Litigation 101: legal professional privilege for in-house counsel

Georgina Penglis, Roxana Carrion, Trina Storm and Karen Ingram
12 May 2022
Time to read: 2.5 minutes

There are particular issues of legal professional privilege with documents prepared by in-house counsel.

As a general rule, LPP will extend to oral or written confidential communications between in-house counsel and their employers (that is, their clients), as long as the communications are made for the dominant purpose of giving or receiving legal advice or for use in actual or anticipated litigation.

See Litigation 101 Series: Legal Professional Privilege for Business for a quick guide to legal professional privilege (LPP).

Particular issues arise in relation to documents prepared by in-house counsel.  In-house counsel often have legal and non-legal responsibilities, particularly if they have a dual role.  For example, it is common practice for General Counsel to also act as Company Secretary.

LPP will only apply to work performed by in-house counsel if:

  • it is work carried out by in-house counsel clearly acting in their legal capacity and not in some non-legal, commercial or management capacity; and
  • In-house counsel is sufficiently independent from the organisation to be truly acting as an independent legal adviser.

In-house counsel acting in their legal capacity

This means that in-house counsel must be qualified and entitled to practice law, and accordingly, subject to the duty to observe professional standards and the liability to professional discipline.

In-house counsel must be sufficiently independent

To attract privilege when giving legal advice, in-house counsel must act consistently with their obligations as an officer of the Court.  This means that the professional relationship of lawyer and client must be maintained between in-house counsel and the employer, ensuring that they give independent advice.

Practical guide for in-house counsel to claim and keep LPP

There are some easy steps that in-house counsel can take to maximise the likelihood of LPP being maintained.

  • Keep a current practising certificate

    It is prudent for in-house counsel to keep a current practising certificate.  This will help to demonstrate that they are acting in a professional legal capacity and have the necessary independence from the organisation they are advising, which is also likely to be their employer.

    While a lack of a current practising certificate will not be fatal to a claim for privilege, it can make it easier for a court to infer that the in-house counsel performed non-legal work and were performing such work when making the communication in question.

  • Avoid performing dual roles at the same time

    Where in-house counsel have both legal and non-legal roles, the performance of those roles should be kept as separate as possible.  Otherwise, in-house counsel risk any legal advice given being viewed by a court as commercial advice to which privilege does not apply.

    Labelling a document as privileged does not make it so.  In-house counsel should think critically about whether to mark a document as privileged.  A document should only be marked as being privileged, when it truly is, when in-house counsel is genuinely performing their legal function. Overuse of the "privilege" label can diminish its effect when used in communications to which privilege genuinely applies.

  • Keep legal and non-legal communication separate

    Keeping legal and non-legal communications separate helps to minimise any risk that the legal purpose will not be the dominant one in any document which deals with legal matters.  It also makes it clear that the document dealing with legal matters is privileged, and thereby reduces the risk of inadvertent disclosure of the document, which could lead to a waiver of privilege.

    Be particularly vigilant about legal advice to the Board of your organisation:  any written advice should be a separate annexure to any Board pack, distributed only to those who NEED to read it and not stored on a central database/cloud storage (eg. Board Effect).  The minutes of any Board discussion should not record the advice, even the gist of it.  If necessary, a separate note of the Board discussion of the advice could be kept by the Company Secretary in case any Board member might need a refresher.

    It is prudent not only to keep legal and non-legal communications in separate documents, but also to store them separately, if that is possible.

  • Document the dominant purpose

    When commissioning a document on behalf of the in-house counsel’s employer organisation from a third party for the dominant purpose of actual or anticipated litigation, privilege will not apply unless the organisation, and not just the in-house counsel, had that as its dominant purpose.

    Any request for such a document should be set out in writing from the board or a senior executive of the organisation to the in-house counsel, and should state that the document is being sought for the relevant legal dominant purpose. Subsequent use of the report should also be consistent with that purpose.

    Once privilege applies to a document, it is crucial not to do anything inconsistent with the confidentiality of the document, as this could waive privilege.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.