Loss of Legal Privilege

A recent decision of the High Court of England and Wales highlights the importance of having appropriate processes in place when making large-scale discovery. Our Dispute Resolution team examines the nuances encountered in that case and explores how its outcome provides some helpful guidance in how to maintain privilege over documents that have been discovered in error.

What You Need to Know

• The English High Court has clarified whether legal privilege is waived by the inadvertent discovery of legally privileged documents, particularly in large-scale discovery using e-discovery platforms.
• Over 4,000 privileged documents were mistakenly disclosed by the UK Gambling Commission during litigation with the New Lottery Company. The Court had to decide whether some of these could be used by the opposing side.
• The Court applied an objective test, asking what a reasonable solicitor would have done on seeing the documents, rather than relying solely on the views of the lawyers involved.
• Some documents were allowed to be used, as the Court found it was not obvious they had been disclosed by mistake; others remained protected by privilege.
• The decision is a reminder to legal teams to take extra care during discovery, including providing internal legal team details and applying consistent review processes when using e-discovery tools.

Background

A recent English case^[1] before the High Court of England and Wales (the Court) concerned the New Lottery Company Limited’s (TNLC) legal challenge to the award of the fourth UK national lottery licence.

During the discovery phase of the litigation, the Gambling Commission (GC) inadvertently disclosed over 4,000 legally privileged documents.

On discovering the error, GC’s solicitors wrote to TNLC’s solicitors seeking confirmation that the relevant documents would be destroyed or returned. TNLC, however, refused to do so for 128 documents, arguing that legal professional privilege over these documents was lost as the client had reviewed them. In addition, TNLC wished to refer to these documents to amend its pleadings. GC disagreed, contending that the inadvertent disclosure was an ‘obvious mistake’ and so TNLC was not entitled to use them.

The Court undertook a detailed analysis of the law governing the loss of legal professional privilege because of inadvertent disclosure.

Treatment of the mistaken disclosure of documents by Irish Courts

In Ireland, the inclusion of a privileged document in the schedule to an affidavit of discovery, without a claim for privilege, does not automatically constitute a waiver^[2]. The Courts have found that, before inspection, the disclosing party can typically amend the schedule to correct these mistakes.

However, once inspection of the document has occurred, the general legal principle is that privilege is lost. This is particularly true if copies of the document have been provided.

In reality, the delivery of an affidavit of discovery is typically accompanied by a copy of the documents referred to in the schedule. Therefore, the ability to amend an error in the schedule prior to inspection or delivery of documents is limited.

However, there are exceptions to this general rule where:

• The document was procured for inspection or delivery by fraud, or
• It would have been evident to a reasonable solicitor, on seeing the privileged document, that its disclosure was a mistake

The legal test to determine whether a mistake arose involves two stages:

1. Was it evident to the solicitor, seeing the privileged documents, that a mistake had been made?
2. If not, would it have been obvious to a hypothetical reasonable solicitor that disclosure had occurred as a result of a mistake?^[3]

If the answer to either question is affirmative, the court will likely allow the disclosing party to correct the mistake and prevent the receiving party from using the privileged document. The court adopts the perspective of a "reasonable solicitor" in assessing this. It considers the evidence and surrounding circumstances to determine, on the balance of probabilities, whether the solicitor would have recognised the disclosure as erroneous. The subjective belief of the receiving solicitor is relevant but not determinative. As a result, the court will make the final decision based on the objective standard of the reasonable solicitor.^[4]

The New Lottery Company decision

There was no dispute between the parties as to whether legal professional privilege originally attached to the documents in the first instance. Instead, the issue for the Court to determine was how to deal with the unintended disclosure of privileged material.

While the position in England does not differ from that in Ireland regarding how the inadvertent disclosure of privileged material is to be addressed, the judgment considers how this test applies in the context of a large-scale discovery exercise conducted using an e-discovery platform. In this regard, the Court acknowledged the complexities of modern discovery exercises, which typically involve large volumes of electronic documents and multiple reviewers with varying levels of experience.

The Court commented that the complexities of electronic discovery may require the test to go slightly further. The Court stated that if there is something in the nature of the document disclosed which ought to alert a reasonable reviewer to the possibility of mistake, the reviewer ought to inquire further and/or refer the document to a higher-level review. Therefore, the Court said, the test of obviousness should not be confined to what is wholly obvious on first review.

The Court considered that the following matters may arise and should be taken into account:

• The reasonable solicitor is entitled to start from the premise that documents disclosed have been deliberately disclosed.

• The reasonable solicitor is entitled to take into account the character of the firm giving disclosure and the manner in which disclosure has been given. A sophisticated exercise undertaken by a highly experienced firm would not typically result in inadvertent disclosure of privileged documents.

• The volume of disclosure is a matter that cuts both ways. On the one hand, it might be said that a vast volume of disclosure would make it more likely that mistakes would be made. On the other hand, a court might regard it as less likely that any errors should be obvious to the reasonable solicitor.

• The reasonable solicitor is one with a reasonable knowledge of the issues in the case and the issues for disclosure. That would include whether there were any matters on which it might reasonably be thought that the disclosing party would disclose documents over which it might otherwise assert privilege.

Ultimately, the Court considered a sample of documents under various categories and determined whether those documents fall within the objective test of what a reasonable solicitor would have done when reviewing the discovery. Having considered the documents, the Court found that some fell within the test, while others did not, consequently allowing TNLC to rely on certain documents that GC had claimed were privileged.

The Court commented that it would have been sensible for GC to have provided a list of members of their internal legal team at the time of delivery of their documents. In this regard, the Court said that a reasonable solicitor reviewing discovery would not be expected to ascertain and correctly determine the identity of an in-house legal team to identify documents that may have been inadvertently discovered.

What to do when faced with inadvertent discovery of privileged documents

What is also helpful about the judgment is that it provides some guidance on addressing mistakes in discovery as follows:

• Promptly identify and notify: On discovering an inadvertent disclosure, the disclosing party should promptly notify the receiving party.

• Consistent redactions: The disclosing party should ensure documents are consistently redacted.

• Evidence of due consideration: While a court may have regard to what the receiving solicitor considered in forming their view of whether a mistake occurred, the Court held that the review to be considered by the reasonable solicitor is one of a detailed consideration of the question of whether the document was disclosed by mistake. Therefore, while it is important to identify whether a receiving solicitor may have considered that a mistake may have occurred, their view is not conclusive that a mistake actually occurred.

• Objective test: Ultimately, a court will apply an objective test, considering what a reasonable solicitor would have concluded on reviewing the documents. Therefore, any challenge should be considered in that context.

• Cooperation: The parties should cooperate to narrow the issues and seek to resolve disputes efficiently.

Comment

This case serves as a helpful reminder of the importance of robust document review procedures, especially in large-scale litigation. It also highlights a court's approach to inadvertent disclosure, balancing the need to protect privilege with the principle of fair disclosure. The judgment underscores the necessity of a careful and considered approach when dealing with potentially privileged material in the discovery process.

For more information and expert advice on all matters related to preserving legal privilege, contact a member of our Dispute Resolution team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] New Lottery Company Limited and another v the Gambling Commission EWHC 1058 (TCC)

[2] Re Briamore Manufacturing Limited (1986) 1 WLR 1429 and Guinness Peat Properties Limited v Fitzroy Robinson Partnership (1987) 1 WLR 1027 at 1045

[3] Endorsed by Clarke J. in Byrne v Shannon Foynes Port Co [2008] 1 IR 814

[4] Shell E&P Limited v. McGrath and Others [2006] IEHC 409