Making sure an in-house counsel's legal advice is privileged

In-house counsel's legal advice can attract legal professional privilege even if they do not hold a practising certificate, according to the ACT Court of Appeal's decision in Commonwealth of Australia v Vance [2005] ACTCA 35 (23 August 2005), which has clarified when their legal advice is privileged. Although a practising certificate is useful, the Court has made it clear that failure to have one will not automatically mean any advice you give is not protected by privilege.

Seeking discovery of documents

Vance was challenging the termination of his employment in the Royal Australian Air Force, and sought discovery of certain documents. The Air Force claimed those documents were protected by legal professional privilege.

Legal professional privilege permits a person to resist the giving of information or the production of documents which would reveal communications between the client and his lawyer made for the dominant purpose of giving or obtaining legal advice, or preparing for or prosecuting actual or anticipated legal proceedings.

Some of these documents had been prepared by persons who were employed in the Defence Legal Office, and who had been admitted to practice law in various Australian jurisdictions.

Were the documents protected by privilege?

Justice Crispin in the ACT Supreme Court held that no legal professional privilege attached to these documents because these Defence Legal Officers did not hold practising certificates, and did not have the requisite independence (see our Alert). He based that conclusion on the public interest in facilitating the representation of clients by legal advisers as the traditional common law rationale of the privilege. A vital concomitant of representation of clients, he said, was being in a position to exercise the right to do so (which requires a practising certificate).

The ACT Court of Appeal rejected this. The test for whether documents are privileged from discovery in these proceedings is not the common law test but that laid down in the Commonwealth Evidence Act. The Act requires that those giving the advice are admitted to practise, but nothing specifically beyond this.

Practising certificates are one important factor in determining whether there was independent advice given professionally so as to constitute it being legal advice within the Evidence Act requirements, but they are not conclusive.

So what's the test?

Assuming that a document is created for the dominant purpose of giving legal advice, what makes it confidential? According to the Court, in jurisdictions where the Commonwealth Evidence Act applies, where client legal privilege is claimed over documents created by an in-house lawyer, particularly when that in-house lawyer is employed in government service, the question is whether the document would meet the statutory test of being a confidential document. That is, was it prepared in such circumstances that the person who prepared it was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law.

In other jurisdictions, the position is not so clear. Although not decided in this case, the Court noted that it would be possible to conclude that for the purpose of the privilege at common law, in order to place "salaried legal advisers" on the same footing as legal advisers, the salaried legal advisers should be practising barristers or solicitors, but referred with apparent approval to a number of cases, including Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 131 at [111], in which the Courts have found that at common law, the absence of a practising certificate is not fatal to a claim for legal professional privilege.

Significance for in-house legal advisers

The Court’s explanation of when legal professional privilege arises is a useful one, but it’s important to keep a few things in mind:

• It’s not enough for the advice to be given by a legal adviser – it must be legal, not general administrative or business, advice.
• Where the lawyer is employed, real questions as to the nature of their role and duty may arise. While the possession of a practising certificate is not conclusive, it can be very relevant in determining whether or not an employed lawyer, whether or not in government service, is employed in circumstances where they are acting in accordance with appropriate professional standards and providing the independent professional legal advice such that would attract a claim for client legal privilege under the Evidence Act.
• Legal advisers must be careful not to act in a manner inconsistent with the assertion of legal professional privilege.