Mr Justice Akenhead has held in the case of Walter Lilly and Company Limited v Mackay and DMW [2012] EWHC 649 (TCC) that advice given to clients by claims consultants is not covered by legal professional privilege or legal advice privilege, even if that advice was given by solicitors or barristers engaged by those claims consultants.

As such, the advice and correspondence given to clients by claims consultancies may well have to be disclosed in the event that the matter comes to court, unless the claims consultant has engaged a practising solicitor or barrister to provide legal advice.

So what are “legal professional privilege” and “legal advice privilege”?

Privilege gives a party an absolute right to withhold evidence (either written or oral) from a third party or the court without any adverse inference being drawn by the court.

Various types of privilege exist including legal professional privilege, which covers both legal advice and litigation privilege.

Both types of privilege relate to confidential communications. Legal advice privilege applies whether or not litigation is pending and applies to communications between a lawyer and client which come into existence for the purpose of giving or receiving legal advice within a legal context.
Litigation privilege (which was expressly not considered in the Walter Lilly case) is slightly different in that it applies to communications both between a lawyer and client, and between either the lawyer, the client and a third party, made for the dominant purpose of litigation where litigation is pending, reasonably contemplated or existing.

What counts as “legal advice”?

It is a fundamental principle, and one of the first things that all lawyers are taught at law school, that legal advice (rather than, for example, commercial advice) communications between a client and lawyer are privileged.  This is to allow a client to instruct his lawyer freely and honestly and to place unrestricted confidence in his lawyer.

For this privilege to apply however, the communication must be between a client and its "lawyer".

And how is a “lawyer” defined?

In R (on the application of Prudential Plc & Anor) v Special Commissioner of Income Tax & Anor [2010] the Court of Appeal confirmed that legal professional privilege did not apply (unless statute provided) to professionals other than qualified lawyers, that is: "a solicitor, barrister, or appropriately qualified foreign lawyer".

In that case, the court ruled that as such, accountants providing tax law advice did not benefit from the privilege, even though their advice was of a legal nature.

That finding is being appealed, to be heard in November and we will watch how that case develops with interest.

What happened in Walter Lilly?

Mr Justice Akenhead was asked to consider an application by Walter Lilly (the Claimant) for an order that the Defendants disclose all correspondence with, or documents created by, Knowles Limited, a well-known claims consultant. The Defendants resisted that application arguing that the documents were protected by legal professional or legal advice privilege.

The court considered the contents of Knowles retainer in this matter which stated that Knowles would provide “contractual and adjudication advice” to the Defendants and also envisaged circumstances in which an outside firm of solicitors may need to be appointed and act in conjunction with Knowles in relation to any dispute.

The Defendants argued that they had understood that Knowles’ instruction was to the effect that Knowles would provide legal advice to the Defendants and that the main contacts at Knowles that provided such advice were and/or were understood by the Defendants to be qualified and practising barristers or solicitors.

The court however concluded, noting and following the authority referred to above (R v (Prudential plc and or another) that Knowles were not retained by the Defendants as solicitors or barristers to provide legal advice (even if the two relevant personnel who had been providing the advice were in fact solicitors and barristers).

Rather, the court decided that the Defendants had retained Knowles as an organisation to provide the Defendants with claims and project handling advice.  It also noted that Knowles had not held itself out as a firm of solicitors or group of barristers.

Accordingly the documents generated by that appointment did not attract legal professional or legal advice privilege and so had to be disclosed to the Claimant.

The decision confirms that claims consultants are no different from the tax accountants in the Prudential case and that privilege would only be extended outside the legal profession in exceptional circumstances.

Summary and practical implications

This case is important for anyone who uses claims consultants (for either already contentious matters or otherwise). It has confirmed that any advice of a legal nature provided by a claims consultant will not be covered by legal professional privilege and therefore may have to be disclosed to the opposing party in legal (or arbitration) proceedings.

As such, if an organisation has been engaged by a client other than to provide legal advice and assistance (e.g. to provide project management advice, contractual advice and/or adjudication advice, all of which are different to the provision of actual legal advice), then it is unlikely that privilege will apply to that advice regardless of whether the organisation employs solicitors and/or barristers.
Only legal advice provided by the legal profession (being "a solicitor, barrister, or appropriately qualified foreign lawyer") to a client will be deemed to be privileged. 

To ensure that you do not end up in the same position as the Defendants in this case, having to disclose ‘legal’ advice which may, for example, highlight weaknesses in your case or otherwise not be entirely favourable to, or supportive of, your position, it would be advisable to ensure that:

  • legal advice is obtained in the first instance directly from the legal profession – e.g. a solicitor; or
  • if using a claims consultant, ensure that the consultant retains a practising solicitor or barrister to provide legal advice on the issues involved or documents they generate.

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