privilege under EU law is likely to be an issue – and where it arose in Akzo Nobel – is in the context of EU competition law, where the Commission is carrying out a ‘dawn raid’ as part of an investigation. If concerns are raised within an organisation about a possible breach of competition law, or a dawn raid is launched, best practice is to instruct external solicitors as a matter of urgency to ensure that future discussions 
of the matter are privileged.

LPP continues to operate even after a lawyer-client relationship has terminated, so in-house lawyers will remain able (and indeed obliged) to refuse to disclose advice given to an organisation even after moving on from that employer.

In-house lawyers in the public sector must keep in mind that privileged information could be requested by anyone at any time, and not just by a court in the course of litigation, under freedom of information (FoI)legislation. While privileged information is exempt from disclosure under s36(1) of the Freedom of Information (Scotland) Act 2002 and s42 of its 2000 UK equivalent, those are qualified exemptions. Privileged information must therefore be disclosed unless the public interest in maintaining the exemption outweighs that in disclosing the information. While both the Scottish and UK Information Commissioners tend to recognise the significant public interest inherent in protecting privilege, and so only rarely order disclosure of otherwise privileged material, it is notable that FoI legislation is the only context in which public interest arguments can override LPP (per Lord Rodger in Three Rivers, quoted above).

CONCLUSION

The obligation to respect privilege is perhaps the key professional obligation incumbent on all lawyers. The importance of LPP to the administration of justice and the rule of law has been consistently recognised by the courts, and in-house lawyers have a crucial role to play in both creating and protecting that vital status whenever their organisations are dealing with sensitive issues.

By Charles Livingstone, associate, and Ramsay Hall, solicitor, Brodies LLP.

E-mail: charles.livingstone@brodies.com; ramsay.hall@brodies.com.