legal professional privilege

Subscribe to legal professional privilege via RSS

Two cases illustrate the narrow scope of application for exceptions to the without prejudice rule of legal privilege.

By Stuart Alford and Clare Nida

Background

In two recent judgments, the High Court found exception to the ‘without prejudice’ rule of legal privilege. The rule protects statements made by parties to a dispute (whether written or oral statements) in a genuine attempt to settle the dispute. There are certain situations in which this public policy justification will be outweighed by other factors if the fairness of judicial proceedings is at risk. Motorola Solutions, Inc. v Hytera Communications Corporation Ltd[1] and Berkeley Square Holdings v Lancer Property Asset Management Limited[2] clarify the scope of certain aspects of these exceptions, namely the “unambiguous impropriety”, misrepresentation/fraud, and the “Muller” exceptions.

The Court narrowly interprets dominant purpose to exempt general tax advice from legal privilege.

By Oliver E. Browne and Clare Nida

In Financial Reporting Council Ltd v Frasers Group Plc (formerly Sports Direct International Plc) [2020] EWHC 2607 (Ch), the High Court handed down the latest ruling in relation to the Financial Reporting Council’s (FRC) ongoing investigation into Grant Thornton’s audit of Sports Direct International. The Court’s previous ruling on this matter was discussed in this Latham.London blog post.

The Court narrowly interprets dominant purpose to exempt general tax advice from legal privilege.

By Oliver E. Browne and Clare Nida

In Financial Reporting Council Ltd v Frasers Group Plc (formerly Sports Direct International Plc) [2020] EWHC 2607 (Ch), the High Court handed down the latest ruling in relation to the Financial Reporting Council’s (FRC) ongoing investigation into Grant Thornton’s audit of Sports Direct International. The Court’s previous ruling on this matter was discussed in this Latham.London blog post.

English High Court holds that alleged breaches of a director’s statutory duties can engage the ‘iniquity exception’, which disapplies legal professional privilege under certain conditions.

By Stuart Alford QC and George Schurr

In Barrowfen Properties v Girish Dahyanhai Patel & Ors.,[i] the English High Court held that the ‘iniquity exception’ to legal professional privilege will become engaged if:

  • An applicant can establish a “strong prima facie case” that a respondent director has breached at least one of their statutory directors’ duties.[ii]
  • Either of the following is true:
    • Those allegations involve fraud, dishonesty, bad faith, or sharp practice.
    • The director consciously or deliberately preferred their own interests over the interests of the company, and did so “under a cloak of secrecy”.

The court held that the appropriate standard of proof in such circumstances (“a strong prima facie case”) is a lower threshold than both (i) the balance of probabilities, and (ii) the summary judgment test (no real prospect of success).

The Court ruled on the “dominant purpose” test and offered guidance on the status of multiparty emails, and attachments.

By Oliver Browne and Clare Nida

Two recent Court of Appeal judgments have sought to clarify, and offer practical guidance relating to, legal professional privilege.

In Civil Aviation Authority v. R (on behalf of the application of Jet2.com Ltd) [2020] EWCA Civ 35, the Court considered first whether the “dominant purpose” test still applies in order for a communication to fall within the scope of legal advice privilege. Second, in light of its consideration of this issue, the Court examined the proper approach to determining the status of communications among multiple recipients, and whether emails and attachments hold the same status.

Soon after, in Sports Direct International plc v. The Financial Reporting Council [2020] EWCA Civ 177, the Court overturned a first instance decision that the production of the client’s privileged documents to the regulator would not infringe the legal professional privilege belonging to the client.

By Stuart Alford QC, Daniel Smith and Kem Ihenacho

Legal professional privilege allows clients to share information with lawyers, knowing it need not be revealed in court. Privilege extends to legal advice generally, and to documents prepared in contemplation of litigation. Privilege has important implications for private equity beyond litigation, and can affect how firms and portfolio companies conduct internal investigations worldwide, and how information is shared during and after deals. However, challenges to privilege are increasing; from civil litigants, regulators and prosecutors.

Findings of Internal Investigations May Not Be Protected

Data released by the Financial Conduct Authority (FCA) points to a significant increase in investigations of regulated firms. This comes as the FCA broadens the UK’s Senior Managers and Certification Regime to financial sponsors, as part of a programme to assign responsibility and accountability to senior executives. External investigations typically trigger an internal investigation, as firms want to understand and respond to potential wrongdoing or failings. However, buyout firms should note that two recent cases make clear that investigation materials, in particular interview notes and transcripts, might not be privileged and could be disclosable in civil, regulatory and criminal proceedings.