Privilege - protecting internal communications


The Court of Appeal recently ruled on the topical issue of whether internal commercial discussions about proposed settlements should be privileged. 

In its judgment, the Court clarified that litigation privilege does not extend to purely commercial communications within a company discussing settlement proposals. The judgment also deals with the Court’s approach to requests for inspection of documents where a claim for privilege is challenged. The ruling found that whilst “conducting litigation” encompassed avoiding or settling litigation, to fall within the scope of litigation privilege, documents must seek advice or information. The Court also rejected arguments that all of a company’s internal communications were privileged. It found no justification for covering all internal corporate communications with a blanket of litigation privilege as to do so would afford corporations greater protection than partners, trustees or agents.

In terms of inspection, the Court did accept that litigation privilege would attach to a document in which advice or information obtained for the dominant purpose of conducting litigation “cannot be disentangled” , or a document which would “otherwise reveal the nature of such advice or information”.

Companies and employees should be alive to this and note that although the Court has shown an unwillingness to extend the scope of privilege, the nature of their internal communications should be carefully considered.

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The judgment reflects the general reluctance of the court to extend the scope of privilege. It is also a cautionary reminder to companies to remain vigilant regarding the nature of internal communications. Extra care should be taken with regard to board minutes. This could be difficult as there may be many communications which discuss avoiding or settling litigation but do not seek information or advice. We may well therefore start to see legal advice becoming intentionally ‘entangled’ within internal communications as a workaround to ensure the test is satisfied
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