06 November 2013

The legal principle of ‘privilege’ is the most powerful way of preventing an opponent in litigation or a regulatory body investigating from obtaining what would otherwise be relevant documentation. It protects legal advice and certain documents connected with such advice from what are, otherwise very onerous obligations to disclose relevant material. Nonetheless, it is, perhaps unfortunately, a very theoretical concept which proves very hard to apply in practice.

One example of privilege in practice was given by the First Tier tax tribunal in Behague v HMRC [2013] UKFTT 596 (TC). It dealt with whether Legal Advice Privilege extends to:

  • the contents of a solicitors’ firm’s engagement letter
  • schedules which are not themselves privileged to a legally privileged report.

Although parts of an engagement letter do not in themselves relate to advice on the law and the schedules to a report might include excerpts from public documents or legislation which cannot themselves be advice on the law – the protection from privilege is not just confined to specifically legal questions. This is best described in two leading cases:

  • 'legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context' (Balabel v Air India)           
  • 'advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law' (Three Rivers District Council)

The question is therefore whether the above documents contained advice on the law or the relevant legal context:

  • An engagement letter may have sections which record what advice is being sought – these are likely to be privileged. The rest is not. I would however strongly doubt that the rest of an engagement letter would, in most cases, realistically be relevant (and hence would not be not disclosable anyway).
  • Schedules to a privileged report may well give an indication of what the privileged advice concerned – as such, although not privileged themselves, the contents of such schedules, as schedules, is privileged. This appears to have the same logic as 'course of enquiry' privilege which generally attaches to the assembly/collection of (non-privileged) documents which itself might indicate the legal advice being given or requested.

This is a helpful description of whether certain documents need to be given over to an opponent in live litigation. However, each case throws up a number of specific and particular facts and privilege inevitably remains a difficult thing to apply practically.

If you would like further information, please contact Ian Tucker in our Dispute Resolution team.

Key contact

David Hall

David Hall Partner

  • Dispute Resolution
  • Banking Disputes
  • Business Crime and Regulatory Investigations

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