Legal privilege is a powerful tool. It enables businesses and individuals to take legal advice and prepare for, pursue or defend litigation, without the contents of that advice or discussions about litigation strategy needing to be disclosed to the other side.
But, as an exception to the general duty to disclose relevant documents in litigation, it's narrow in scope. Legal advice privilege only applies to confidential communications between a qualified lawyer and client created for the 'dominant purpose' of taking legal advice (not advice from other professional advisers), while litigation privilege only applies where the dominant purpose of the communication was connected with actual or anticipated litigation. One important difference is that litigation privilege may apply to confidential communications between a client, lawyer or third party, whereas legal advice privilege only applies to communications between a lawyer and client. Communications with other advisers, such as accountants or HR consultants, aren't covered by legal advice privilege - which is why we often advise clients to be cautious in their communications with such advisers.
A recent case suggests that employers might be able to withhold from disclosure communications with external consultants who are not lawyers - but a close look at the facts shows that care is still needed.
The case concerned an employee who was dismissed following a disciplinary process. An issue arose over whether an email between the manager who heard the appeal against and an external HR consultant was disclosable. The manager had stated in the email (long before the employee was even dismissed, let alone had an opportunity to appeal) that the employee would not be returning under any circumstances - suggesting he had prejudged matters, to put it mildly. The employee argued that, as a result, the email was disclosable because its intent was fraudulent; the HR consultant was being engaged to enable the employer to run a sham disciplinary and appeal procedure, and so privilege was lost. However, the Employment Appeal Tribunal disagreed; the communication was the sort of frank communication which parties are entitled to engage in with their advisers and did not indicate a fraudulent intention.
So does that mean that employers can throw caution to the wind when using external non-legal advisers? Sadly not. A crucial point in this case was that the Employment Tribunal had found that litigation privilege applied to the email - i.e. the dominant purpose of the email was connected with an anticipated claim by the employee. The employee was not permitted to appeal against that finding for procedural reasons, and as a result had to argue that the email had lost privilege because of the fraudulent purpose, rather than arguing that it had never been privileged at all. It's unusual that litigation would be in contemplation so far in advance of any dismissal. Employers should not assume that litigation privilege will arise during most internal processes. As a result, they still need to exercise caution in internal communications and communications with non-lawyer advisers.