Are directors entitled to claim ‘joint privilege’ if the company’s lawyers give advice that affects them personally as well as the business itself? A recent case has helped clarify a previously obscure area of the law of privilege.
When proceedings are brought against a company, a claim may also be brought against an individual director. The firm’s lawyers may then be called on to advise in both sets of proceedings. ‘Legal advice privilege’ protects communications between lawyer and client from being disclosed to the other side .
But occasionally a director may not be protected by legal advice privilege in proceedings against him. The other party may argue that the advice is privileged only in relation to the claim against the company – not in proceedings against the director personally.
A director may be able to argue that the legal privilege benefitting the company is in fact joint privilege. Joint privilege, also known as common interest privilege, arises where the advice was clearly intended for directors as individuals as well as for the company.
The case of Ford (R, on the application of) v Financial Services Authority has set out the conditions under which directors may benefit from joint privilege:
the directors must have communicated with the lawyer in order to seek legal advice in their individual capacity
the directors must make it clear to the lawyer that the advice is for them as individuals as well as for the company
the company and anyone else benefiting from the joint privilege must or ought to be aware of the legal position
the lawyer must know that they are communicating with the directors in a personal capacity
the communication must be confidential.
In circumstances where these issues arise, we will advise clients accordingly. However, if directors are concerned about potential claims against them as individuals, it would be advisable to seek advice swiftly.
As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.
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