Thursday 19 April 2012 by Masood Ahmed
The question before Mr Justice Akenhead in Walter Lilly & Company Ltd v Mackay and another  EWHC 649 (TCC) was this: does legal professional privilege (LPP) attract to documents produced by a claims consultant, even one which retains legally qualified personnel?
The claimant was employed by the second defendant to construct a large house in London. However, the construction project experienced substantial delays. The claimant requested various extensions of time from the architect and these were granted. As a result of the continuing delays with the project, the second defendant, the individual who would ultimately own and occupy the house, retained the well-known claims consultants, Knowles, to provide 'contractual and adjudication advice' in respect of the construction project. After a period of approximately two years, Knowles' services were dispensed with.
The claimant now argued that Knowles and the second defendant had embarked upon a strategy whereby the architect's authority was undermined and which had the effect of manoeuvring the claimant into a position in which it could be held liable for any delay. Some of the correspondence to and from Knowles was disclosed by the first defendant, but some had been withheld on grounds of privilege. As a consequence, the claimant made an application to the court for disclosure of the remaining documentation.
The issue for the court was whether or not Knowles was engaged as solicitors or barristers. It was argued that a client who in good faith instructs an organisation or person which he mistakenly believes is a qualified solicitor or barrister and then receives legal advice from them is entitled to the privilege protection. Therefore, it followed that, although Knowles was not a firm of solicitors or barristers, it employed legal advisers and therefore the documents produced by Knowles were privileged.
Considering the scope of the rule of LPP, Akenhead J cited R (Prudential plc and another) v Special Commissioner of Income Tax  EWCA Civ 1094. In that case the Court of Appeal was concerned with a claimant who had obtained advice from accountants on tax law aspects of the proposed transaction in question and privilege was claimed in respect of communications between them. Lord Justice Lloyd gave the lead judgment in which he stated: 'I consider that this court is bound to hold that LPP does not apply, at common law, in relation to any professional other than a qualified lawyer: a solicitor or barrister, or an appropriately qualified foreign lawyer. That is the effect of Wilden Pump, and it is binding on us despite Lord Pannick's arguments, whether based on human rights or on an attempt to distinguish the case.
'Even if we were not so bound, I would conclude that it is not open to the court to hold that LPP applies outside the legal profession, except as a result of relevant statutory provisions. It is of the essence of the rule that it should be clear and certain in its application, since it is not the subject of any ad hoc balancing exercise but is, to all intents and purposes, absolute.'
Also in the same case, Lloyd LJ referred to an Employment Appeal Tribunal decision, New Victoria Hospital v Ryan  ICR 201, in which the tribunal, Mr Justice Tucker presiding, said at pages 203 and 204: 'In our opinion the privilege should be strictly confined to legal advisers such as solicitors and counsel, who are professionally qualified, who are members of professional bodies, who are subject to the rules and etiquette of their professions, and who owe a duty to the court. This is a clearly defined and easily identifiable qualification for the attachment of privilege. To extend the privilege to unqualified advisers such as personnel consultants is in our opinion unnecessary and undesirable.'
Lloyd LJ commented on the words 'such as solicitors and counsel' and explained: 'I do not see that the use of the phrase "such as", rather than "namely" or some other such phrase, can be taken as showing that the rule is not restricted to members of the two English legal professions but extends to others who could be called legal advisers, but are not professional lawyers as such. As such it does not add to other previous cases, and of course it does not bind the Court of Appeal.'
Having considered the general principles, Akenhead J examined the nature of the engagement of Knowles. It was noted that Knowles was an established and well-known claims consultancy firm which did not hold itself out as a firm of solicitors or a group of barristers, even though some lawyers were employed at the firm. Akenhead J also noted that the terms of Knowles' appointment explicitly referred to the provision of 'contractual and adjudication advice'. Knowles was not required to provide legal advice. Further, the rates which were to be paid for Knowles' services did not relate to the use of solicitors or barristers. Taking these facts into account, Akenhead J found that Knowles was not retained as solicitors or barristers but as an organisation to provide the defendants with claims and project-handling advice. Akenhead J also dismissed the contention that a client who in good faith instructs an organisation or person who he mistakenly believes is a qualified solicitor or barrister and then receives legal advice from them is entitled to the privilege protection.
Akenhead J was of the opinion that: 'The fact that Mr Mackay honestly understood that the two gentlemen with whom he was dealing at Knowles were qualified and practising barristers or solicitors is immaterial because their employer was not retained by the defendants to provide the services of barristers or solicitors. The fact that he was mistaken in his understanding is immaterial. Policy considerations come into this because a party to litigation might casually meet someone who he honestly believed was a qualified solicitor (but who was not) and might receive legal advice. The protection of privilege is not intended to extend to the relationship between a person and another who is not in fact a qualified and practising lawyer, save in exceptional circumstances like those which arose in the Calley case, which is completely different from the current case: here, the defendants had no good reason to believe that they were employing solicitors or barristers because they were employing Knowles which does not profess to be offering the services of qualified practising solicitors and barristers.'
The case of Calley v Richards  19 Beaver 401 concerned a man who had been a solicitor working for a firm of solicitors who had ceased to practice, although he was held out by the firm as still being part of it and therefore in practice. It was held that privilege did apply to documents produced by the 'solicitor', but at paragraph 38 in the judgment of Lloyd LJ in R (Prudential plc and or another) v Special Commissioner of Income Tax he explained that this was an exceptional case and reinforced the absolute principle that LPP only applied to lawyers.
Referring to Calley, his Lordship stated: 'However, that is an exceptional case, and it seems to me that it does not take out what Lord Pannick needs to take from it, if function had been the test, then it may be that a person who had been a solicitor but had recently retired might be regarded as every bit as qualified to give legal advice as he had been before retirement. But the judgment makes it clear that if the client had known that Mr Mullings was no longer a solicitor, then the privilege would not be available. This is an exception which proves (i.e tests) the rule, but it does not seem to me that the recognition of the exception, by itself, altered the nature of the rule so as to apply more generally beyond the seeking and giving of legal advice from and by professional lawyers.'
Mackay serves as a reminder of the scope of LPP. The rule is, as Lloyd LJ explained in R (Prudential plc and or another) v Special Commissioner of Income Tax, absolute and any attempt to extend the protections afforded by the rule will be dismissed by the courts. Where an organisation is seeking to argue that documents are protected under LPP, one must consider the purpose for which the organisation was engaged in order to determine whether LPP attracts.
If the organisation has been engaged other than to provide legal advice and assistance, then it is unlikely that LPP will attract regardless of whether the organisation employs solicitors and/or barristers. In such circumstances, any documents which have been produced by the organisation and which are relevant to a dispute will be subject to disclosure and inspection.
Masood Ahmed, Birmingham City University