Dissemination of privileged communications within the client company

As set out in section 2, legal advice privilege contains a narrow definition of "client", such that the majority of employees in a large organization would not fall within it and would instead be classified as third parties. However, it is well-established that legal advice privilege covers the client's own written record of advice and also any communication passing on, considering or applying that advice internally as confirmed in: Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd ("The Good Luck") [1991] 2 Lloyd's Rep. 191. This was described as an "uncontroversial proposition" in Financial Services Compensation Scheme Ltd v. Abbey National Treasury Services Plc [2007] EWHC 2868 (Ch). This means that privileged advice can be disseminated within an organization without it losing privilege, though best practice would be to ensure that the dissemination is on a "need to know" basis.

More recently, the Court of Appeal acknowledged in Civil Aviation Authority v. R Jet2.com Ltd [2020] EWCA Civ 35 that:

"legal advice is not given for hypothetical purposes, but to be considered and (insofar as accepted) applied by the client. It is therefore well-established that it covers not only a document from the lawyer containing advice and the client's own written record of advice (whether given in writing or orally), but also any communication (again, whether written or oral) passing on, considering or applying that advice internally.

However, a distinction can be drawn between the circulation within a company of advice received from lawyers and the recommendations made by officers of the company as to the action to be taken, having regard to that advice. The recommendations are corporate actions — and not privileged — whether they follow the advice or disregard it.

Limited waiver of privilege

Confidentiality is an essential element of privilege. If a party chooses to share a document with another party, confidentiality — and therefore privilege — will be lost as against that party. However, confidentiality is not lost more broadly, and so privilege in that document can be asserted as against the rest of the world.

In Property Alliance Group v. Royal Bank of Scotland [2015] EWHC 1557 (Ch), Mr. Justice Birss (as he then was) confirmed that privilege can be waived for a limited purpose and that this would prevent the person to whom the document was disclosed from using it in some circumstances if they were outside the limited purpose for which privilege was waived. In that particular case, the documents in question had been provided to various regulators on the basis that confidentiality and privilege would be preserved as against third parties. The agreements with the regulators contained "carve-outs" that permitted the regulators to share the documents with other third parties (such as other governmental or regulatory agencies) and/or to make the material public or to disclose it further. Birss J found that those carve-outs did not amount to a general waiver of privilege and stated the following:

The fact that the carve outs recognise the regulator's rights and obligations to take a step, which might go so far as even publishing the information in the document, makes no difference if that has not happened. Until they do, I fail to see why the confidentiality and privilege would not be preserved.

The case of State of Qatar v. Banque Havilland SA [2021] EWHC 2172 (Comm) confirmed the English court's view that, where a document has been provided to a limited number of people, it will generally take a good deal of persuading that privilege has been waived more broadly, as against the rest of the world. This is the case whether a limited waiver is implied, or whether it is express (and set out in a written agreement or exchange of correspondence).¹ An express limited waiver is preferable to avoid argument, but the written element is not required for the protection of limited waiver to apply.

In practice, if it is necessary to share a privileged document with a third party, it is advisable, before handing over the document, to (i) state expressly in a communication to the third party that the document is being provided in confidence and without prejudice to legal professional privilege, (ii) specify the purpose for which the document is being provided and (iii) ask the third party to acknowledge this in writing and to undertake not to disclose the documents to any other person.

Common interest privilege

A party does not waive privilege where it discloses documents to a third party with whom it shares a common interest in the subject matter of the privileged document or the litigation to which the document relates. It is uncertain precisely which situations are covered by this form of privilege, but the relationships in which a common interest has been found to exist to date include companies in the same group; insured and insurer; reinsured and reinsurer; agent and principal; company and shareholder; codefendants; and parties using the same solicitor. It is always best practice to use a common interest privilege agreement to record this relationship and its agreed terms. Common interest privilege is not a privilege in its own right, but applies to already-privileged material, where the parties share a common interest.

[1] See, for example, Belhaj and another v. Director of Public Prosecutions and others [2018] EWHC 513 (Admin).