Buckle-Up: The Latest Considerations for Legal Professional Privilege Claims Involving In-House Counsel

Snapshot and key takeaways

Although it is accepted that communications involving advice prepared by in-house counsel can generally be covered under legal professional privilege, courts are inclined to examine privilege claims involving in-house lawyers more rigorously than they would examine claims involving external counsel.

In practical terms, this means that a heavier onus is placed on a party seeking to establish that privilege subsists in communications involving in-house counsel as opposed to the onus of proof that applies to a party in establishing privilege in communications involving external counsel.

A recent decision from the Supreme Court of Victoria¹  highlights the following considerations in relation to the Court’s approach to assessing evidence in determining privilege claims, and when it will consider documents involving in-house counsel to be privileged:

• although it may be considered inefficient for several employees to make affidavits to support privilege claims, a general and indirect affidavit given by an external solicitor based on a review of the documents is merely evidence of their opinions and has its limitations;


• no inference can be made that a communication is privileged just because in-house counsel is copied into or involved in the communication – there needs to be some evidence, either on the face of the document itself or from some other source (such as affidavit material or another contemporaneous document) to allow the Court to conclude that the communication was part of a request for or the provision of legal advice;


• for the litigation limb (s 119 of the Evidence Act) to apply, the legal services must be obtained by the client who is the party or likely party to the actual or anticipated proceedings;


• establishing whether an in-house counsel has the required degree of independence for privilege to apply to their advice is an exercise which depends on their role and the structure of the particular in-house legal team. In what may be a sigh of relief to some extent for in-house counsel, the Court noted that an in-house lawyer’s emphasis of the strategic or commercial qualities of their advice will not necessarily detract from their legal role or their providing of legal advice;


• the fact that parties may have altered their position in relation to whether certain documents are privileged is unremarkable and does not cast any doubt over the legitimacy of their privilege claims;


• communications in relation to the continuation of unlawful operations or how to avoid visibility with relevant authorities are not covered by privilege if they occurred after receiving legal advice that the conduct in question was unlawful.

More detail

Background

The case concerns a challenge made by Mr Andrianakis and Taxi Apps Pty Ltd (together, the Plaintiffs) to a number of privilege claims made in class action proceedings against a ridesharing company. On 23 September 2021, Mr Andrianakis filed a summons seeking production of unredacted copies of certain documents. On 8 October 2021, Taxi Apps filed a similar summons seeking production of 3,971 common documents and 73 unique documents.

It was agreed that the privilege challenges would proceed by way of the Court reviewing a set of 100 sample documents (Sample Documents).

The purpose of the Court’s review of the Sample Documents was to determine the position in respect of the privilege claims at a general. The approach was for the Court to make general rulings in respect of the Sample Documents so that the parties could apply those rulings to the remaining challenged documents as guidance in each of the proceedings issued by the Plaintiffs.

Did the Defendants provide sufficient evidence to establish their privilege claims?

An affidavit in support of a privilege claim

The Court agreed held that if there is no direct evidence as to the purpose of the document and the purpose or dominant purpose cannot be ascertained from the document itself or if the purpose is ambiguous on the face of the document, then the Court cannot be satisfied that the dominant purpose is a privileged one. Therefore an affidavit made by an external solicitor instructed by the Defendants in support of a privilege claim is, in essence, an opinion about the purpose of those documents based on the exercise the external solicitor had undertaken, rather than direct evidence that the document is privileged.

The participation of in-house counsel in communications

The Defendants argued that it was appropriate to infer the existence of privilege where communications take place between a client and his or her independent legal advisers or between a client’s in-house lawyers and those legal advisors. The Court held that while this was correct on a very general level, further evidence was required to allow the Court to conclude that the communication was part of the continuum of communication passed between solicitor and client for the purpose of requesting or providing legal advice. In these circumstances, the Court did not consider it appropriate to rely on the participation of the Defendant’s in-house counsel in communications alone, without more, to establish that those communications were covered by legal professional privilege.

Claims based on the litigation limb

Another point of contention was whether the Defendants discharged their burden of proof under s 119 of the Evidence Act in satisfying the Court that the communications were privileged as they formed part of legal services provided in relation to a proceeding, or anticipated or pending proceeding in which the Defendants were or may be a party (‘the litigation limb’). The Court found that communications indicating that drivers of the Defendants had been invited to interviews with regulatory authorities was not evidence of a connection between the communication and actual or anticipated litigation. Importantly, it was emphasised that the Defendant must be a party or likely party to actual or anticipated proceedings. Even if there was such evidence, it would concern proceedings in respect of those drivers rather than the Defendants and therefore would not be covered under the litigation limb.

The mixed role of in-house counsel

It was accepted in-house lawyers often have a mixed role. Therefore, in order to ascertain whether communications involving in-house lawyers are privileged, it was important to determine whether the in-house lawyer was acting in a legal context in respect of the document or communication in question. In this case, the Court found that the in-house lawyers had both legal and non-legal responsibilities, which did not preclude their communications from being covered by privilege. The Court held that presumptions cannot be made about the dominant purpose of the documents/communications involving in-house counsel and the assessment of the dominant purpose of each document will primarily rest on the content of the document and its context (in terms of subject matter and who is participating in the document or communication).

Whether the conduct of the Defendants’ discovery casts doubt upon the legitimacy of their privilege claim

The Court found that it was unremarkable that the Defendants had made the decision to narrow the scope or alter the volume of disputed documents. Such behaviour was consistent with the overarching obligations set out in the Civil Procedure Act 2010. The fact that the Defendants had abandoned some of their privilege claims over some of the Sample Documents did not indicate that their approach to privilege claims in the first place was somehow suspect.

Does the Misconduct Exception apply here such that the Defendants are not able to rely on their privilege claims?

The “Misconduct Exception” (s 125 of the Evidence Act) applies to communications made or documents prepared by a client or lawyer in furtherance of the commission of an offence or the commission of an act that renders a person liable to civil penalty.

The Court accepted that there were reasonable grounds for finding that the Defendants knew that operating their system would involve the commission of ridesharing offences and that the Defendants knew that most of their drivers were or would be unlicensed. Once the Defendants had received external legal advice that the operations were unlawful, any in-house communications in relation to continuing the operations and how to avoid visibility with the relevant authorities became communications in the furtherance of an offence and therefore not privileged.

In the circumstances of the case, the Court held that there were reasonable grounds to find that legal advice or services for the purposes of avoiding or delaying enforcement action being taken or offences being detected fall within the Misconduct Exception. Therefore, legal advice sought after the relevant dates regarding matters, such as launching and continuing to provide their system using unlicensed drivers, avoiding enforcement activity or detection, and dealing with fines and prosecutions, constituted legal advice in furtherance of the commission of Ridesharing Offences. In reaching this conclusion, the Court distinguished between advice regarding avoiding enforcement action is not the same as advice regarding avoiding offending.

¹ Andrianakis v Uber Technologies Inc & Ors; Taxi Apps Pty Ltd v Uber Technologies Inc & Ors [2022] VSC 196.