Court of Appeal clarifies scope of legal privilege

In a recent landmark ruling the Court of Appeal (SFO v ENRC) overturned a controversial decision which narrowed the scope of legal professional privilege in internal investigations.

04 Oct 2018
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This will come as a significant relief for companies and lawyers undertaking internal investigations into allegations of wrongdoing.

The Court's decision concerned two types of privilege, litigation privilege and legal advice privilege.

Litigation privilege

Litigation privilege is the privilege of a client to refuse to disclose communications between it and its lawyers and third parties. The communications must have been made for the dominant purpose of obtaining legal advice in connection with adversarial litigation. The litigation must have commenced or be in reasonable contemplation.

The Court of Appeal's decision focused on when litigation is 'in reasonable contemplation' – in particular, whether litigation privilege can protect documents generated in an internal investigation.

The Court of Appeal stated that:

  1. Whether or not litigation is in contemplation is fact-specific. It is not necessary for a criminal investigation to have commenced. It will depend on the state of mind of the relevant individuals.
  2. The same test for reasonable contemplation applies in criminal and civil cases.
  3. Legal advice given for the purpose of avoiding contemplated litigation should be protected by litigation privilege as legal advice for defending litigation.
  4. A fact-finding exercise may be for the purpose of advising on contemplated litigation (and hence litigation privilege may apply to any documents generated), because fact-finding can be an important aspect of seeking to avoid litigation.

Legal advice privilege

Legal advice privilege covers communications between a client and its lawyer for the purpose of giving or receiving legal advice. However unlike litigation privilege, it does not apply to communications with third parties, for example with experts or employees.

In a previous case, (Three Rivers (No.5)) the Court of Appeal decided that only communications between lawyers and individuals authorised to seek and receive legal advice on behalf of the corporate were protected by legal advice privilege. This decision has been heavily criticised because it can make it difficult for larger businesses to obtain legal advice without risking losing privilege over that advice.

The Court of Appeal in the ENRC case observed that:

  1. The current definition of "client" for legal advice privilege is too narrow and "English law is out of step with the international common law on this issue".
  2. Whilst the definition of client may not present many issues for small businesses (because individuals or the board of directors will usually have the information needed by the lawyers), the law should also protect legal advice sought by large corporations where relevant information may only be obtainable from other employees.

However, because the decision in Three Rivers (No.5) was made by the Court of Appeal, they did not have the power to depart from this and the matter will need to be considered by the Supreme Court.


The decision of the Court of Appeal concerning litigation privilege is a return to a common sense approach. It reinstates essential protection for legal advice. Whilst the decision in Three Rivers (No.5) remains the law for now, it can only be a matter of time before this is challenged in the Supreme Court.

Whether or not privilege applies will be dependent on the facts of the case. Businesses should seek advice from external counsel as soon as possible when faced with issues concerning privilege and/or the prospect of conducting an internal investigation. 

The Howard Kennedy Business Crime and Regulatory team is recognised as one of the UK's leading teams specialising in this area. If you would like more information about these issues, please contact Ian Ryan.


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