Emails between an in-house counsel and an employee, gathering information to provide to external lawyers, were not protected by legal advice privilege.  The decision illustrates (a) how difficult it will be for internal fact finding to be privileged in the absence of existing or contemplated litigation, and (b) the importance of establishing, for communications between in-house counsel and an employee, whether legal advice privilege applies: Glaxo Wellcome UK Ltd (t/a Allen & Hanburys) & anr v Sandoz Ltd & ors [2018] EWHC 2747 (Ch)

In the context of an intellectual property dispute, the defendants, who were all in the same group of companies, had to disclose documents relating to the design history of a product. They claimed privilege over emails between an in-house lawyer and a regulatory affairs manager, who both worked at one of the defendant group companies.  

These emails either sought, or provided, information to give to external lawyers. The claimants challenged the defendants' claims to privilege over these emails.

Regulatory affairs manager not authorised to seek legal advice from external legal advisers

The defendants claimed that the regulatory affairs manager was authorised to request and receive legal advice where it was relevant to his regulatory affairs position, and that it was within the scope of his authority to provide information for the purposes of obtaining legal advice. Communications between him and the in-house counsel were, the defendants argued, therefore privileged.   

The court found that there was no evidence that the regulatory affairs manager was authorised to seek legal advice from the external lawyers, who were in fact acting for another group company.  It was more likely, the court said, that the in-house counsel had been tasked with that job and it was the in-house counsel that was obtaining information for that purpose.  In that event, the court held, the in-house lawyer’s exercise in gathering information from the regulatory affairs manager would not be subject to legal advice privilege:  “The provision of information by him [the regulatory affairs manager] would not make the communication privileged unless he was the client for the purposes of him obtaining legal advice” (which he was not).  

Group companies had not each made out their claim to privilege

The defendants' evidence in support of their claim to privilege did not explain each of their respective entitlements to privilege. The court criticised this approach. The court noted that there was no evidence that the external law firm in question was providing advice to the company for which the in-house counsel and regulatory affairs manager worked, nor that the regulatory affairs manager had any authority to seek legal advice from that external law firm (who was acting for another group company). 

The court concluded that the emails were not privileged.

Comment 

This decision confirms that the gathering of information by in-house counsel of a company, from an employee of that company, for passing on to external lawyers in order for advice to be provided by that external law firm is not privileged.  

Who is the ‘client’?

This decision makes it clear that, as Andrews J said in SFO v ENRC​:¹ “…the employee must be authorised to seek/obtain the legal advice that is the reason for the communication…”. So, while an employee may well be authorised to obtain legal advice from in-house counsel,  s/he may not be so authorised in relation to an external law firm.  The question of who is the client in respect of any given communication is a question of fact.  

The decision further reiterates that the mere fact that an employee is generally authorised to communicate with or give information to a lawyer is not enough to make that employee the “client” vis-à-vis that lawyer.  This is consistent with RBS Rights Issue Litigation:² “the fact that an employee may be authorised to communicate with the corporation’s lawyer does not constitute that employee the client or a recognised emanation of the client”.³

It is worth remembering that just because someone holds the office of in-house counsel does not mean that s/he is automatically a “client” of external legal advisers for privilege purposes. As Andrews J put it in ENRC:  “It might also be persuasively argued that the company's in-house lawyers or general counsel would have the necessary authority, by virtue of their office, to seek and obtain legal advice from external lawyers on behalf of the company. Whether they, or any other individual employee or group of employees had such authority in a given case, is a question of fact to be determined on the evidence.”⁴  

Accordingly, companies may need to look at employee job descriptions to assess whether individuals are authorised to seek and obtain legal advice and, if so, who from.  The answer is not always clear-cut.  

Group companies must be specific when claiming privilege

The decision highlights the importance of being aware, when undertaking a privilege analysis, of the lines of communication both within a company and between companies in the same group, particularly where there may be some shared legal function.  Any evidence put forward in support of a claim for privilege on behalf of a number of group companies must explain clearly each company’s entitlement to the privilege and, although not relevant here, where advice is being given by an in-house lawyer in one company to an employee in another company, it is important to assess carefully whether this might impact the question of whether the employee can be said to be a client for privilege purposes.  

Internal and external legal advice

It seems that there was no suggestion in this case that, in relation to the emails in question,  the in-house counsel had intended to, or provided legal advice to the employee – the defendants stated that she was simply seeking information to pass on to external lawyers. So there does not seem to have been a basis for arguing that the emails were privileged communications between the employee (as client) and the in-house counsel (as lawyer).  However, on the right facts it may of course be possible to make such a claim to privilege.  For example, an in-house counsel may initially request and receive information in emails with an employee with the intention of subsequently providing legal advice to that employee.  In-house counsel may decide to pass on the same information to an external lawyer, perhaps for a second opinion or a more detailed analysis, or in connection with a separate matter. This latter action does not affect the privilege analysis of the original emails.

The purpose for which an information gathering exercise originally took place (was it to simply pass on to external lawyers as in this case, or was it for the in-house counsel to advise his/her “client”?) may not always be documented in the context of busy day-to-day corporate operations.   Where litigation privilege is not available, in-house counsel should ensure they consider carefully who their internal clients are on any given matter and, even when they are communicating with an employee who would ordinarily fall within that “client” category, they must consider whether that particular communication involves the lawyer wearing his/her “lawyer” hat and the employee wearing his/her “client” hat or whether the communication is in fact made on some other basis.  If it is unclear whether an individual is a client for these purposes or whether either party is wearing the right hat in relation to a particular communication, it may be prudent to operate on the basis that the communication will not be privileged.

Footnotes:

1 The court noted that this quote was cited with ‘apparent approval’ by the Court of Appeal in ENRC v SFO.  

2 See Investigations: notes of employee interviews not privileged. 

3 Hildyard J in Re RBS Rights Issue Litigation

4 Para 92 Andrews J SFO v ENRC