Pitfalls with privilege – Ensuring trustees don't stumble at the final hurdle

As part of their analysis, many actuaries are requesting that legal advice the trustees have obtained is shared with them. It is important that trustees don't stumble at the final hurdle and cause more problems for themselves.

What is privilege?

First off, some terminology. Privilege exists over types of legal advice and communications and, once it exists, it allows the recipient of that advice to resist being required to hand over confidential and sensitive material to others.

That makes it a powerful way of avoiding handing over sensitive advice, which can be valuable in later disputes.

Everything that is privileged is confidential; but not everything that is confidential is privileged. Confidentiality is a fundamental part of privilege. The owner of the privileged document, in order to keep it privileged, needs to handle it in a clearly confidential way.

Any time legal advice is passed to a third party (i.e. beyond the client and the lawyer), whether that is intentional or accidental, that risks stripping that document of the confidentiality necessary to maintain privilege. This means control, safeguards, and labelling, are all important.

The ‘magic' of privilege over legal advice is a frustrating area for non-lawyers. If trustees don't mind waiving (i.e. giving up or foregoing) privilege over legal advice, that of course is fine – it is their privilege to waive – but they should be aware of how and why they are doing so.

How do you avoid losing legal privilege?

So, how do you avoid that privilege being lost?

Firstly – it may sound obvious, but they should consider whether they actually need to share the legal advice at all. This will obviously depend on what the advice covers and what you are asking the actuary to do. It may be that some, or all, of the advice can be held back, particularly if other topics were covered in the note. It may also be that the actuary can rely on other sources of information for what they need.

Secondly – if the advice does need to be shared, then the trustees should put safeguards in place which reduces the chances of confidentiality falling away.

• The trustees should make clear that they are intending only a limited waiver of privilege for that third-party recipient (the actuary) only. If the trustees have in mind others receiving the document too they should say so and, ideally, control that communication themselves.
• They should specify the specific purpose for which the advice is being shared and that the trustees expect the document to be kept confidential (or even destroyed).
• The document, if it isn't already, should be marked ‘privileged and confidential' and ‘not for onward circulation'. That flags the privileged nature of the document to others in the organisation who may not have seen the original safeguards.

Thirdly, if in doubt ask a lawyer – but this writer is conscious that legal advice about legal advice does seem like a rabbit hole that clients would rather avoid…

Chris Edwards-Earl is a partner at Stephenson Harwood