When a report is commissioned by a corporation's internal or external lawyers - to allow the entity to receive legal advice - frameworks need to be established to make clear that the dominant purpose in commissioning the report is one which will support a claim for legal professional privilege.
This means that its primary focus, and the focus of any entity handling such a report, must be to ensure that the report is clearly commissioned to assist in the client receiving confidential legal advice from its external or internal lawyers.
A recent case which aptly illustrates this point is
ASIC sought access to the Report, arguing that it was not a privileged document.
In applying this test, Stewart J in
Often there may be a desire to 'say something' about a corporation's conduct or state of affairs to allay what may be a market concern or a public relations issue the entity is facing. Often, the desire can be to indicate that the entity is on a strong legal ground for the position it has taken.
This can occur in ASX market announcements, investor presentations and in statements made by corporate relations teams and advisers. This is a practice fraught with danger - as it can lead to a loss of legal professional privilege, and care needs to be taken in the drafting of these statements and scripts.
Since the case of
In
Deploying the substance or effect of legal advice for forensic or commercial purposes is inconsistent with the maintenance of the confidentiality that attracts legal professional privilege, for example see Bennett v Chief Executive Officer of the Australian Customers Service (2004) 140 FCR 101.
A waiver of legal professional privilege may be present where there is incongruence between the keeping of confidentiality with respect to a document and other conduct.
In finding that privilege had been waived, Stewart J determined that there was inconsistency because
His Honour found that
Mere phrases which refer to the existence of legal advice will not be enough to waive privilege - but at the same time entities should ensure that they do not disclose the substance or gist of the advice.
In ASIC v
If an entity decides to provide material to a regulator for a limited purpose, such as to inspect documents, it should always seek to obtain express agreement before any disclosure, guided by a primary aim of keeping any information confidential. For example, the Federal Court in Cantor v
In Ampolex, two statements were considered:
- "There is a dispute about the conversion ratio. Ampolex maintains that the correct ratio is 1:1 and has legal advice supporting this position"; and
- "Ampolex's views as to the likely outcome of the Convertible Note litigation.
The views set out below have regard to the pleadings, the evidence available to Ampolex and the advice of the barristers and the solicitors engaged by Ampolex for the purposes of the litigation, as at1 May 1996 . Ampolex considers that:- it is likely that Ampolex will be successful in..."
The first statement was a waiver, while the second was not. The second statement merely expressed the Board's view, and the matters to which the Board had reference to in forming that view. Rolfe J explained:
"... the words are a statement of Ampolex's view of the likely outcome of the litigation and they are not a statement of either the substance or effect of the advice... I do not regard the statement of Ampolex's view as constituting a disclosure of the legal advice. It may be that in forming its opinion Ampolex has misconstrued or misunderstood the advice. However that may be, the statement does not rise above a statement of Ampolex's view and it does not purport to state the advice, or its substance or effect and, therefore, it does not amount to a disclosure of the advice."
In Switchcorp v Multimedia [2005] VSC 425, the Court concluded that there is a waiver where a statement involves a "clear and deliberate disclosure of the gist or the conclusion of legal advice" as this results in an inconsistency between the relevant statement and the preservation of confidentiality which is attached to that legal advice.
An ancillary issue to this is that when privilege is waived over an advice, there is a significant risk that privilege is waived on all things in relation to the advice as well - for example the brief to counsel and all that it included - which may be necessary to understand the advice.
Companies and other entities will often want to refer to confidential documents when asserting the strength of their position in negotiations or public discussions, but doing so can risk privilege being waived. The distinction between references to the substance or conclusion of a privileged document and opinions or assertions are very fine, so drafting a statement that allows a client to convey a message to other parties but which does not waive legal professional privilege will be an ongoing challenge.
It also underscores the importance of properly documenting the engagement for any report or investigation which is commissioned to assist in the client receiving legal advice.
The maintenance of legal professional privilege is an area which can be a minefield, leading to the loss of privilege if communications are mishandled.
Footnote
1ASIC also has a regime which will allow for a party to provide it with documents - on a confidential and limited use basis - which are asserted to be privileged. ASIC agrees that it will not assert that any privilege has been waived by the disclosure of those documents, beyond the disclosure to ASIC. How ASIC deals with LPP claims can be found here and the standard agreement ASIC proposes is here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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