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Notes of professional privilege

The ramifications of RBS Rights Issue Litigation are troubling to in-house lawyers, explains Emily Detheridge

28 March 2017

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The widely reported outcome in RBS Rights Issue Litigation [2016] EWHC 3161 (Ch) has caused understandable consternation among in-house lawyers and external counsel. 

In RBS Rights Issue Litigation, Mr Justice Hildyard considered that the Three Rivers (No5) judgment reconfirmed the differences in English law between legal advice privilege and litigation privilege. He considered the nub of the 
Court of Appeal’s conclusions in Three Rivers (No 5) to be that ‘in a corporate context, information gathered from an employee is no different for these purposes from information obtained from third parties, even if the information is collected by or in order to be shown to a solicitor to enable fully informed advice to be 
given to that solicitor’s client, 
the corporate entity’. 

Taking Three Rivers (No5) 
as binding authority that 
legal advice privilege is 
limited to lawyer and client communications, Hildyard J then considered what constitutes 
‘the client’, commenting that ‘the fact that an employee may be authorised to communicate with the corporation’s lawyer does not constitute that employee the client or a recognised emanation of the client’. What, then, does that mean for a corporate’s external legal advisers and/or in-house counsel?

Hopes were raised that an appeal might be ‘leapfrogged’ to the Supreme Court to reconsider Three Rivers (No5), but now the parties have settled, it may be some time before this issue can be considered by a higher court. The current position causes problems for corporates who wish to take legal advice under the remit of legal privilege. The definition of who the ‘client’ is for the purposes of legal advice is, as confirmed in the RBS Rights Issue decision, extremely narrow. 

The decision makes clear that the client for the purposes of legal advice privilege consists only of those employees authorised to seek and receive legal advice from the lawyer, 
and that legal advice privilege doesn’t extend to information provided by employees and ex-employees to or for the purpose of being placed before 
a lawyer. 

Of further worry to corporates is what their lawyers actually record. Although it’s common ground that lawyers’ working papers are privileged under the legal professional privilege doctrine, the RBS Rights Issue decision makes clear that a lawyer’s verbatim note of a third-party interview (such as a non-client employee) will not be afforded the protection of legal privilege simply by virtue of it being a solicitor’s note. If the underlying conversation itself was not privileged, neither will 
a verbatim transcript of the interview. 

Hildyard J considered that, to be privileged, such an interview note would need to record 
‘the note-taker’s own thoughts and comments on what he is recording with a view to advising his client’. So, junior lawyers beware: interview notes need some element of comment and advice to hopefully qualify for legal professional privilege. However, your working assumption should be that it will likely be challenging to properly assert privilege over the note.

As an in-house lawyer, the ramifications of the RBS Rights Issue decision are troubling. Given the repercussions of the decision for corporates, one 
can only hope that another opportunity for the Supreme Court to reconsider Three Rivers (No5) presents itself before 
too long.

Emily Detheridge is a senior in-house lawyer at Which? and vice president of the Junior London Solicitors Litigation Association

www.lsla.co.uk/junior

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