Smart Counsel


What is client legal privilege?

Privilege protects the disclosure of certain communications and documents that would otherwise need to be disclosed or be compelled as part of:

  • investigative and administrative procedures;
  • search warrants; and
  • court proceedings.

The purpose of privilege is to facilitate the administration of justice by encouraging open communications between clients and lawyers.

Client legal privilege is also known as legal professional privilege

Are my documents protected by client legal privilege?

There are 2 types of documents or communications that are generally protected by client legal privilege:

  • confidential documents prepared or communications made between a client and lawyer (or third party) for the dominant purpose of providing legal advice (legal advice privilege); and
  • confidential documents prepared or communications made between a client and lawyer (or third party) for the dominant purpose of existing or anticipated litigation (litigation privilege).

Legal advice privilege

A document or communication of any type will be privileged if:

  • it is a confidential document prepared by a lawyer, client or other person or it is a confidential communication between:
    • the client and a lawyer;
    • a consultant or expert retained for the purpose of informing legal advice; or
    • 2 or more lawyers acting for a joint client; and
  • the communication was made or the document was prepared for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client.

Litigation privilege

A document or communication of any type will be privileged if:

  • it is a confidential document prepared by a lawyer, client or other person or it is a confidential communication between:
    • the client and a lawyer;
    • the client and another person; or
    • a lawyer acting for the client and another person; and
  • the communication was made or the document was prepared for the dominant purpose of the client being provided with legal services relating to an Australian or overseas proceeding, or an anticipated or pending proceeding, in which the client is, or might have been a party.

How to maintain privileged documents

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, amongst other things, 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;
  • ensure that each person receiving/reading the document/communication understands that it is confidential.
  • instruct and involve solicitors in matters early where it is likely that the communications will be privileged, in particular where documents/communications are likely to become the subject of legal advice and/or litigated proceedings.
  • 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…), or where appropriate under headings/subheadings; 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 into a communication 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.
  • Where a communication contains both legal and non-legal advice, ensure the purpose of each is separated and clear to distinguish.
  • The treatment of a document will be considered when a court considers whether confidentiality has been maintained.
  • Where a non-legal document becomes the subject of legal advice or litigated proceedings, it is important to ensure that the privileged purpose is expressly clear. Solicitor engagement is often useful under these circumstances.

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 and that everyone who reads such documents is aware that they are privileged.

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.

Privilege issues when responding to subpoenas

If you have received a subpoena, it is necessary to produce all subpoenaed documents to the Court, even if they are privileged. If any privileged documents are subpoenaed, collate them in a bundle, put them in an envelope and clearly mark the bundle as privileged (and not to be inspected) before producing it to the Court. Attend the Court on the return of subpoena date to ask the Court to make a ‘no access order’ in respect of the documents marked as privileged.  If this is contested, or to otherwise satisfy the Court, it may become necessary to prove to the Court that the documents are privileged by demonstrating that they were between a lawyer, client and/or third party thee dominant purpose for their creation and the way they have been treated to maintain confidentiality and thus privilege.

Without prejudice privilege

Under the Uniform Evidence Acts, documents and communications will be subject to ‘without prejudice privilege’ and will therefore not be admissible in proceedings if:

  • the communication was made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
  • the document was prepared in connection with an attempt to negotiate a settlement of a dispute.

A similar without prejudice doctrine applies under the common law, although there may be some differences (e.g. it is arguable that the common law doctrine only applies to communications being relied upon as admissions whereas the “in connection with” requirement in the Evidence Acts may be wider.

The purpose of the privilege is to enable parties engaged in an attempt to resolve a contentious dispute the subject of litigation to communicate each other freely and without risk of making admissions that might be used in the litigation.

There are some circumstances in which without prejudice privilege can be waived, however it cannot be waived by only one party.

How to assert without prejudice privilege

The protection afforded by without prejudice privilege will depend on the nature and contents of the document or communication. The mere assertion that a communication is ‘without prejudice’ does not make it so. However, in order to maximise the chance of obtaining without prejudice protection, it is wise to:

  • clearly mark documents and communications as being ‘without prejudice’ where it is appropriate to do so; and
  • separate communications about settlement from communications about other aspects of a matter or business dealings.


Without prejudice communications can still be admitted into evidence in court proceedings in some narrow circumstances. The most common circumstance is on an argument as to who should pay the costs of the proceedings. Such documents are often marked “without prejudice, save as to costs”, although this is not always the case. A party that wins may, contrary to the usual rule, be required to pay the costs of the proceedings where it is shown to have unreasonably rejected a settlement offer. However, offers that might be used in court to argue about allocation and quantification of costs ought to expressly warn the other side (in the contents of the communication) that the offer will be presented to the court on the question of costs.

In deciding whether a document or communication should be expressed to be ‘without prejudice’, the general question to ask is “am I attempting to negotiate and settle this dispute by compromising the relief I am entitled to and would seek at a trial?” If the answer is yes, the letter should be without prejudice.


Without prejudice privilege and letters of demand

Letters of demand should not be written on a without prejudice basis. The purpose of a letter of demand is to state the full amount of the claim (so far as it may be known at the date of the letter) rather than to compromise the claim. It may be necessary to prove that the letter of demand was sent. This can be difficult if the letter is written on a without prejudice basis as it cannot be admitted into evidence.

In practice, a letter of demand is often accompanied by a separate without prejudice letter. The letter of demand claims the whole sum asserted while the without prejudice letter offers to settle the claim for a lesser amount.