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Freshfields Risk & Compliance

| 4 minutes read

Litigation privilege revisited: has the Court of Appeal fundamentally changed the nature of litigation privilege?

The English Court of Appeal has recently handed down a significant decision on legal professional privilege (LPP), Loreley Financing v Crédit Suisse [2022] EWCA Civ 1484. The court unanimously held that the identities of persons authorised to give instructions to lawyers in relation to litigation are only privileged where disclosure of those identities would inhibit candid exchanges between lawyer and client. However, the real importance of the decision lies in the approach to litigation privilege, which the court regarded as a question of principle, and the court’s reconsideration of the rationale, nature, and scope of litigation privilege.

Litigation privilege is one strand of LPP, the other being legal advice privilege. Broadly speaking, litigation privilege applies to ‘communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation […], but only when the following conditions are satisfied: (a) litigation must be in progress or in contemplation; (b) the communications must have been made for the sole or dominant purpose of conducting that litigation; (c) the litigation must be adversarial, not investigative or inquisitorial’ (Lord Carswell in Three Rivers DC v Bank of England [2005] 1 AC 610 (Three Rivers No 6)).

The issue arose in this case because the identities of those authorised by the claimant to give instructions to lawyers in relation to the underlying securitisation fraud litigation might be relevant to potential limitation defences. The claimant argued that the identities were protected by litigation privilege, which was contested by the defendant bank. At first instance, it had been held that litigation privilege applied only where LPP would be ‘undermined’ by disclosure of the identity sought, and that the claimant had not met this test.

Although the Court of Appeal agreed with the judge that the identities of persons authorised to communicate with lawyers in respect of legal proceedings ought to be privileged only in rare cases (the Court of Appeal referred to ‘exceptional,’ ‘unusual’, and ‘rather special’ situations), it reframed the test as one of inhibiting candid exchanges between lawyer and client. The presumption, in effect, is that the identities are not privileged, unless the party asserting LPP can adduce evidence to the court of special circumstances which would inhibit candid discussions.

The court’s reasoning is notable – and, in part, problematic – in a number of respects:

  • The Court of Appeal did not accept the argument, supported by leading authorities (including the foundational decision in Three Rivers No 6), that legal advice privilege and litigation privilege are conceptually distinct and mutually exclusive. It held that a confidential lawyer/client communication for the dominant purpose of seeking advice in relation to litigation is protected by both types of LPP, and it approached the issue in this case as one of litigation privilege.
  • As a consequence, the rationale for litigation privilege coincides with that for legal advice privilege, namely to enable a client to seek legal advice (in relation to litigation) in the absolute confidence that the communications would be permanently protected from disclosure. The Court of Appeal expressly rejected the notion of a ‘zone of privacy’ in legal proceedings which litigation privilege was designed to protect. The notion of the ‘zone of privacy’ has support in US and Canadian case law, and in legal commentary, but the court did not consider the effect of domestic authorities as creating such a zone.
  • Although not on the precise issue in question, there was prior case law finding both in favour and against the identities of clients being privileged. The Court of Appeal explained the cases which had found in favour of LPP on the basis that the clients were able to provide evidence that they had disclosed their identities in special circumstances (such as being on the run from the police or shielding their anonymity as bloggers) and specifically subject to confidentiality.
  • The Court of Appeal stated repeatedly that litigation privilege was concerned with protecting communications, rather than facts. This was also the thrust of Lord Carswell’s definition in Three Rivers No 6. However, it is clear that certain documents and information may be protected by litigation privilege even though they may not be communications properly so called: there is no doubt that draft pleadings, non-served witness statements, expert reports, and the identities of factual and expert witnesses are privileged. Similarly, the Court of Appeal decision does not affect the ‘materials for the brief’ aspect of litigation privilege, e.g., in respect of client notes (in some cases, even real evidence collated for litigation, such as blood samples, has been held to be privileged), nor pre-existing documents collected from third parties which may, in certain circumstances, attract LPP.
  • Tying the rationale for litigation privilege to the protection of communications between lawyer and client sits uncomfortably with the position of litigants in person. The position of a party involved in litigation communicating with third parties, but not having instructed lawyers or seeking legal advice, is therefore uncertain. However, litigation privilege has never been tied to the involvement of a lawyer at all. For example, a self-represented company or litigant in person should be able to claim litigation privilege over its communications with third parties. It is suggested that the court’s reconsideration of the rationale for litigation privilege was made in the context of lawyer/client exchanges, and should not affect other situations in which the courts have held that litigation privilege applies.

Further information on this decision can be found in our client briefing here


litigation, arbitration, investigations