Slow and Steady Wins the Race: Lessons Learned, and Why It Is Time to Establish a Corporate Legal Advice Privilege

Penn State International Law Review Volume 26 Number 4 Penn State International Law Review Article 5 5-1-2008 Slow and Steady Wins the Race: Lessons Learned, and Why It Is Time to Establish a Corporate Legal Advice Privilege Matthew M. Cronin Follow this and additional works at: http://elibrary.law.psu.edu/psilr Recommended Citation Cronin, Matthew M. (2008) "Slow and Steady Wins the Race: Lessons Learned, and Why It Is Time to Establish a Corporate Legal Advice Privilege," Penn State International Law Review: Vol. 26: No. 4, Article 5. Available at: http://elibrary.law.psu.edu/psilr/vol26/iss4/5 This Comment is brought to you for free and open access by Penn State Law eLibrary. It has been accepted for inclusion in Penn State International Law Review by an authorized administrator of Penn State Law eLibrary. For more information, please contact . Comments I Slow and Steady Wins the Race: Lessons Learned, and Why it is Time to Establish a Corporate Legal Advice Privilege Matthew M. Cronin* I. Introduction The legal advice privilege has been shaped and reshaped at different times by different legal systems, but the underlying premise remains intact. As the methods of managing one's legal affairs have changed and grown increasingly complex, so has the legal advice privilege. In much of the world, clients are no longer strictly individuals who seek legal advice to protect their interests. The legal advice privilege has evolved to protect a variety of legal "persons," such as business organizations. However, the privilege is not shared and belongs only to one particular client in any particular matter. That client alone may assert or waive the privilege. This Comment identifies policy considerations that give rise to * J.D., The Dickinson School of Law of the Pennsylvania State University, 2008; B.A. Organizational Studies, University of Michigan. Thank you to the Penn State InternationalLaw Review team for their dedication to the publication of a top quality journal. Special thanks to my family and friends for their patience, inspiration and constant support. PENN STATE INTERNATIONAL LAW REVIEW [Vol. 26:4 difficulties in application of the legal advice privilege in the United Kingdom, and its counterpart in the United States, the attorney-client privilege. Part I discusses the evolution of the legal advice privilege, as well as its existence and application in the corporate context. Part II addresses the evolution of the attorney-client privilege and difficulties encountered in applying it consistently to corporate clients. Part III compares the corporate legal advice privilege and the corporate attorneyclient privilege, outlines the policies underlying each approach, and explains how both government investigators and corporate clients can benefit from clear recognition, and consistent application, of the corporate legal advice privilege. II. Legal Advice Privilege in the United Kingdom The legal advice privilege has maintained an enduring presence in some form or another in the jurisprudence of the United Kingdom for centuries.' In his judgment in Three Rivers District Council and others v. Governor and Company of the Bank of England ("Three Rivers (No. 6)"), 2 a case, which will be more thoroughly discussed infra, Lord Scott identified several features that underlie the policy reasons for the legal advice privilege.3 Lord Scott noted that the legal advice privilege gives the person entitled to it the right to decline to disclose or to allow disclosure of the confidential communication or document in question. 4 Such an entitlement does not arise unless the communication or document for which privilege is sought is a confidential one; and if the communication or document qualifies for the privilege, the privilege is absolute. 5 A. Scope of the Legal Advice Privilege in the UnitedKingdom Until 1833, the courts recognized only one privilege, the legal professionals privilege, which protected communications between lawyer and client in connection with pending litigation.6 In 1833, however, 1. See Minter v. Priest, (1930) [1930] A.C. 558 (H.L.) (appeal taken from Eng.); Great Atlantic Insurance Co. v. Home Insurance Co., (1981) [1981] 2 All E.R. 485, [1981] 1 W.L.R. 529; Wheeler v. Le Marchant, (1881) 17 Ch. D. 675 (Ch. D.); Greenough and Others v. Gaskell, (1833) [1824-1834] All E.R. 767, 1 My & K 98, 10102 (Rev. Rep.). 2. Three Rivers District Council v. Governor and Company of the Bank of England (No. 6), [2004] UKHL 48, [2005] A.C. 610 (H.L.) (appeal taken from Eng.) [hereinafter Three Rivers (No. 6)]. 3. Id. 24-27. 4. Id. 26. 5. Id. 25. 6. Three Rivers District Council v. Governor and Company of the Bank of England (No. 5), (2003) [2003] EWCA (Civ) 474, [2003] Q.B. 1556, 8 [hereinafter Three Rivers 20081 SLOW AND STEADY WINS THE RACE Lord Brougham extended the privilege to communications where litigation was not contemplated: To force from the party himself the production of communications made by him to professional men, seems inconsistent with the possibility of an ignorant man safely resorting to professional advice.., the protection would be insufficient, if it only included communications more or less connected with judicial proceedings: for a person oftentimes requires the aid of professional advice upon the subject of his rights and liabilities, with no reference to any particular litigation, and without any other reference to litigation generally than all human affairs have, in so far as every 7transaction may, by possibility, become the subject ofjudicial inquiry. Although the exact terminology had not yet been articulated, in so stating, Lord Brougham partitioned the legal professionals privilege into two related, but distinct privileges: the "legal advice privilege," and the "litigation privilege." The litigation privilege protects evidence obtained for the purpose of litigation, 8 and the legal advice privilege "attaches to advice upon the subject of a client's rights and liabilities" 9 without any other reference to litigation. The House of Lords recently emphasized the distinct nature of the two privileges and defined the scope of the legal advice privilege in Three Rivers District Council v. Governor and Company of the Bank of England (No. 6).10 The complex nature of the proceedings leading to this decision requires a short summary. B. The Three Rivers Cases The Bank of England ("the Bank") maintains regulatory authority over banks and financial institutions doing business in the United Kingdom. 1 Following the collapse of the Bank of Credit and Commerce International ("BCCI") in 1991, the Chancellor of the Exchequer announced the creation of the independent Bingham Inquiry Unit ("BIU"), consisting of three Bank officials.' 2 Their task was "[tlo enquire into the supervision of BCCI under the Banking Acts; to consider whether the action taken by all the UK authorities was (No. 5)]. 7. Greenough, [1824-1834] All E.R. 767 (Rev. Re (...truncated)