Creating privileged documents
Not all communications with or documents created by lawyers, or copied to lawyers, are privileged.
Whether a document is privileged will depend on its dominant purpose. A document that has more than one purpose will not be privileged unless it has a dominant purpose and that purpose is a privileged one.
To ensure that a document that is intended to be created for a privileged purpose will be interpreted as privileged:
- maintain confidentiality in documents and communications which contain or refer to legal advice or which are prepared in relation to current or anticipated legal proceedings. If a document is not confidential, and is not kept confidential, it cannot be privileged;
- mark documents and communications as confidential and ‘subject to legal professional privilege’ where this is the case. Consistent with this requirement of confidentiality, such documents should not be disseminated more widely than is necessary for their purpose;
- state the purpose of the document or communication where it might not be clear on the face of the document (e.g. obtain legal advice on…); and
- deal with legal and commercial issues separately or in a separate section clearly labelled as privileged.
Ultimately, the test is one of substance not form and it is important to note that:
- marking a document as privileged does not in itself create privilege;
- copying a lawyer will not in itself create privilege; and
- where an in-house lawyer may also have a strategic or other non-legal role, it is important to be clear about the nature of their input because advice of a non-legal nature which is given by a lawyer will not be privileged. Further, privilege may not attach to advice given by an in-house lawyer unless that lawyer has independence from their employer in giving the advice similar to that of a private lawyer.
When will privilege be lost?
Privilege in a document or communication may be lost where:
- the privileged document or communication is disclosed to a third party or the lawyer or client consents to the privileged document or communication being disclosed to a third party;
- the document or communication was made with an illegal or fraudulent purpose;
- the document becomes publicly available; or
- the client acts inconsistently with the maintenance of the privilege. Where this occurs, the privilege may be regarded as waived even where the client does not intend this. Waiver of privilege over legal advice in this way may, but will not always, occur where a client discloses the conclusion (or gist, substance or effect) of the legal advice.
For example: “We have been advised that we are well within our rights to terminate this contract.”
How to minimise the risk of waiving privilege
Do not disclose privileged documents, or the contents of privileged documents or communications, to third parties, i.e. persons who are not the lawyer or the client. This includes persons who are trusted business advisors unless you have sought legal advice about doing so in a way that is consistent with maintaining privilege.
Where referring to or summarising legal advice in board papers and minutes, do so in a separate section labelled as legal advice and subject to privilege.
When creating publicly available documents, such as annual reports and ASX disclosures, or making public comments, refer to company belief rather than legal opinion or advice.
Where documents are prepared for a privileged purpose, ensure that subsequent use of those documents is consistent with that purpose.
What if a privileged document has accidentally been disclosed?
Inadvertent disclosure is not necessarily fatal to the maintenance of privilege, but immediate steps should be taken to assert privilege and recover the documents. Immediately notify the recipient of the accidental disclosure, assert privilege over the document and obtain assurances (preferably in writing) that the recipient will destroy or delete the document without reading or copying it.