Legal advice privilege and preparatory documents

A recent High Court case held that legal advice privilege protects confidential communications passing between a lawyer and his client and does not protect "preparatory" materials even if created for the purpose of enabling lawyers to advise: National Westminster Plc v Rabobank Nederland [2006] EWHC 2332(Comm). These documents are not privileged unless they are subject to litigation privilege, namely the documents were created for the dominant purpose of gathering evidence to use in pending or contemplated legal proceedings or for giving legal advice in relation to those proceedings. If litigation is not pending or contemplated, it is important to be aware that preparatory materials will not be privileged and may need to be disclosed in any subsequent litigation.

The High Court was asked to consider whether the defendant could claim privilege over two categories of documents:

1. two documents which were communications via the defendant's audit department which had been disclosed in error and which the defendant sought to recover; and
2. documents produced during the defendant's initial investigation into the events at the centre of the litigation.

The judge, Simon J, confirmed the state of the law following the Three Rivers litigation, namely that legal advice privilege could only be claimed for confidential documents passing between the client and its legal advisers for the purpose of giving or obtaining legal advice or assistance (see post). He therefore found that this privilege does not apply to the "sort of preparatory work which does not constitute communications between lawyer and client". The judge concluded that the first category of documents, "where communication was via the audit department" of the defendant, could not be subject to legal advice privilege. He rejected the defendant's submission that legal advice privilege extended beyond communications between lawyer and client provided the documentation "was directed at the production of a report which was designed to provide legal advice" to the client. He also rejected the submission that the relevant individual from the audit department had been acting as the agent for the lawyers in collecting information and his function was part of the "stream of information" between the lawyers and the client.

In relation to the second category of documents, the judge held that to the extent they were not communications between lawyer and client, they must be disclosed unless litigation privilege applied. This would depend on whether the documents were created for the dominant purpose of gathering evidence in pending or contemplated proceedings. Although the judge expressed doubts about the evidence filed in support of the claim to litigation privilege, in relation to the purpose of the initial investigation, he refused the claimant's invitation for the court to inspect the documents. Instead, the judge required the defendant's solicitors to make an affidavit verifying the claims for privilege in relation to all documents withheld from disclosure.

This case has confirmed that preparatory documents which do not form communications (or draft communications) between lawyer and client are not protected by legal advice privilege, even if they were prepared for the purpose of taking legal advice. Care must therefore be taken when documents are created in any internal investigation about a matter even if legal advice is intended to be sought in relation to it, and even if it may turn litigious but proceedings are not yet contemplated. If they are not communications with a lawyer for the purpose of seeking legal advice or assistance, then they may need to be disclosed in any subsequent litigation.