Scott Kugler, Gowling Lafleur Henderson LLP
www.gowlings.com

Solicitor-client privilege has been described by the Supreme Court of Canada as “fundamentally important to our judicial system”.  When litigation arises, litigation privilege can be just as important.  In order to protect your company’s privilege, you must understand it.  The following ten points may serve as a good refresher regarding the key aspects of privilege.

1. Solicitor-Client Privilege Only Applies to Communications with a Lawyer

In order for a communication to be protected by solicitor-client privilege, it must: (1) arise from communication between a lawyer and her client; (2) where the client seeks or receives legal advice; (3) in circumstances in which the communication is intended to be confidential.  The fact that a lawyer is in-house counsel and not external counsel does not disqualify a communication from being protected by solicitor-client privilege.  However, the communication must still arise from a communication where the client (often a business person in the company) seeks legal advice.

2. Not All Communications with a Lawyer are Covered by Solicitor-Client Privilege

Despite the phrase “solicitor-client” privilege, not all communications between a lawyer and her client are privileged.  The communication must relate to seeking or providing legal advice.  This is especially important for in-house counsel to remember because you are often called upon to provide input on business issues that may not constitute legal advice.  There is often not a clear distinction between the legal advice and the business or policy advice provided.  The Supreme Court of Canada has explained that determining which communications will be privileged will depend on the nature of the relationship, the subject matter of the advice, and the circumstances in which it is sought and rendered.  Some documents may even contain privileged and non-privileged content such as minutes of board of director meetings.  It is a good practice to indicate right in the minutes which portions the company claims privilege over.  This will facilitate redactions if the document needs to be produced to the opposing party in litigation.

3. Litigation Privilege Can Arise Without the Involvement of a Lawyer

Litigation privilege is generally asserted to protect documents that are created in the course of litigation for the dominant purpose of the litigation.  These documents are often referred to as “work product” and can be prepared by the lawyer, the client, or a third party.  Litigation privilege also protects communications regardless of whether a lawyer is involved.  For example, litigation privilege protects communications between a lawyer and a third party adjuster if the dominant purpose of the communication is for pending or anticipated litigation.  Litigation privilege can also protect internal communications between two managers of a company about a complaint lodged by a customer if the dominant purpose of the communication is for pending or anticipated litigation.

4. Internal Policies Regarding Disputes

Once litigation commences, it can be difficult to determine when litigation privilege first arose and therefore which communications may be privileged.  To facilitate this process, consider implementing an internal policy that requires everyone in the company to notify in-house counsel in writing as soon as a dispute occurs that has a reasonable prospect of litigation.  Not only will the notice be good evidence of when the company believed that there was a reasonable prospect of litigation, it may also provide you with earlier notice of problems than you might otherwise have received. Once you begin to collect and create documents for litigation, keep those documents separate from your non-privileged documents or mark them “privileged”.  This will help you or your successor if the company is subsequently required to produce documents to an opposing party.

5. Litigation Privilege Does Not Last Forever

Unlike solicitor-client privilege, litigation privilege does not last forever.  It only lasts until the litigation in which it arose and any related litigation (contemporaneous or subsequent) is completed.  The difference in the duration of the privileges is due to the policy reasons that underlie each privilege.  Solicitor-client privilege is intended to permit clients to speak freely to their lawyers without fear that what they say will be divulged to a third party.  In contrast, the purpose of litigation privilege is to create a zone of privacy in relation to pending or anticipated litigation.  When a piece of litigation ends, put the privileged documents in a separate file if there is any possibility of subsequent related litigation.  This will save time and money if subsequent litigation ensues.

6. Communications with Experts 

Experts are often engaged by outside counsel to assist in litigation or anticipated litigation.  The communications between the expert and counsel, including the expert’s report, are generally protected by litigation privilege because the communications are intended to be confidential from the public and are made for the dominant purpose of pending or anticipated litigation. 

7. Internal Investigations by an Employee 

When an employee conducts an internal investigation at the direction of in-house counsel, the communications will generally be protected by privilege if the purpose of the investigation is to gather facts to obtain legal advice or for the dominant purpose of pending or anticipated litigation.  However, there is mixed jurisprudence on this point and therefore extra care must be taken before the investigation commences to ensure that the communications and work product will be protected by privilege. 

8. Investigations by an Expert 

When an expert is retained by in-house counsel to conduct an internal investigation of the corporation, it is not always clear whether the investigation is being done in anticipation of litigation, to facilitate obtaining legal advice, or for other business reasons.  Since the investigation report and other communications with the expert will generally only attract litigation privilege, it is important to carefully consider whether the dominant purpose of the investigation is for pending or anticipated litigation. 

9. Settlement (“Without Prejudice”) Privilege 

There are three conditions that must be met in order for a communication to be protected by settlement privilege: (1) a litigious dispute must be in existence or within contemplation; (2) the communication must be made with the express or implied intention that it will not be disclosed to the court; (3) the purpose of the communication must be to attempt to effect a settlement.  Therefore, marking a document “without prejudice” does not make a document privileged; the content of the document must meet the test for settlement privilege.  Likewise, a document that is not marked “without prejudice” may be protected by settlement privilege if the content of the document meets the three conditions for the privilege.  To avoid confusion about the author’s intent, it is a good practice to mark all settlement documents “without prejudice”. 

10.   Privilege Belongs to the Client 

Privilege does not belong to lawyers, it belongs to their clients.  Although it generally makes sense for a client to keep communications with her lawyer confidential through the assertion of solicitor-client privilege, there are times when a client faces a practical need to waive the privilege.  For example, if the client believes that the lawyer has performed negligently and wants to commence a claim against the lawyer, the client will generally need to waive privilege in order to present the essential facts of the case such as the specific instructions provided to the lawyer and the legal advice provided by the lawyer.