"Intra-Client" Documents: UK High Court Delivers Significant Judgment on Scope of Legal Advice Privilege

In a recent decision,¹ the English High Court has delivered welcome guidance on an aspect of legal advice privilege hitherto largely unaddressed by English law, holding that parties are entitled to assert legal advice privilege in respect of “intra-client” documents, provided that those documents were created with the dominant purpose of seeking and/or receiving legal advice.

The High Court’s guidance comes in the context of the ongoing securities litigation against Glencore Plc (“Glencore”), in which an important judgment has already been issued on the scope of privilege, with the High Court departing from a long line of judicial authority by disapplying the so-called “Shareholder Rule” (the principle that a company cannot assert privilege against its shareholders save in limited circumstances).²

Facts of the case

The Claimants have brought various claims against Glencore under Sections 90 and 90A of the Financial Services and Markets Act 2000, as well as contractual claims and claims in deceit and negligence, in relation to alleged (and, in some cases, admitted) misconduct by certain Glencore subsidiaries, as well as admitted oil price manipulation. The Claimants allege that they have suffered losses on their investments in Glencore because of the company’s failure to disclose this misconduct in certain public documents.

The Court was asked to adjudicate on a dispute that had arisen between the parties as to the scope of legal advice privilege and the extent to which that privilege applied to certain internal communications between members of Glencore’s client group and/or documents created by members of that client group. Glencore sought to withhold the production of documents from the Claimants on the ground that it is entitled to assert privilege over communications which are not between client and lawyer but are between members of the “client group”, as defined in the seminal Three Rivers (No. 5) decision, where those communications were made for the dominant purpose of seeking or receiving legal advice.³ The Claimants argued that Glencore was not entitled to take this position, a basic principle of legal advice privilege being that it protects (a) communications between lawyer and client, (b) documents that evidence those communications and/or (c) communications that were intended to be a communication between client and lawyer even if not in fact communicated.

Three Rivers (No. 5): definition of the “client group”

Legal advice privilege “attaches to all communications made in confidence between solicitors and their clients for the purposes of giving or obtaining legal advice, even at a stage when litigation is not in contemplation” (emphasis added).⁴

Three Rivers (No. 5) remains the leading English authority on the issue of identification of “the client” for the purposes of legal advice privilege. Where the client is an individual, no issue arises as to their identification. However, for a corporate entity or large organisation – where multiple subsidiaries, departments and/or employees may be involved in the continuum of legal advice – this is not always straightforward.

In Three Rivers (No. 5), in the context of the 1991 collapse of the BCCI banking group, the English Court was asked to decide whether legal advice privilege applied to certain internal communications within the Bank of England (which had supervisory responsibilities for the BCCI banking group). These internal communications had been made for the purposes of obtaining information to enable the bank’s lawyers to advise on its submission to a private inquiry into the bank’s supervision of BCCI. At first instance, the High Court held that employee communications, as part of the process of communication with lawyers, were protected by legal advice privilege. The Court of Appeal overturned this decision, applying a restrictive definition for “the client”, such that only a small group of individuals at the bank constituted the client (just three bank officials, specifically appointed to deal with the private inquiry) and, accordingly, internal or inter-employee communications outside of this small group were not protected by legal advice privilege.

Three Rivers (No. 5)’s restrictive view has received mixed judicial consideration and has been subject to much academic criticism.⁵ Many other common law jurisdictions, recognising its limitations (particularly with respect to large corporate entities), have departed from it, but it remains authority in England and Wales unless and until the matter is brought before the Supreme Court.

Discussion

Counsel for the Claimants submitted that Glencore was not permitted to withhold intra-client documents because Three Rivers (No. 5) restricted the application of legal advice privilege to client-lawyer communications. The Claimants referred the Court to various judicial authorities handed down since Three Rivers (No. 5), which they argued supported this position, too.

The Court rejected these arguments, holding that Three Rivers (No. 5) was not concerned with “intra-client” documents but with “non-client” documents. The Court noted that neither the authorities relied upon in Three Rivers (No. 5) nor the authorities following that decision addressed the issue of “intra-client” documents.

The Court further held that, as a matter of principle, English law (a) does not require an actual communication to pass between lawyer and client, and (b) allows for advice privilege to extend to other types of confidential communications that “nonetheless are made as part of the process of seeking or giving legal advice or assistance”.⁶ The Court agreed with Glencore that “there can be no justification for treating intra-client documents, created as part of the process of seeking legal advice or assistance and/or for which the intention to communicate with the lawyer accounts for the existence of the document, as not attracting legal advice privilege in circumstances where that privilege is available in relation to other documents that are materially similar”;⁷ noting as examples intra-client documents (i) identifying an issue on which legal advice is to be sought (cf. a privileged engagement or instruction letter identifying the same issue) and (ii) whose dominant purpose is to identify facts that the client proposes to communicate to a lawyer for the purpose of seeking legal advice, but where the document itself is not intended to be sent to that lawyer.

Conclusion

This decision provides welcome and unprecedented clarification as to the treatment of intra-client working papers and the protections afforded to such sensitive documents during the process of seeking legal advice.

Whilst caution should be exercised given that the decision may be subject to appeal (and it is possible that the High Court may, upon re-examining this issue, reach a different decision in a future case), the decision constitutes an important statement of the English law position on the application of legal advice privilege to intra-client documents which, as noted above, has not been subject to specific judicial consideration before.

The decision also serves as a reminder of the intricacies of the law concerning the application of legal privilege and, in particular, the practical realities and difficulties faced by modern clients – particularly corporate entities and other large organisations – when applying the law in this area. It was, of course, not open to the High Court to depart from the decision of Three Rivers (No. 5) with regard to the definition of “the client”, and the Court did not directly address this issue; it remains to be seen whether an appropriate future case will result in this issue being considered by the Supreme Court.