Marking internal notes as 'confidential' is no guarantee that they won't be read out in court. Gary Meggitt discusses the finer shades of privileged information
Most insurers know that documents concerning legal advice sent to or received from solicitors do not, generally speaking, have to be disclosed to third parties. But what about, say, internal notes? It is a common misconception that marking them "confidential" can protect them. Sadly, this does not work when the third party is one's opponent in a court case. Unless a document is "privileged" it must be disclosed. What is and what is not a privileged document was re-examined by the Commercial Court in Three Rivers Council & BCCI v Bank of England .
The claimant wanted the disclosure of documents the Bank of England had created to provide information to its lawyers, who in turn were advising the bank on its role in the Bingham inquiry into the collapse of BCCI. The bank asserted legal advice privilege. The claimant alleged this covered only documents passing between a party and its lawyers, not internal communications.
There are many types of privilege, one of which is legal professional privilege. This is, in turn, divides into legal advice privilege and litigation privilege. The former covers confidential communications between a lawyer and a client for giving or receiving any legal advice. This advice can be more than telling the client what the law is, provided it is about what a client can sensibly do in the light of certain legal circumstances. Purely commercial advice is not privileged.
Litigation privilege covers confidential communications between lawyers, clients and third parties, where the dominant purpose is to obtain legal advice in the conduct of existing or anticipated litigation. Whereas legal advice privilege covers only clients and lawyers, litigation privilege covers witnesses, experts and others - but only if there is existing or anticipated litigation.
What is privileged?
While the bank claimed only legal advice privilege, the Three Rivers judgment addressed both types of legal professional privilege. Mr Justice Tomlinson said privilege covered "the whole process of communication... not just those documents which can be recognised as comprising the actual or final communication". He added: "This becomes particularly obvious when one considers... a corporation which can only act through individuals". So the bank's internal documents were privileged. It would be "artificial" if a letter from a bank official to its lawyers was privileged, but an internal memorandum to that official from one of his colleagues on the same subject was not.
Mr Justice Tomlinson said the "touchstone" for whether a document was privileged was the author's dominant purpose. An internal communication that was not sent to a third party, created with the dominant purpose that it was to be used to obtain legal advice, was privileged. This, not sending the document to a solicitor, was the "control mechanism" for legal professional privilege.
Mr Justice Tomlinson did not believe his decision broke new ground. The Waugh and Guinness Peat Properties judgments dealt with these matters at length. Yet Three Rivers confirmed that privilege covers the whole communication process - not just certain documents -- and stressed the importance of the dominant purpose test. Only those documents that are created to obtain, or help obtain, legal advice will be protected. Claimants may still try to obtain insurers' and insureds' internal files because they contain documents, such as claims histories, that are relevant to their claim. All documents should be prepared with "Why am I writing this?" in mind. Moreover, one must be shown that the answer to that question is "To obtain legal advice". Simply printing "confidential" on a file won't help.