Where the above situation arises, with a general counsel performing dual roles, it is questionable as to the independence of that general counsel’s advice and whether it will fulfill the requirements for legal professional privilege. Prior to 2000, confidential communication (oral or written) between an in-house solicitor and the employer would be protected by legal professional privilege, if they fulfilled the following requirements.

• They are made for the dominant purpose of giving or receiving legal advice or of conducting actual or anticipated litigation. (as was found in Esso Australia Resources Ltd v Commissioner of Taxation).
• There is a professional relationship of lawyer and client between the in house solicitor and employer so as to render the advice independent notwithstanding the employment relationship.
• The solicitor is qualified to practice law and subject to the duty to observe professional standards and liability to professional discipline. (as was found in Waterford v Commonwealth).
Since 2000, communications have not been protected by legal professional privilege simply because they are made by
an in-house solicitor. For the privilege to apply, the solicitor must be acting in a professional, or legal, capacity and the advice must be of a legal nature. The in-house solicitor should hold a current practicing certificate or be otherwise entitled to practice in the relevant jurisdiction. This was decided in Waterford v Commonwealth and Australian Hospital Care Pty Ltd v Duggan.

The independence obligations require that the in-house solicitor, must not be influenced in their advice by their loyalties
or duties to, or the interest of, their employer. The element of independence is relevant in determining whether a document prepared by a general counsel is privileged or not. There are two reasons why such a document may be susceptible to challenge. The first being that the document was not prepared by general counsel in the capacity as lawyer, but in a management capacity. The second is even if the document was prepared by general counsel in the capacity as lawyer, general counsel is not “independent” of the employer.

Alfred Crompton Amusement Machines Ltd v Customs and Excise Commissioners discussed the “capacity” issue, and whether an in house lawyer may work for their employer in a different capacity. However, “their communications in that capacity would not be the subject of legal professional privilege. So the legal adviser must be scrupulous to make the distinction.” Any party who challenges a claim for legal professional privilege, for a document prepared by general counsel, is likely to argue that the document was prepared by general counsel not in their capacity as legal adviser to their company but in their capacity as an officer of the company providing a management report for the information of management.

Purely from the perspective of legal professional privilege, titles such as “general counsel,” “principle legal officer” and “chief legal officer” are preferable to a title such as “manager, legal services” because the former emphasise the “legal” role whereas the latter emphasises the “management” role.

There are numerous cases in which claims for legal professional privilege have been rejected by courts where they involve
a person with dual roles within an organization. Communications made by a person with dual roles may be found to fall outside the protection of legal professional privilege because they are found to have been made for “mixed purposes (that is, a legal purpose and one or more non-legal purposes) and fail the dominant purpose test or because the person was acting in their “non-legal” capacity when the communication was made.

This occurred in Belle Rosa Holdings Pty Ltd v Hancock Prospecting Pty Ltd and Standard Chartered Bank of Australia Ltd v Antico When considering the “independence issue” a party challenging the claim for legal professional privilege will most likely inquire about such matters as general counsel’s place in the organization hierarch of the company, their remuneration and whether they own shares in the company. There is a risk that the dual roles held by general counsel will be used by opponents in litigation to support an argument that general counsel is not independent of the company because they are part of the senior management team and are therefore responsible for managing the company’s business.
Reporting lines are relevant to the independence issue. It has been suggested that in-house counsel should report to and be solely responsible to the board of directors or, if this is not feasible, to the managing director and that direct reporting and responsibility to other non-legal management should be avoided in order to minimize the perception of loss of independence.

The independence issue was discussed at length in Australian Hospital Care Pty Ltd v Duggan. In that case, two defendants
challenged a claim for privilege made in the plaintiff’s affidavit, in respect of four internal memoranda prepared by the general counsel/company secretary of the plaintiff’s parent company on the basis that he was not sufficiently independent of the plaintiff. The Court referred to previous cases which discussed the independence issue and said that although it is likely that the requirement of independence is an aspect of the requirement that the in-house solicitor must be acting in their capacity as a lawyer, it was nevertheless convenient to consider the requirement of independence “as a separate element.”

The Court held that there was sufficient doubt about whether the general counsel/company secretary was acting independently
at the relevant time. This was because there was evidence indicating that the general counsel/company secretary was directly involved in commercial negotiations relating to the disputed transaction, and the plaintiff’s failure to respond to the defendants’ requests for information regarding the independence issue. His Honour therefore concluded that it was appropriate to order that the four internal memoranda be produced to a judge so that the judge
could inspect them and determine whether they were privileged.
The outcome in Australian Hospital Care is a timely reminder that the issues of capacity and independence are not mere theoretical considerations, but legal requirements which must be satisfied in practice in order that documents which are prepared by general counsel are protected by legal professional privilege.

In November 2005, whether a practising certificate is required, was explored by Commonwealth of Australia & Anor v Russell Vance. In this case the in-house counsel was engaged as a legal officer with the Australian Defence Force in the position of Departmental Legal Officer (DLO). The plaintiff sought damages from unlawful termination from the Defence Force and applied for an order requiring the defendants to provide a number of documents for inspection. The application was proposed on the ground that the
documents were the subject of a claim of legal professional privilege.

The primary issue in the application was whether communications from DLOs which contained or purported to contain or relate to the provision of legal advice could be the subject of a claim for legal professional privilege. This involved an examination of the position and function of DLOs and in particular, whether they were lawyers.

The application for privilege was considered at common law and not under the provisions of the Evidence Act 1995 (ACT). His Honour Crispin J, examined Waterford v Commonwealth, which he believed to be most relevant to the proceedings. Waterford stated that the in-house solicitor should hold a current practicing certificate or be otherwise entitled to practice in the relevant jurisdiction. In Waterford, the person who provided the legal advice were ‘lawyers,’ that is, not only were they qualified to practise law in terms of academic prerequisites, but each held a relevant practising certificate.

The evidence then stated that while all permanent military and civilian DLOs were legally qualified and admitted to practice, the military DLOs were not required to hold practising certificates. The plaintiff argued that the defendants’ claim for privilege must fail, because the communications the subject of the claim for privilege were not from persons qualified to practise law and they did not hold relevant practising certificates.

Having considered both Waterford and Attorney General (NT) v Kearney (1985) 158 CLR 500 (both of which maintained the importance of practising certificates) his Honour held that it is ‘difficult to see how these requirements could be regarded as having been satisfied by legal advisors who did not hold practising certificates or, perhaps, worked under the supervision of others with practising certificates, unless they enjoyed a statutory right to practice such as that provided by … the Judiciary Act,’ (which the DLOs did not).

Consequently, his Honour concluded that legal professional privilege will arise to “protect the confidentiality of communications
with a legal advisor only when he or she has an actual right to practice and not merely when he or she has… joined the ADF, even if permitted to carry out ADF legal duties without holding a practicing certificate.” Consequently his Honour was satisfied that any presumption in favour of privilege attaching to the documents in issue had been amply displaced.

The appeal

The Commonwealth sought leave to appeal on the basis that the trial judge had erred by holding that a claim for legal professional privilege could only be brought where a document was authored by a person holding a current practising certificate. The court found that from a consideration of those cases it was possible to conclude that his Honour the trial judge should have applied the provisions on client legal privilege of the Evidence Act 1995 (ACT).

The Court then held that where client privilege may be claimed over a document by an in house lawyer, the question is whether the document would meet the statutory test of being a confidential document, which includes being under an express or implied obligation not to disclose its contents, whether or not that obligation arises under law. This may be more easily answered where the lawyer holds a practising certificate. However, holding a practising certificate is not the definitive test, as long as the statutory requirements are met.

The proceedings were accordingly remitted to the trial judge to consider the question of privilege in accordance with the courts reasons. Therefore in jurisdictions where the Evidence Act applies, then privilege will apply to communications sought to be adduced
in evidence if those communications are to or from a lawyer regardless of whether that lawyer holds a current practising certificate so long as the person is acting in their capacity as a lawyer and for a privileged purpose.