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LEGAL PRIVILEGE & COMPETITION LAW

It was once assumed that all documents passing between solicitor and client would not have to be revealed in legal proceedings. Developments in the law relating to “legal privilege” and in competition law have made it more likely that legal correspondence and other documents may end up in the hands of the authorities, however.

So far as competition law is concerned, on 1 May 2004 the powers of the EC Commission under EU law will be strengthened as part of the modernisation initiative. These are mirrored in changes in the powers of the OFT, so that the authorities will have:

• the right to examine records held on computer
• the right to ask representatives and any members of staff of the business for explanations concerning facts or documents
• the power to seal up premises and books and records (whilst dawn raids are in process)
• the power to carry out inspections at or in “any premises, land and means of transport including the homes of directors, and other members of staff of the undertakings…concerned”

These enhanced powers follow on behind the introduction in the UK of the Enterprise Act, which came into force last year. That legislation gave UK competition authorities additional powers including the power to seize and shift documents relevant to their enquiries, as well as to carry out intrusive surveillance on business and domestic premises and vehicles

So, there are new weapons in the armoury of the competition authorities designed to ensure that they are better equipped to detect and gather information, especially documentary information, than they were before.

It remains the case that documents which are legally privileged may not be used by competition authorities in their work against anti-competitive behaviour, but recent cases have limited the scope of legal privilege and have pointed the way for further reductions in its scope.

The main decisions have come in the litigation about the Bank of England’s involvement with the BCCI affair - there have been two important decisions in the Court of Appeal about the extent to which documents passing to and from the Bank and its solicitors, Freshfields, in connection with the Bingham Inquiry, should be available to the Court in the subsequent litigation brought by the Three Rivers District Council.

By these decisions it was decided inter alia that:

• privilege is only available between solicitor and client: so, where the client is a company or institution, it is the client body that has the benefit of the privilege, not its individual employees
• privilege relating to legal advice not connected with imminent or existing court or tribunal proceedings only applies to documents which:
• pass between solicitor (or barrister) and client
• are confidential
• and concern the clients legal position, ie the clients rights and liabilities.

It was decided that documents which do not pass these tests are not privileged, so excluding other communications between solicitor and client once thought to be protected. In the instant case, for instance, documents requesting and giving advice about the presentation of the Bank’s position to the Bingham Inquiry for the purpose of safeguarding the Bank’s reputation were held not privileged.

As part of the decision, statements were made by the Judges of the Appeal Court which create doubt over the extent of the effect of the ruling that privilege should not apply to advice about the way a clients case is presented, as opposed to the client’s substantive legal rights and liabilities. The door was left open for a future decision that legal work involved in the drafting of statements of evidence for litigation do not give rise to privilege .

So, in future it is more likely that documents passing between solicitor and client will come to the attention of competition authorities and less likely that they will be privileged.

Nevertheless, requests for advice and advice about competition law and its effect on a client’s position will remain privileged so long as care is taken at the stage when the documents are generated and communicated, and if and when they reach the hands of the authorities.

Appropriate steps include:

• identification of the “client“ at the outset - in the case of an organisation this will be the senior representative(s) who interface with the lawyers
• consideration of the effect of involvement of in house lawyers on legal privilege, bearing in mind that privilege does not attach to communications with retained lawyers under EU law, unless they are passing on advice from independent lawyers
• communication with the external lawyers via the “client” individuals only
• keeping communications confidential - use of E Mail, or circulation of copies, could waive privilege
• keeping communications directed towards the taking of advice, or the conduct of litigation - introduction of other topics could waive privilege
• asserting privilege quickly and consistently if and when production of the document(s) is sought.

key expertise

David Gwyther
Partner
david.gwyther@martjohn.com

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