When dealing with privileged documents, it is always necessary to consider to whom that privilege belongs. Particular challenges arise when the privilege belongs to more than one party (joint privilege), and the case of Ford v FSA provides useful guidance on how to avoid falling foul of the rules in such situations.
What has happened?
In 2008, the FSA commenced an investigation into a company called Keydata. Keydata’s solicitors were - according to the strict terms of their retainer - only instructed to advise the company. However, in reality they also provided legal advice to a number of executives who were involved (but not, initially, under investigation themselves); “the unspoken understanding was that this representation would be swept up within the earlier engagement letter, with Keydata picking up the bill”.
The FSA subsequently notified the affected executives that they too were under formal investigation, and at this point the solicitors provided confirmation that they were also acting for the executives (and entered into a formal retainer with them).
When Keydata was put into administration, the administrator - at the request of the FSA - waived privilege over the company’s email records, including several emails of advice from the solicitors. The executives did not become aware of this waiver until they received the FSA’s report. One of the executives issued an application for judicial review of the FSA’s decision to rely on two of the emails in its enforcement action, on the basis that the emails were protected by joint interest legal professional privilege.
The Administrative Court held in favour of the executive: joint interest legal privilege was evident on the facts of the case, and the FSA was wrong to rely on the waiver of this privilege from the Company’s administrators to use such material in its enforcement investigations. The court held that:
Legal privilege is absolute, need not be connected to litigation, and “cannot be set aside on the ground that some other higher public interest requires that to be done”;
Legal privilege cannot be waived without the consent of all of the parties to whom the privilege belonged;
The Court will undertake a factual inquiry to determine if joint interest legal privilege exists. This will require the Court to establish that:
- the communication with the solicitor was made for the purpose of seeking advice in an individual capacity (rather than only as a representative of a corporate entity);
- those with whom the joint privilege was claimed knew or ought to have appreciated the legal position;
- the solicitor knew or ought to have appreciated that he was communicating with the individual in that individual capacity; and
- that the communication with the solicitor was confidential.
How will this affect me?
There are many situations where it makes sense for a solicitor to act for both company and employee. This decision provides welcome clarification that where legal advice is given to both company and employee in a personal capacity, that advice may be protected by joint legal privilege. Such joint legal privilege cannot be waived unilaterally.
This case also provides reassurance that a failure to have a clear, separate retainer letter with employees as well as the company will not necessarily be fatal to establishing such joint legal privilege.
This decision is welcomed. It has strengthened the existing authorities by demonstrating that joint legal professional privilege can belong to more than one party, even in circumstances where there may be no separate retainer letter with each party.
Nevertheless, the executive would surely have preferred the opportunity to deny the FSA access to the emails in the first place, rather than having to seek judicial review of its actions after the event. This might have been possible if the solicitors had signed separate engagement letters with the executives and the company at an earlier stage in proceedings, since this would have made the joint interest legal professional privilege more obvious. This decision emphasises the importance of formalising the solicitor-client relationship from the outset.