Playing with Privilege

The paper argues that there are no sound a priori reasons for courts disallowing privilege in respect of communications between corporations and in-house counsel. It proposes that disallowing privilege for communications between corporate clients and in-house counsel would, in effect, deny corporations the ability to communicate confidentially with lawyers of their choosing. This would be inconsistent with the underlying rationale for privilege, which is to encourage full and frank disclosures by clients to legal advisers so that legal advisers can provide their clients with accurate advice. After briefly reviewing some international decisions (and contrasting those decisions with the law of privilege in Australia), the paper explains the importance of client-lawyer privilege as promoting: client confidence, economic efficiency, and access to justice. The paper examines the kinds of legal services external and internal counsel provide and considers why corporations might employ lawyers rather than pay external advisers. While noting that external counsel can bring valuable objectivity to the legal services they provide, in-house counsel can also be independent advisers. Being salaried employees, in-house counsel may even be more independent than their external lawyer counterparts. In the final section, a sample of Australian cases is examined. While the Australian courts have suggested some useful lawyer-characteristics for determining whether communications with counsel are privileged, the Australian cases also hint that courts are likely to focus on whether the lawyer is 'independent' (in which case, privilege may be claimed), rather being than a 'player in the transaction' (in which case, privilege may be denied). While it may sometimes be difficult to distinguish an 'independent counsel' from a player, there should be no presumption against privilege for internal counsel.