Confidentiality, Legal Privilege and Fees
Abstract
This article will examine and explore the practice and principles of client confidentiality, legal professional privilege, and legal fees. It will seek to clarify the law governing their implementation, the importance of the principles themselves, and the tensions and controversies that have arisen in both their practice and scope. Firstly, it will explain the relevant law and principles surrounding client confidentiality and legal professional privilege, the situations when they apply in law, and the relevant exceptions to the rules. It will then examine the difficulties that legal professional privilege has experienced, in particular the precarious balancing act between keeping legal communications rightfully privileged, and the detection of criminal activity with wide powers of legislation-enabled surveillance of privileged communications, and how Parliamentary legislature and the courts have struggled to implement these measures whilst maintaining this balancing act. Lastly, this article will examine the importance and practice of legal fees, the conflicts of interest between lawyers and clients in the practice of fee-paying, and the lack of regulation and guidance in the proportionality of fees to be paid.
The lawyer-client relationship
Trust is fundamental to any relationship. It ensures that both parties support each other through thick and thin, and carry out their responsibilities towards each other in a mutually beneficial manner. For trust to exist, those party to a relationship have to feel safe; both by feeling comfortable in the communications that they provide each other, and by feeling that no one person is inherently taking advantage of the other.
The objective of The code of conduct and a lawyers’ professional conduct is to avoid dominance by either the lawyer or the client and the client being enabled to make advised decisions in a supportive atmosphere[1] and, in turn, the client expects (impliedly and/or explicitly) the lawyer to uphold their duties, namely by acting in the client’s best interests (CD2), acting with honesty and integrity (CD3), keeps the client’s affairs confidential (CD6), and works to a competent standard (CD7): These Core Duties (CDs) are a few, among others, that are enshrined in the BSB Handbook.[2]
For this relationship to function effectively and serve its purpose, it is fundamental that the client can trust and confide in their lawyer. This is paramount to ensuring the right to a fair trial (ECHR Art. 6) and the thorough exercise of the entire lawyer’s expected duties in litigation and presenting a thorough case to the court.[3] In practice, this is upheld by three legal principles, which exist in common law, the relevant codes of conduct, and/or relevant legislation:
Client confidentiality
Legal Professional Privilege
The handling of Legal Fees.
This article will examine and explore these three principles, the importance of them, and the tensions and controversies that have arisen in both the practice and scope of these provisions. It will also explain the distinction between client confidentiality and legal professional privilege, as they are similar but not the same. In particular, it will seek to explain and clarify the relevant law and principles surrounding client confidentiality and legal professional privilege, the situations when they apply in law, and the relevant exceptions to the rules. We will then examine how legal professional privilege has experienced difficulties in its’ implementation and execution in the face of legislation-enabled surveillance of privileged communications, afforded by RIPA 2000 and later replaced by the Investigatory Powers Act 2016, and how Parliamentary legislature and the courts have struggled to implement these measures whilst also retaining the integrity and importance of legal professional privilege. Lastly, this article will examine the importance of legal fees, the conflicts of interest between lawyers and clients unavoidably inherent to this fundamental practice, and the lack of regulation and guidance in the proportionality of fees.
Confidentiality
Core Duty 6, as stated in the BSB handbook, states that a barrister must keep the affairs of each client confidential. Additionally, lawyer-client communications are protected by Legal Professional Privilege (LPP), and therefore are not shared with any other person or party who are not privy to the communications in the contemplation of litigation. Client confidentiality and LPP seem similar, but are not the same. We will first examine client confidentiality.
Even if a lawyer may feel out of moral obligation that there is confidential information that ought to be disclosed, without the consent of the lay client or the relevant legal exceptions permitting this, the lawyer cannot and should not do so[4]. The few exceptions to this will be discussed later.
Lord Millet in Bolkiah v KPMG[5] states that “the duty to preserve confidential information is unqualified. It is a duty to keep the information confidential, not merely to take all reasonable steps to do so”[6]. For Barristers, this duty is regulated by the Bar Standards Board (BSB)[7]. For Solicitors, this is governed by the SRA Handbook[8]. This relates to how essential it is that a client must be able to trust and confide in their lawyer in relation to facts and issues pertaining to the case. Without this trust, private but vital information could be withheld by the client, which would impede the full and thorough consideration of the facts needed to be successful in litigation. This would also compromise the integrity of the legal process and the fundamental right to a fair trial (ECHR Article 6).
The duty to respect client confidentiality is so important, that a barrister must even refuse instructions where there is a real risk that confidential information of a past or current client is relevant to the case of a current or prospective client, and the other client does not consent to its’ use or disclosure[9].
If confidential information is revealed by a lawyer, the client can sue for breach of confidence. The test in Coco v A N Clark[10] sets out three requirements to prove, to the civil standard, a breach of confidence:
A subjective element: The information must have been disclosed in circumstances where the recipient knew it was confidential: In essence, that the information was not already in the public domain or is not common knowledge.
A reasonableness element: The information was shared in the circumstances that a reasonable person would have deemed to be confidential, and that the information is reasonably believed to be confidential.
A detriment element: The revealing of the information is to the owner’s detriment. This determines the extent of damages awarded, as this is proportional to the extent of the damage caused by the breach of confidence.
Exceptions to confidentiality
In practicing in accordance with the BSB Handbook, there are instances where client confidentiality can cause tension with a barrister’s duty in observing their duty to the court in the administration of justice (CD1). CD1 arguably underpins every core duty, and both the BSB regulations as a whole and, by extension, a barrister’s professional life.
The general rule is that client confidentiality must be respected, providing that the court is not misled or would be in risk of being misled. In avoiding the court being misled, there are two key exceptions to confidentiality:
Informed consent. This is self-explanatory, and is when a client gives express and informed consent for the confidentiality rule to be waived.
Where disclosure is “required or permitted by law”, regardless of the client’s consent[11]. For example, Anti-Money Laundering Provisions[12] requires a barrister to report concerns about possible money laundering activities by or on behalf of the client. This duty to report also applies to terrorist financing.
Another example is an instance where the client is in receipt of public funding, but circumstances arise to reveal that the client may in fact not be entitled to receive public funding at all. In this instance, the barrister must advise their client to inform the legal Aid Agency of their true financial position. If the client decides not to follow that advice, the barrister must withdraw from the case[13], and the barrister is now under a duty to make the necessary disclosure to the legal aid agency, regardless of the client’s wishes[14].
Legal Privilege
A distinction must be made between client confidentiality and communications protected by legal professional privilege. The latter concerns protection of communications and information pertinent to a case or course of litigation; for example:
Legal advice explaining the law to the client and any professional advice as to what should be done in the relevant legal context (Three Rivers[15]),
Opinions and use of expert witnesses[16],
Communications between non-parties in the conduct of litigation, where it was the dominant purpose of the communications and where litigation is pending or reasonably in prospect[17].
These all come under the umbrella of Legal Professional Privilege (LPP). LPP applies to in-house lawyers as well as private practice[18]. An interesting quirk to the general rule of legal advice privilege is that even though a document that was not privileged when it was made does not necessarily become privileged by enclosing it when seeking legal advice, a compilation of non-privileged documents can become privileged in instances where the compilation gives away the trend of advice[19]. This even applies to a collection of highlighted or underlined sections of documents, where this reveals a trend of advice[20].
Following from this, it is worth reiterating that confidentiality of legal communications, both in terms of client confidentiality and LPP is an “unqualified duty”[21].
However, as outlined earlier, despite the importance of “complete client confidence”[22] and the duty of confidentiality owed by barristers to their current, past and prospective clients, both confidentiality and LPP can be waived in exceptional circumstances; for example, in instances of criminal activity coming to light by the communications[23], such as drug trafficking[24]. This is not an exclusion of the common law principle of LPP, but an exception to the rule that is fundamental to the rule itself. This was established in R v Cox and Railton[25]. Essentially, a client with criminal operations cannot protect themselves by placing their matters and documents in the hands of a solicitor or barrister[26].
The difficulties surrounding Legal Privilege
Legal Privilege has not been without it’s criticisms and controversies. Whilst the restrictions and confidentiality afforded by LPP can be waived in exceptions pertaining to criminal activity, this is not the case for civil wrongs and negligence. For example, there would not be a requirement to disclose information on a medical report that a defendant, a negligent driver, may have been the cause of death of a child. This was the case in Spaulding v Zimmerman[27]. Another example is the reports into the practises of large tobacco companies[28], which shed light onto the harmful effects of smoking. However, these reports, which contained facts unfavourable to the interests of the tobacco companies, were kept private as these were covered by LPP. However, the omission to mention these findings and/or advancing any positive findings would be giving a false impression that smoking was not harmful. This is unethical from both a scientific and moral front, however as stated earlier, the duty of client confidentiality and LPP supersedes any moral dilemmas insofar as the law requires this to be the case.
There also exists the controversy surrounding legislation-enabled surveillance of privileged communications, and these can be problematic in respect of the right to a fair trial. This is especially problematic in criminal trials, where such surveillance can risk the integrity of the trial process, and therefore carries the risk that those guilty of offences are not successfully prosecuted to the criminal standard of proof[29]. Originally, the practice under the Police and Criminal Evidence Act 1984 (PACE) was such that surveillance of lawyer-client communications was avoided. This was changed by the Regulation of Investigatory Powers Act 2000 (RIPA), which conferred wide powers of surveillance for the government insofar as they were “lawful for all purposes”[30], but made no exception for the surveillance of legally privileged communications[31].
This proved problematic in Re McE[32], in which Lord Hope attempted to qualify the extent to which the provisions in RIPA ought to apply, and that the qualifier of surveillance being “lawful for all purposes” overrode LPP[33]. This was also seen by David Hanson, the Minister of State for the Home Department at the time, to be compatible with Convention Rights under the ECHR[34].
However, the Belhaj case[35] demonstrated how this approach could be problematic to the rule of law and fair process, and demonstrated an overextension of the powers that RIPA afforded the government. In the case, the failure to treat the relevant LPP as privileged caused the ‘tip off’ by the authorities, resulting in the unlawful treatment of Mr Belhaj and unlawful approach to the relevant surveillance. The UK government, recognising their abuse of power, apologised to the victim, however this attracted vast swathes of criticism from news outlets and academic discourse. By peering into the privileged information even prior to criminal activity coming to light by the communications, this approach was seen as the state, as posited by Dinah Rose QC, as “eavesdropping to gain an unfair advantage in court”[36] and that this approach was merely “the tip of the iceberg” with regards to bringing the integrity of criminal judgements into question by the sanctioned use of unethical legal practices on behalf of the prosecution[37].
The Investigatory Powers Act
In the drafting of the Investigatory Powers Bill (later the Investigatory Powers Act 2016), the Bar Council sought to qualify the powers of surveillance that ought to be afforded to the government regarding privileged communications. In the wake of the abuses of power following RIPA and the Belhaj case, and following the short-sightedness of the decision in Re McE nearly a decade prior, the Bar Council stipulated that authority to intercept privileged communications should only apply where there are “compelling grounds to believe that those communications are being used for the furtherance of a criminal purpose.”[38]
The primary concern of the Bar Council was twofold. Firstly, there exists the issue of intercepted communications potentially (and likely) containing a mix of client communications protected by LPP, and that safeguards would need to be enacted to keep privileged those communications that do not reveal a criminal purpose, but would nonetheless be mixed among the communications which may be relevant to the interception[39].
The second concern was that not only was the existing “exceptional and compelling circumstances” test in the Codes of Practice not binding, and therefore lacking solid foundations in the intention of the act itself, but even if given legal bite, would be “highly problematic”[40], as the threshold would be too low, and could cover a wide range of cases, which would mark an “unacceptable” and “confused” overextension of the exception to LPP (where the privilege of communications held for a criminal purpose is to be waived).[41]
The 2016 Act has seemed to take this into account by incorporating safeguards with regards to items subject to legal privilege. These safeguards attempt to narrow the focus to privileged information of a criminal ambit, in order to incorporate the key exception of the waiver of privileged communications held for a criminal purpose. Section 55(5) of the Act states that the interception and retention of privileged information is justified where:
“(a) the public interest in retaining the item outweighs the public interest in the confidentiality of items subject to legal privilege, and
(b) retaining the item is necessary in the interests of national security or for the purpose of preventing death or significant injury.”[42]
The inclusion of “retaining” is significant. It allows for manoeuvrability where there may be mixed communications that do not satisfy this test and can be disregarded. However, the issue remains that upon uncovering mixed material, even the irrelevant communications which ought to be privileged are no longer so. It could be argued that LPP will never be as protected as it aspires to be in some cases.
In practice however, this intrusion is ultimately justifiable, because it is perhaps the closest we will get to achieve a practical balance between the principles of legal privilege, fair process and the greater good. Legal Professional Privilege is not without its’ controversy, but it has come a long way in attempting to both address said controversy, as well as preserve its’ roots in protecting lawyer-client relations and communications
Legal Fees
Something which is frequently spoken about by the senior practitioners at our office is that clients do not like paying legal fees. Legal fees are, in theory, meant to be proportionate to the nature and value of the matter at hand[43]. This makes sense as the client is essentially hiring a skilled person or team of skilled people to undertake a service in the client’s best interests. However, the salient issue here is that “proportionate” is not a defined term under any binding legislation or non-binding codes or practice rules, which opens up a raft of issues and discourse in the area of legal fees.
It can be argued that what is considered ‘proportionate’ should be assessed on a case by case basis. The issue with this approach is that this can fall prey to unrealistic expectations that clients can often have with regard to the nature of the work and expected costs.[44] There are many hours that go into preparation for a lawyers work, take this article for example. This seem to be unseen by clients paying fees. This is illustrated by significant number of complaints to the Legal Ombudsman about fees[45]. In large part, this is due to a lack of standardised rules and amounts with regards to what is considered ‘proportionate’.
Under r44.2 of the Civil Procedure Rules, costs follow the event, therefore in many cases it can be difficult to assess potential costs when even the lawyers themselves may not have a clear idea of the extent of the costs until the matter progresses. Costs themselves are discretionary, and the court takes into account the conduct of all the parties, any particular parts of a case in which a party may be successful, even if not wholly successful, and any admissible offers to settle made during or before proceedings (CPR, r44.2(4)). More than a case-by-case basis, costs are more in line with an issues-based approach (CPR, r44.2(4), WB commentary 44.2.10), and a conduct based approach of the parties (CPR r44.2(5)). This is of little help to clients who are expected to predict costs based on hourly rates, who ought to have more guidance on the expected costs to begin with from lawyers, who are themselves much more experienced and knowledgeable not only in the likely costs, but the likelihood of each issue contested being successful at trial, and the conduct that is most in favour of discretion-based costs.
Whilst it is not inherently problematic to charge for legal services (it is expected, after all, to make profits and remain commercially viable and sustaining), the lack of clarity with regards to fees are only further muddied by the myriad of hourly rates, as these do not make the full extent of the costs clear, as most lay clients are unfamiliar with the exact time, preparation and therefore costs required in litigation processes. It was also found that different lawyers charge differently for the same kind of work[46], which only adds to the confusion.
Conflicts of interest
It can be argued that, at the heart of the practice of charging fees, there exists an unavoidable conflict of interest between the lawyer and client. It would be in the best interests of the client to not have to pay, just as it would be in the lawyer’s best interests to be paid for their work. However, even in the instance of fixed fee arrangements (such as with conditional fee arrangements, where the client does not have to pay if the lawyer loses, but has to pay the normal fee and a success fee if the client wins at trial), this conflict of interest still exists; perhaps even more so, as a lawyer would be less incentivised to do as much as he can for his client’s case if the costs are fixed from the outset. There is also the risk that a lawyer under this model could try and cut costs where it becomes clearer that his client may be losing the case by doing lower quality work or not giving the client their day in court (which for the client may be more important). However, on the alternative, this model has the potential to be a no-lose scenario for clients who may otherwise be unable to afford legal services[47] and bring their case to court.
Furthermore, even if legal costs are less of an issue for wealthier clients, the billable hour’s model is not free from potential conflicts of interest. As it is in the lawyer’s best interests to be paid for their work, they may aggravate costs by prolonging the process, or be incentivised to use devious and unethical tactics to win. This is despite the client’s best interests of keeping costs down.
It is strange and somewhat humorous that there exists more guidance with regards to tips than there are concerning fees. Under the rules of the BSB Handbook, barristers cannot accept tips[48]. They can only accept gifts when proceedings have concluded, and even then, they must be of modest value and proportionate.
Perhaps why this is so much less problematic than the issue of legal fees, despite being more open to disciplinary action if abused, is due to the lack of conflict of interest. Unlike fees, the interests of both parties have been served, and the gift is likely a salutary gesture on the part of a satisfied former client. All forms of fee payment will pose a conflict of interest. Little can be done about this, however more guidance is needed with regards to the extent to which fees should and can reach in litigation, and this needs to be conveyed more effectively to current and prospective clients to equip them with a better set of information from the outset as to what to expect in relation to the fees expected from them. Perhaps, similar to the guidelines on gifts, a “proportionate and modest value” quantifier could be incorporated to by the Legal Ombudsman, BSB and the SRA to remedy the blind spots in measuring the proportionality of fees.
References
[1] R. Dinerstein, ‘Client-centred counselling: Reapppraisal and refinement’ (1990) 32 Arizona Law Review 501, 541.
[2] “Bar Standard Board Handbook” (Bar Standards Board, 31 December 2020) https://www.barstandardsboard.org.uk/regulatory-requirements/bsb-handbook/ (Version 4.6 of the BSB Handbook came into force on 31 December 2020)
[3] Convention for the Protection of Human Rights and Fundamental Freedoms (European Convention on Human Rights, as amended) (ECHR)
[4] David O’Donnell, “Legal ethics in practice - five problem cases”, Scots Law Times, 2001 4, 33 - 40
[5] Bolkiah v KPMG [1999] 2 AC 222.
[6] ibid.
[7] “Bar Standard Board Handbook”, (Bar Standards Board, 31 December 2020) Part 2B.
[8] “SRA Handbook: Code of Conduct”, (Solicitors Regulation Authority, 8 February 2022) https://www.sra.org.uk/solicitors/standards-regulations/code-conduct-solicitors/
[9] “Bar Standard Board Handbook”, (Bar Standards Board, 31 December 2020), rC21.
[10] Coco v A N Clark (Engineers) Ltd [1969] RPC 41.
[11] “Bar Standard Board Handbook”, (Bar Standards Board, 31 December 2020) rC15.5.
[12] Prevention of Crime Act 2002.
[13] “Bar Standard Board Handbook”, (Bar Standards Board, 31 December 2020) rC25.1.
[14] The Legal Aid (Disclosure of Information) Regulations 2013, Reg. 4.
[15] Three Rivers DC v Governor of the Bank of England [2011] UKHL 16.
[16] Neil, J, Williams, “Four questions of privilege: the litigation aspect of legal professional privilege”, Civil Justice Quarterly, 1990 9, 139 – 166.
[17] Waugh v BRB [1980] AC 521.
[18] Alfred Crompton v Commissioners of Customs and Excise [1974] AC 405.
[19] Lyell v Kennedy (1884) LR 27 Ch D 1.
[20] Imerman v Tchenguiz [2009] EWHC 2902 (QB).
[21] [1999] 2 AC 222.
[22] William, Cursham, “Don’t "waive" privilege goodbye”, Construction Law, (2012) 23(9), 26 – 28.
[23] s.10(2) Police and Criminal Evidence Act 1984.
[24] R v Central Criminal Court, ex p. Francis & Francis [1989] AC 346, HL.
[25] R v Cox and Railton (1884) 14 QBD 153.
[26] [1989] AC 346, HL
[27] Minn. Sup. Ct., 263 Minn. 34, 116 N.W.2d 704 (1962).
[28] E. LeGresley and K. Lee, ‘Analysis of British American Tobacco’s questionable use of privilege and protected document claims at the Guildford Depository’ 26 Tobacco Control 316 (2017).
[29] Investigatory Powers Bill, Session 2015-16, Written evidence submitted by the Bar Council (IPB 38), Para. 6.
[30] Re McE [2009] UKHL 15.
[31] Chantal-Aimee Doerries QC, ‘Protecting privilege’ (Counsel, 25 April 2016 <https://www.counselmagazine.co.uk/articles/protecting-privilege> accessed 24 February 2022).
[32] [2009] UKHL 15.
[33] ibid.
[34] Explanatory Memorandum, The Regulation of Investigatory Powers (Extension of Authorisation Provisions: Legal Consultations) Order 2010, Para 6.1.
[35] Belhaj case [2017] UKSC 3.
[36] Owen Bowcott, ‘UK intelligence agencies spying on lawyers in sensitive security cases’ The Guardian, 7 November 2014 <https://www.theguardian.com/world/2014/nov/06/intelligence-agencies-lawyer-client-abdel-hakim-belhaj-mi5-mi6-gchq> accessed 24 February 2022.
[37] ibid.
[38] Investigatory Powers Bill, Session 2015-16, Written evidence submitted by the Bar Council (IPB 38), Para. 9.
[39] ibid Para. 17.
[40] ibid Para. 20.
[41] ibid.
[42] Investigatory Powers Act 2016, s. 55(5).
[43] Civil Procedure Rules 1.1 <http://www.justice.gov.uk/courts/procedure-rules/civil/rules> accessed 24 February 2022.
[44] Office for Legal Complaints, Annual Report and Accounts, for the Year Ending 31 March 2013 (Office for Legal Complaints, 2013), 15.
[45] Adam, Sampson, “Complaints clinic: Legal Ombudsman”, Law Society’s Gazette, (2012) 109(14), 24 – 25.
[46] Competition and Markets Authority, Legal Services Market Study (CMA, 2016), 31.
[47] E. Zamir and I. Ritov, ‘Notions of fairness and contingent fees’ (2011) 74 Law and Contemporary Problems 1.
[48] “Bar Standard Board Handbook”, (Bar Standards Board, 31 December 2020), rC73.