Claims Firms Cannot Claim Legal Privilege

September 19, 2012

Claims Firms Cannot Claim Legal Privilege

Legal professional privilege is a set of rules of evidence that allows a party to a dispute not to disclose certain categories of documents that are relevant to the dispute. The rules protect the confidentiality of the lawyer-client relationship and allow clients to disclose full details of their affairs to their lawyers, without fear of that information being used against them in court.

The question in a recent case in the High Court was whether or not legal professional privilege applied to documents produced by a claims consultancy, including when the consultancy retains legally qualified personnel.

Giles Mackay engaged a firm of architects and various contractors to construct a house for him and his wife in London. Delays were tolerated in the early stages of the project but these became more and more extended as time went on. In 2006, after further substantial delays, Mr Mackay engaged a claims consultant, Knowles, to advise him on a claim against the contractors.

A written retainer with Knowles, dated October 2006, stated that Knowles was to provide ‘contractual and adjudication advice’ and other services, none of which were those of solicitors or barristers. The document made it quite clear that if lawyers were required, Knowles would act as agent in appointing solicitors prior to them taking instructions directly from their clients (the Mackays).

Building contractor Walter Lilly, the main contractor for the project, argued that Mr Mackay and Knowles had embarked on a strategy to manoeuvre it into a position in which it could be held liable for the delays. Some of the correspondence to and from Knowles had been disclosed by DMW Developments, the firm that had engaged Walter Lilly. Other documents had been withheld on the grounds that they were privileged.

As a consequence of DMW’s failure to disclose some of the documents, Walter Lilly made an application for disclosure of the remaining papers.

In considering whether the documents in question did attract legal professional privilege, the judge stated that Knowles is well known as a provider of claims consultancy services. As such, it is not a firm of solicitors or group of barristers, even if it does employ some lawyers. It was retained to provide contractual and adjudication advice, not to provide legal advice.

The judge therefore had no difficulty in concluding that legal professional or legal advice privilege did not apply in this case. A further argument that the application was too late and that it would be a disproportionately onerous task to produce the disputed documents during the trial was also dismissed. All the parties were made aware that disclosure was likely to be ordered and the documents were held electronically. It would not, therefore, be difficult to make them available.

Application for disclosure therefore succeeded.