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Legal Professional Privilege: Advisors should be careful not to waive LPP

Professional advisers who receive legal advice should be cautious when making statements that refer to the advice — or they risk losing the protection of legal professional privilege. Shelley Taylor and Paul Ellis

Professional advisers face potential legal liabilities in the course of their business and may need to obtain legal advice. A recent court decision shows that revealing the fact that you have received advice and disclosing the "gist" of that advice will likely amount to a waiver of legal professional privilege.

Legal professional privilege: the benefit

Legal professional privilege‚?? attaches' to confidential communications, whether oral or written, between a client and their lawyer if the purpose of the communication was to obtain legal advice in relation to existing or contemplated litigation.

The effect of the privilege is that the neither the client nor the lawyer can be forced to disclose the contents of the communication — unless the client has waived privilege in some way. A client can waive privilege by consenting to the disclosure or by voluntarily revealing the communication to another person (whether or not they realise the disclosure waives the privilege).

The case

The decision in Seven Network Ltd v News Ltd (No 12) [2006] FCA 348 concerned a report belonging to Optus called the "Project Alchemy Board Paper". The paper contained a section headed 'Legal Risks' which included the statement:

Our legal advice is that the risk of damages being awarded against Optus is low.

Optus was before the court objecting to a court requirement that Optus provide the court with a copy of the legal advice referred to in the paper. Optus argued that it had only waived legal professional privilege in relation to the document itself, and not the legal advice the document referred to.

The decision

The Federal Court of Australia:

  • concluded that Optus had voluntarily disclosed the 'gist', or the conclusion, of the legal advice referred to in the document
  • held that this disclosure was inconsistent with Optus maintaining its legal professional privilege; and
  • ordered Optus to release documents relating to the advice referred to in the statement.

Tips for professional advisers

Advisers need to remember that, if possible, they should not publicly announce the conclusion of any legal advice they receive — otherwise, they may prejudice their ability to claim privilege in the future. If an announcement cannot be avoided, then it is best to state only that they have sought the advice (and not disclose the 'gist' of the advice, or its conclusions).


Lawyer in Profile

Leigh Baring
Leigh Baring
PH: 61 3 9258 3673

Leigh is a partner in the Maddocks Tax & Revenue team.

Leigh regularly provides advice on:

  • structuring of businesses and transactions;
  • mergers and acquisitions;
  • corporate reorganisations and distributions;
  • sale of businesses;
  • demergers;
  • capital raisings;
  • joint ventures and property developments;
  • international tax (both inbound and outbound);
  • succession planning; and
  • liquidations.

His advice covers both direct and indirect tax considerations.

Leigh advises Australian and multinational companies, high net worth individuals, accountants and financial advisers on all areas of taxation law.