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How selective communication to lawyers protects business

Posted by Nicholas Achurch | 22 November 2018 | Corporate & Commercial

Lawyers know, but clients need to appreciate, that not all communication of information by a client with a lawyer is blocked from required disclosure in court proceedings. Explored in this article are the requirements for the law of client professional privilege to protect a client’s data, information and communication as it heads to court.

Before reaching a decision, a court has to decide on evidence that is admissible. A common tussle is over what material (ie evidence) is “in” or “out” for a judge to consider to reach a decision.

Material a judge accepts as being privileged cannot be used as a ground for a court decision. A judge is not permitted to consider privileged material as being “in evidence”. That is due to the law of client professional privilege. It protects against disclosure of a client’s legal advice.

What material does privilege protect, and when?

Material that client professional privilege can protect includes:

  • sensitive business information eg project information, internal product investigations and trading practices compliance discussions;
  • financial accounts;
  • personal information of employees or members; and
  • business data and records.

What gives material a privileged status requires evidence that there is: (1) communication to a lawyer for legal advice (whether in print or electronically) in regard to that material, and (2) a circumstance in which a dispute exists or may arise. Material selection is a part of (1), as the selection of that material as well as the material itself, by the lawyer or the client, has meaning and that meaning is a component of the communication.

The High Court of Australia during the 2006 WorkChoices case when the commonwealth and states each had its barristers at the bar table.

Essential requirements and privilege court cases

It’s a client’s privilege not the lawyer’s, hence it is vital for clients to properly communicate to lawyers to gain the benefit of the privilege.

Critical for the law of privilege is that documentation must form part of a communication, merely transmitting the document does not provide a strong basis to claim privilege.

It is essential for privileged communication to be between a client and lawyer for the dominant purposes of giving or obtaining advice, provision of legal services or for the purposes of litigation: sections 118 and 119 of the Evidence Act 1995 (NSW).

Requesting legal advice in relation to selected information may make it part of privileged communication, thus blocking it from disclosure in court proceedings. This is appropriate says the law when a dispute arises, or it appears that a dispute may arise.

Some cases help better understand the scope of the law of client professional privilege.

  • Confidential information

The case of CBX2 Pty Ltd v National Australia Bank was decided in the Supreme Court of NSW. It provides an informative summary on the current state of NSW caselaw[1] regarding a court’s consideration of privileged communications. For documents or revealing of information that would result in the disclosure of confidential communications between a lawyer and client, the document or information must contain confidential material that its disclosure would result in the exposure of that confidential communication between the lawyer and the client.

  • A document copy – privileged

The case of Australian Federal Police v Propend Finance Pty Ltd [2] provides that a copy document, derived from an original may attract privilege, where the original document will not. Here the copy document formed part of the communication by the client to the lawyer, whereas the original was not transmitted to the lawyer for the dominant purpose of obtaining legal services.[3]

  • Piles of business records – not privileged

So when is communication between a lawyer and client not privileged? CBX2 v NAB tells us that privilege does not attach to information (such as mass data or piles of business records) per se[4]. Therefore, retaining a lawyer and transmitting information to the lawyer does not by itself make that information part of privileged communication.[5]

  • Data dumping – not privileged

Tan v Commissioner of New South Wales Police tells us that funnelling terabytes of data through your nominated legal service provider, or “data dumping” does not make the data privileged. In the Tan case a client extracted a mass of data from a mobile onto a decoding device and then transmitted it to a lawyer’s computer via a Universal Forensic Extraction Device (UFED). The court ruled the mass of data was not privileged material. The files (eg Microsoft Excel and Adobe PDF files) resulting from the subsequent decoding of the mass of data were considered to be neither copies nor a communication.[6] Instead they were considered by the court to be unselected reports given to a lawyer, with no legal expertise applied to their selection.

High Court of Australia with the bench of 7 judges and facing them 19 advocates.

Material selection + communication + dispute circumstances

You may have noticed the repeated use of the word “communication” in this article.

  • The law of privilege distinguishes communication from documents and information. Think of it as two sides of the same coin.
  • Privilege protects documents or information when communicated or transmitted to a lawyer within a context inside the scope of the law of privilege. As indicated above communication to a lawyer when a dispute arises, or it appears that a dispute may arise, may impart a “dominant purpose” to documents or information bringing them within the scope of the law of privilege.
  • In our big data era care is needed. Mass data was discussed in Tan[7] noting that the unreadable format in which it comes cannot attract privilege as it is not a communication.[8] The decoded readable data files are not a “copy” of the raw data for the purposes of attracting privilege, they are considered a translation of an original. Copies of those “translations” may attract privilege only in the right circumstances.

In conclusion, when privilege is sought it is ill-advised to communicate to a lawyer with a blank covering email attaching a file containing highly confidential business information, documents or records. The chances that privilege will properly apply are increased by:

  • seeking legal advice,
  • indicating the circumstances as to why that is so,
  • stating that privilege is claimed in respect of say a document, and
  • naming that document in an email or online document sharing platform (eg Dropbox, Box, Sky Drive, Google Drive, iCloud etc).

So be selective, judicious and specific in your communication when requesting legal advice and seeking the protection of client professional privilege.

=====

[1] CBX2 Pty Ltd v National Australia Bank [2015] NSWSC 943 at [18] onwards.

[2] Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3.

[3] Ibid at [96].

[4] CBX2 Pty Ltd v National Australia Bank [2015] NSWSC 943 at [30] – [31].

[5] Ibid.

[6] Tan v Commissioner of New South Wales Police [2012] NSWSC 1580 at [109]

[7] [2012] NSWSC 1580 at [104] – [108].

[8] Ibid.

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