In advance of our upcoming webinar (Legal Professional Privilege – what you need to know – register for free on Lexology here), Jeremy Phillips QC and Mark O’Brien O’Reilly take us back to basics on this important topic for solicitors.
This post gives a broad overview of the concept of legal privilege, how it differs to the duty of confidentiality, and in what circumstances it can be overridden.
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Introduction to Legal Professional Privilege
Solicitors, at whatever stage of their career they are at, will be familiar with the ethical and regulatory obligation imposed upon them to keep their clients’ information confidential.
The Solicitors Regulation Authority (‘the SRA’) Code of Conduct, which must be complied with, states that solicitors must ‘keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client consents’.[1] The SRA Code of Conduct for Firms, which applies to entities authorised to provide legal services, imposes the same obligation.[2]
The duty of confidentiality is also a common law obligation, a requirement under data protection legislation and a core professional principle in the Legal Services Act.[3]
The importance ordinarily placed upon confidentiality is fully justified by the fundamental requirement for clients to be able to have confidence that what they tell their solicitor will remain confidential. This allows them to speak candidly and means that solicitors can advise their clients based on all the facts.
The duty of confidentiality is an enduring one and even if the relationship with a client has come to an end, there is ‘a continuing duty to preserve the confidentiality of information imparted during its subsistence’.[4]
In Prince Jefri Bolkiah v KPMG [1999] 2 A.C. 222, the House of Lords also made it clear that the duty to preserve confidentiality is an unqualified one, ‘to keep the information confidential, not merely to take all reasonable steps to do so’.[5] Further, the obligation ‘is not merely a duty not to communicate the information to a third party. It is a duty not to misuse it, that is to say, without the consent of the former client to make any use of it or to cause any use to be made of it by others otherwise than for his benefit’.[6]
It is important to note, however, the distinction between a solicitor’s professional duty of confidentiality and the concept of legal professional privilege (‘LPP’).
Although LPP will not arise unless the information is confidential, it is not the case that all confidential information and communications can be said to attract LPP.[7] In fact, there are two types of privilege which may protect documents from disclosure in the ordinary course of events: LPP and so-called ‘without prejudice’ privilege.
In The Civil Aviation Authority v R (on the application of Jet2.Com Limited) [2020] EWCA Civ 35, the Court of Appeal held that although LPP has been described as an absolute right, ‘like most rights, it is not absolute in the true sense of that word’.[8]
That begs the question as to what are the circumstances in which a solicitor will be required to cross the Rubicon and disclose legally privileged, or confidential, information, even in the absence of consent from their client?
Legal professional privilege
LPP was described by Lord Taylor in R v Derby Magistrates’ Court Ex parte B [1996] A.C. 487 as ‘much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests’.[9]
Lord Hoffmann in R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 A.C. 563 said that LPP is ‘a necessary corollary of the right of any person to obtain skilled advice about the law’ and that ‘such advice cannot be effectively obtained unless the client is able to put all the facts before the adviser without fear that they may afterwards be disclosed and used to his prejudice’.[10]
There are two sub-categories of LPP: legal advice privilege and litigation privilege. Particular information may fall into either, or both, categories.
Legal advice privilege means that any communications between a solicitor (including an in-house lawyer) and their client relating to the giving or receiving of legal advice, or as part of a continuum of communications to keep both sides informed so as to be able to seek or give advice as needed, or documents connected with that relationship but created for the dominant purpose of seeking or providing legal advice, are privileged.[11] There must be a relevant legal context and therefore more general advice, such as business advice, will not attract privilege.[12]
Litigation privilege protects any communications between the solicitor, their client or a third party which are for use in a piece of litigation or a pending piece of litigation where the dominant purpose at the time of the creation of the document was for use in those actual or contemplated proceedings.
It will be apparent, therefore, that the general duty of confidentiality is more wide-ranging in scope than LPP, which is firmly rooted in the provision of legal advice and/or litigation.
It should be noted, however, that LPP may be waived by the party, i.e. the client, to whom the privilege belongs. Where the client enjoys joint privilege with another party, however, it cannot waive LPP unilaterally. In such circumstances it may only be waived jointly. A solicitor cannot prevent their client from waiving privilege. Where privilege is waived, however, it may not be waived in a partial and selective manner so as to result in unfairness or potential misunderstanding.
Overriding all these provisions, however, solicitors need to be aware that there are some truly exceptional circumstances in which they may have to disclose or report information which may be the subject of LPP and notwithstanding the absence of consent from the client.
Regulatory bodies
The SRA
The SRA is entitled in some circumstances to see information which is the subject of LPP. If a client does not consent to disclosure of the information, the SRA is entitled to seek a statutory production notice (‘SPN’) for disclosure of such information. An SPN requires a solicitor, or a firm, to allow the SRA to access information and documents even where such material is legally privileged.[13]
It would appear that the SRA is now the only regulatory body who enjoys an entitlement to obtain legally privileged material.[14]
Other regulatory bodies
In Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177, the Court of Appeal was concerned with a challenge to an order requiring the disclosure of documents to the Financial Reporting Council, which was conducting an investigation into the appellant’s former auditors.
The documents were withheld on the ground that they were covered by LPP. The FRC argued that although the documents sought did contain material which would ordinarily be covered by LPP, they fell within a narrow exception which meant there would be no infringement of privilege if they were handed over.[15] They argued that alternatively, there would be a technical infringement only and that this would be authorised by the relevant regulations.
The Court of Appeal had to consider whether there is an exception to LPP to the effect that where a regulator has a statutory power to request documents then either there is no infringement when those documents are handed over in response to a request made under that power (‘the no infringement exception’) or any infringement is technical only and can be regarded as authorised by the relevant statutory provisions (‘the technical infringement exception’).[16]
The Court of Appeal said there was no justification for regarding the case law as establishing either ‘the existence of a no infringement exception…or for the application of some lower threshold for implying a statutory override on the grounds that any infringement…would be technical. The task of the court is…to see whether Parliament must have intended to override the privilege’.[17]
The Court of Appeal then said that ‘there is no support in the case law for a gradation of infringements of privilege or for a lower threshold to be applied when the override sought to be implied is for technical infringements only’.[18]
The Court then concluded that ‘there are no exceptions…other than the two recognised by Lord Taylor in Derby Magistrates’ and that ‘any incursions into the hitherto privileged area must be principled and clear, otherwise the confidence of the client in non-disclosure cannot exist’.[19]
The two exceptions identified in Derby Magistrates’ were the so-called ‘iniquity exception’, and where LPP is modified or abrogated by statute.
The iniquity exception
LPP will be otiose if a client has sought a solicitor’s assistance to further criminal or fraudulent conduct. This exception is known as the ‘iniquity’ or ‘fraud’ exception and applies where a solicitor is instructed for the purposes of furthering crime, fraud or iniquity even where the solicitor, and in some circumstances the client (they may be an unwitting tool of a third party who is themselves engaged in the nefarious conduct), is unaware of the wrongful purpose.[20]
The iniquity exception will not be engaged, however, in the course of defending a client who is the subject of criminal proceedings in the ‘ordinary run’ of such cases ‘even where in denying the crime the defendant puts forward what the jury finds to be a bogus defence’.[21]
It will be engaged in civil litigation, however, where ‘there is deception of the solicitors in order to use them as an instrument to perpetrate a substantial fraud on the other party and the court’.[22]
An order can be made requiring the disclosure of any documents which were brought into existence to further such conduct and a solicitor will have to comply with the terms of such an order.[23] In those circumstances, LPP simply falls by the wayside and solicitors must allow access to the information.
Section 10(2) of the Police and Criminal Evidence Act 1984 provides that communications and items enclosed with, or referred to in, them which are ‘held with the intention of furthering a criminal purpose are not items subject to legal privilege’.[24] If it is engaged, such information can be the subject of a section 9 order.[25] A section 9 order permits the police to make an application seeking authorisation to access the information. In those circumstances, a solicitor in possession of the information would be required to either produce it or grant access to it.[26]
A similar provision is contained within section 413(4) of the Financial Services and Markets Act 2000 which says that information which would otherwise be covered by LPP, but which is held with the intention of furthering a criminal purpose, is not a protected item for the purposes of the Act such that a solicitor may be required to produce, disclose or permit the inspection of the information.[27]
National security
In addition to the preceding provisions, Parliament has expressly abrogated privilege in some circumstances concerning the gathering of information needed to protect national security. Section 27 of the Investigatory Powers Act 2016 provides that a warrant may be granted authorising or requiring the interception of items subject to legal privilege or the selection of such items for examination.[28]
Another significant statutory exception is that provided for by the Regulation of Investigatory Powers Act 2000 which allows for covert surveillance. Such surveillance is permitted where there are exceptional and compelling circumstances even where it is likely to lead to the acquisition of matters subject to LPP.[29]
The Proceeds of Crime Act 2002 and the Terrorism Act 2000
Both pieces of legislation raise interesting questions as to the interplay between LPP and confidentiality. The Acts impose obligations to disclose knowledge of suspicion of involvement in money laundering or terrorist financing. A solicitor may, therefore, be under an obligation to make a Suspicious Activity Report (‘SAR’) to the National Crime Agency. If the information or communication in question attracts LPP, however, and the iniquity exception is not engaged, solicitors may not make a disclosure. They should, however, carefully document their reasons for concluding that LPP applies.[30]
Section 330(6) of the Proceeds of Crime Act 2000 provides that a professional legal adviser will not commit an offence by failing to make the required disclosure if the information came into their possession in ‘privileged circumstances’. Section 330(10) sets out what qualify as privileged circumstances. Privileged circumstances should not be conflated with LPP. Privileged circumstances ‘operates merely as an exemption from certain specific provisions’ and ‘[A]lthough in virtually all cases the communication may also be covered by’ LPP, ‘it is not necessarily the case’.[31]
An iniquity or fraud exception is expressly provided for within section 330(11).
Disclosure of information to a nominated officer will not, however, be a disclosure for the purposes of section 330 if a professional legal adviser makes it for the purpose of obtaining advice about making a disclosure and does not intend it to be a disclosure under section 330.[32]
A solicitor will not breach LPP therefore by making a SAR to their nominated officer, or by seeking their advice as to whether a report ought to be made. Solicitors should also be aware of section 342(3) and (4) which provide a defence against the offence of prejudicing an investigation where information is privileged.
Section 19 of the Terrorism Act 2000 makes it an offence not to disclose a belief or suspicion that an offence has been committed and the information on which it is based. Section 19(5) provides, however, that a professional legal adviser is not required to disclose information which they obtain in privileged circumstances, or a belief or suspicion based on information which they obtain in privileged circumstances. Privileged circumstances are defined at section 19(6) and a fraud/iniquity exception is again built in by statute.
Where, however, neither privileged circumstances nor LPP exist, and only the duty of confidentiality is engaged, that duty will be overridden, and a solicitor will be required to make a SAR.
Section 337(1) of the Proceeds of Crime Act 2002, provides, for example, that making a disclosure will not breach the duty of confidentiality.
It will therefore be of crucial importance, in such a scenario, to consider whether either privileged circumstances or LPP are in play.
When considering such matters solicitors must also bear in mind the difference between the protections afforded by privileged circumstances, which merely exempt them from the relevant provisions or which may offer a defence, and LPP. Material, which is privileged, but not subject to LPP, will not benefit from the wider protections conferred by the latter. The material could, therefore, be vulnerable to seizure or production under a court order or notice which can override confidentiality.
Data Protection
Paragraph 19 of Schedule 2, Exemptions Etc from the UK GDPR, provides that the ‘listed GDPR provisions do not apply to personal data that consists of… (a) information in respect of which a claim to LPP… could be maintained in legal proceedings, or (b) information in respect of which a duty of confidentiality is owed by a professional legal adviser to a client of the adviser.’
There is also an exemption from inspection and seizure of information in respect of privileged communications.[33]
Other exceptions?
Outside the recognised exceptions, LPP cannot be set aside on some other ground, such as that some other higher public interest requires that it be overridden.
The situation in respect of confidentiality is somewhat different. It will be remembered that the obligation within the SRA Code of Conduct expressly provides that disclosure of confidential information may be required or permitted by law. In contrast to material which attracts LPP, to which there are very limited exceptions, confidential information may be disclosed where appropriate.
The SRA notes that solicitors will ‘have certain powers or duties to disclose matters to the Courts in relation to proceedings or to third parties where they are lawfully acting on behalf of a client, such as an attorney appointed under a power of attorney or a Court appointed Deputy where the disclosure falls within the scope of their authority’.[34]
Solicitors may also disclose confidential information to a third party ‘where they believe the client is genuine in their intention to commit suicide or serious self- harm and there is no other way of dealing with the issue’ and ‘it is not possible or appropriate to get consent’.[35]
A solicitor may also consider that there ‘are circumstances involving children or vulnerable adults where’ they ‘should consider revealing confidential information to an appropriate authority’ and although the SRA notes that a solicitor is not legally required to disclose the information, it says that a solicitor should ‘consider whether the threat to the person’s life or health is sufficiently serious to justify a breach of the duty of confidentiality’.[36]
The SRA also say that in the context of preventing the commission of a criminal offence, a solicitor ‘will need to balance the duty of confidentiality to’ the ‘client with the public interest in preventing harm to others and will need to consider carefully the information available…and whether this clearly identifies a proposed victim or is sufficiently detailed or compelling…to form an opinion that a serious criminal offence will occur’ before deciding to ‘disclose information to prevent the commission of a future criminal offence’.[37]
Conclusion
Apart from the very limited statutory exceptions where privilege may exceptionally be overridden, the principal exception to LPP is the ‘iniquity’ or ‘fraud’ exception.
The Courts will require explicit support from the statute in order to conclude that Parliament intended to override LPP. In any other circumstances, LPP (or the concept of privileged information in respect of the Proceeds of Crime Act 2002 or the Terrorism Act 2000 for example) will be absolute.
This will be the case even where matters will ‘have to be decided in ignorance of relevant probative material’.[38]
The situation in respect of a solicitor’s duty of confidentiality is different. The circumstances in which a solicitor will be allowed to, or may be required to, disclose confidential information in the absence of client consent are more wide ranging than the narrow exceptions to LLP.
Jeremy Phillips QC
Mark O’Brien O’Reilly
3 May 2022
[1] SRA Code of Conduct for Solicitors, RELs and RFLs, [6.3]. [2] SRA Code of Conduct for Firms, [6.3]. [3] See s 1(3)(e) and SRA Guidance, ‘Confidentiality of Client Information’ (April 2022). [4] Prince Jefri Bolkiah v KPMG [1999] 2 A.C. 222, p. 235. [5] Prince Jefri Bolkiah v KPMG [1999] 2 A.C. 222, p. 235. [6] Prince Jefri Bolkiah v KPMG [1999] 2 A.C. 222, p. 235. [7] Phipson on Evidence (20th edn., 2022), p. 706 [23-13]. [8] The Civil Aviation Authority v R (on the application of Jet2.Com Limited) [2020] EWCA Civ 35, [39]. [9] R v Derby Magistrates’ Court Ex parte B [1996] A.C. 487, p. 507. [10] R (Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 A.C. 563, p. 607. [11] See The Civil Aviation Authority v R (on the application of Jet2.Com Limited) [2020] EWCA Civ 35 where the Court of Appeal at [94] confirmed the applicability of the dominant purpose test. [12] Three Rivers District Council v. Governor and Company of the Bank of England (No. 6) [2005] 1 AC 610, Lord Scott at [38]. [13] SRA Guidance, ‘Reporting and Notification Obligations’ (November 2019). Section 44B of the Solicitors Act 1974 gives power to the SRA to give notice to a solicitor, requiring information and documents to be made available to them. The grounds for this are that it’s necessary to do so to assist with an investigation into professional misconduct by a solicitor. [14] In the aftermath of the Court of Appeal decision in Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177. [15] Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177, [5]. [16] Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177, [20] [17] Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177, [24]. [18] Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177, [46]. [19] Sports Direct International Plc v The Financial Reporting Council [2020] EWCA Civ 177, [51]. [20] Addlesee v Dentons Europe LLP [2020] EWHC 238 (Ch), [29] & [32]-[33]. [21] JSC BTA Bank v Ablyazov [2014] EWHC 2788 (Comm), [93]. [22] JSC BTA Bank v Ablyazov [2014] EWHC 2788 (Comm), [93]. [23] Barrowfen Properties v Patel, Stevens & Bolton LLP and Another [2020] EWHC 2536 (Ch), [3]. [24] Section 10(2) of the Police and Criminal Evidence Act 1984. [25] R v Minchin (Robin) [2013] EWCA Crim 2412, [30]. [26] R (Hallinan, Blackburn-Gittings & Nott (A Firm) v Middlesex Guildhall Crown Court [2004] EWHC 2726 (Admin), [11]. [27] Section 413 of the Financial Services and Markets Act 2000. [28] Section 27 of the Investigatory Powers Act 2016. [29] See McE v Prison Service of Northern Ireland [2009] 1 A.C. 908. [30] Lexis Nexis, ‘Practice Compliance: Privilege and financial crime’. [31] Legal Sector Affinity Group Anti-Money Laundering Guidance for the Legal Sector 2021, p. 156 [13.5]. [32] Section 330(9A) of the Proceeds of Crime Act 2000. [33] Data Protection Act 2018, Schedule 15, Paragraph 11. [34] SRA Guidance, ‘Confidentiality of Client Information’ (April 2022). [35] SRA Guidance, ‘Confidentiality of Client Information’ (April 2022). [36] SRA Guidance, ‘Confidentiality of Client Information’ (April 2022). [37] SRA Guidance, ‘Confidentiality of Client Information’ (April 2022). [38] Three Rivers District Council v. Governor and Company of the Bank of England (No. 6) [2005] 1 AC 610, Lord Scott at [34].
