Every lawyer is well aware of the importance of solicitor-client privilege.

District Judge Neil Hickman looks at the limits of privilege for communications between client and lawyer

Recent cases in the Court of Appeal suggest the privilege may be narrower than had been supposed.

Legal advice privilege protects the confidentiality of communications between solicitor and client for the purpose of obtaining legal advice, irrespective of whether the advice concerns pending or contemplated litigation.

It is distinct from litigation privilege, which protects the confidentiality not only of communications between solicitor and client but also of communications between solicitor or client and a third party.

For a document to attract litigation privilege, the dominant purpose for which it was brought into existence must have been the conduct of pending or contemplated litigation.

Three Rivers (No 5) [2003] QB 1556 clarified a number of issues relating to legal advice privilege.

Although few practitioners are likely to encounter a case such as this involving the collapse of the Bank of Credit and Commerce International, the principles that emerge from Three Rivers are of general importance.

The Court of Appeal held that:

- Documents prepared by Bank of England employees with the intention that they should be sent to their employer's law firm, Freshfields, for advice were not privileged.

Legal advice privilege does not attach to documents obtained from third parties to be shown to a solicitor for advice, and an employee is to be treated as a third party for this purpose.

It makes no difference that a corporation can only act through agents.

Only communications between the client, the bank or its 'Bingham inquiry unit' (BIU), and the solicitor were privileged.

- Documents, even if prepared with the dominant purpose of obtaining legal advice, which were not submitted to the solicitors, were not privileged.

Documents that were sent to the solicitors but had not been prepared with the dominant purpose of seeking legal advice were not privileged.

- Ex-employees can be in no better position than current employees for the purpose of any claim to privilege.

In Three Rivers (No 5), the applicants had not sought disclosure of any documents passing between the BIU and Freshfields, or Freshfields' memoranda or drafts.

However, having considered the Court of Appeal's ruling, they realised that even some documents in those categories might not be privileged.

The Court of Appeal had said that legal advice privilege was in truth a privilege in aid of litigation, because it concerned advice about rights and obligations that could form the subject matter of litigation.

Lord Justice Taylor had also said - in Balabel v Air India [1988] Ch 317 - that it was important for legal advice privilege to be confined to its proper limits and not be extended.

So in Three Rivers (No 10) [2003] All ER (D) 40 (Nov), Mr Justice Tomlinson held that even communications between the BIU and Freshfields would not be privileged if they were directed not to advice about the bank's rights and obligations, but to advice about how the bank's material might sensibly be presented to the Bingham inquiry in a way least likely to attract criticism.

This judgment was upheld on appeal ([2003] EWCA Civ 218).

Solicitor-client communications will often involve matters other than the giving of legal advice in the strict sense.

A homely example comes from C v C (Privilege: Criminal Communications) [2002] Fam 42, where in the course of matrimonial proceedings the husband telephoned the solicitor dealing with the conveyancing.

This communication was not privileged because it had included a threat to tear the solicitor's throat out, which, as a threat to kill, was criminal.

But Lord Justice Thorpe made it clear that neither of its ostensible purposes, to make a deal at an acceptable price and to press the solicitors to complete the job, involved obtaining legal advice.

So on that basis also the communications were not privileged.

Similarly, in R (on the application of Howe) v South Durham Justices [2004] All ER (D) 226 (Feb), the Divisional Court upheld a witness summons requiring the claimant's solicitor to give evidence identifying the claimant as the same person who had been disqualified from driving two years previously, and to produce an attendance note.

The attendance note, it was said, had nothing to do with the giving of legal advice.

In USA v Morris [2004] EWCA Civ 330, the Court of Appeal was concerned with a virtually unprecedented application, in the context of American tobacco litigation, to question the lawyers acting for BAT.

Lord Justice Brooke commented that 'there is obvious force in the general thrust of [the] submission that advice or assistance in collecting and collating, listing, spring-cleaning, storing, transporting and warehousing documents does not amount to legal advice concerning BAT's legal rights and obligations'.

It is not appropriate to dissect a course of communication in an effort to extract individual items that do not relate to the giving of advice, as was emphasised in Balabel.

A document uttered during the transaction did not have to incorporate a specific piece of legal advice to obtain that privilege.

Legal advice privilege is more restricted than litigation privilege.

When will the latter apply? The party claiming privilege must show that he was aware of circumstances that made litigation 'a real likelihood rather than a mere possibility'.

Many people would suppose that in 1986 litigation against the tobacco companies was a real likelihood; but in Morris it was held to have been no more than a 'mere possibility', the last such action against BAT having been in 1969.

Clearly the likelihood needs to be a substantial one.

The last word may not have been said on this subject because the Bank of England may well seek permission to make a third trip to the House of Lords in Three Rivers.

And one should note the decision of the Privy Council in B & Others v Auckland Law Society [2003] 2 AC 736, which was notably sympathetic to a claim of privilege.

Moreover, In Howe Lord Justice Rose reiterated that 'the maintenance of confidence between lawyer and client was of central importance'.

Concerns about the death of legal advice privilege appear premature.

District Judge Neil Hickman sits at Milton Keynes and Aylesbury County Courts