As lawyers (whether in-house or in private practice) we depend heavily on the protection which legal privilege gives to our communications. However, whilst our clients are frequently pressing us to find more and more creative solutions to their problems, a recent case from the Employment Appeals Tribunal (X - v - Y Ltd) serves as an important reminder that legal privilege can be lost where our advice crosses the border into the realm of iniquity.
By way of background to the case, legal advice was provided to an employer on how to remove an employee who had raised allegations of disability discrimination through the manipulation of a redundancy exercise. This would result in the employee being made redundant and thereby avoiding him making complaints of disability discrimination and asking for reasonable adjustments. The advice was later discovered by the employee who sought to rely upon it in the context of subsequent proceedings before the Employment Tribunal. His employer claimed legal professional privilege in the advice, however, Lady Justice Slade ruled that privilege had been lost due to the nature of the advice, which she considered demonstrated a strong prima facie case that it was intended to facilitate an iniquity.
Previously, the loss of privilege through iniquity has arisen in cases of advice on how to commit fraud or breach of fiduciary duty. Slade LJ found that advice to commit a tort (such as the tort of discrimination) may be so unconscionable as to bring it into the category of conduct, which is entirely contrary to public policy and, therefore, results in the loss of privilege.
Whilst this case arose in the Employment Appeals Tribunal, the world of insolvency has also seen recent examples where privilege has been lost through iniquity. For example, where a debtor receives advice pre-bankruptcy on how to put assets beyond the reach of creditors.
This line of cases is a valuable lesson to us as lawyers of the need to maintain our standards of integrity in the face of client demands.