A Federal Court of Australia decision on a claim for legal professional privilege in a recent case, Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts (No. 2) [2007] FCA 1445, raises serious issues for in-house lawyers

What is legal professional privilege?

Usually parties to legal proceedings are required to disclose all relevant documents in their possession, power and control to the other party and the court. Legal professional privilege protects confidential communications between a client and his or her legal adviser from being given in evidence or otherwise disclosed.

A document can be either electronic or in hard copy, hand-written or typed. Examples of such documents include notes of phone call conversations, emails, and notes of meetings. If a communication qualifies for legal professional privilege, unless waived by the client, the privilege is absolute.

The relevant time a claim for privilege is determined is the time the document came into existence. The question is whether the document came into existence for the dominant purpose of seeking legal advice or assistance.

The case

The Minister for Communications, Information Technology and the Arts served a Notice to Produce on Telstra Corporation (“Telstra”). Telstra’s response included a claim for legal professional privilege over some documents. On 12 September 2007, Justice Graham of the Federal Court of Australia ordered Telstra to produce to the Court six documents it had entitled “Privileged documents”, thereby dismissing Telstra’s claim for legal professional privilege. Examples of the documents over which Telstra had claimed legal professional privilege were:

• correspondence between Telstra’s internal legal adviser for the dominant purpose of providing legal advice;
  
  
• correspondence from the client to Telstra’s internal legal adviser for the dominant purpose of receiving legal advice;
  
  
• documents prepared by Telstra’s internal legal adviser for the dominant purpose of providing legal advice; and
  
  
• communication from Telstra’s internal adviser to the client for the dominant purpose of providing legal advice in possible legal proceedings.

The Court noted Telstra did not lead any evidence to establish the role the various legal practitioners performed within Telstra. Importantly, no evidence was advanced to disclose the measure of independence of the legal practitioners in question and their ability to provide impartial advice in their roles. Telstra simply maintained the documents were privileged.

The Minister had challenged the claim for privilege in correspondence raising the issue of waiver. Waiver is where a client’s own conduct does not maintain the confidentiality in a document. The Court did not need to consider the issue of waiver because the basis of privilege claim had not been made.

Justice Graham held there was no evidence on the independence of the internal legal advisers involved in the communications said to have been brought into existence for the dominant purpose of providing or receiving legal advice. Further, there was nothing to indicate from the six documents in question that they must be documents for which privilege is properly claimed. Therefore, Telstra had made no sufficient claim for legal professional privilege.

Justice Graham said “in my opinion an in-house lawyer will not be considered independent if his or her advice is at risk of being compromised by virtue of the nature of his employment relationship with his employer. On the other hand, if the personal loyalties, duties and interests of the in-house lawyer do not influence the professional legal advice which he gives, the requirement for independence will be satisfied.”

What does the decision mean for in-house lawyers?

This case serves to remind in-house lawyers that the onus is on them to prove they are independent from their employer to prevent their advice (often internal emails and memorandums) from being produced in court proceedings. Importantly, simply marking a document as “privileged and confidential” is not sufficient. Employers of in-house lawyers must ensure that if they wish to claim legal professional privilege, they have sufficient evidence to base an argument on independence. The seniority and duties of the legal adviser expressing the opinions and the subject matter of the advice may be relevant to the issue of whether privilege may be maintained.

For further information, please contact Leneen Forde on +61 3 9608 2243 or l.forde@cornwalls.com.au

or Geoff Denton on + 61 3 9608 2125 or g.denton@cornwalls.com.au