Decision in Ford v The Financial Services Authority is relevant where a company and its directors are being advised in litigation by the same law firm
The High Court gave judgment on 11 October 2011 in Ford v The Financial Services Authority, a claim for judicial review as to whether the claimant (Stewart Ford, the founder of Keydata Investment Services Limited) and two other former Keydata directors could assert joint interest legal privilege over certain correspondence sent to them by Irwin Mitchell, Keydata’s lawyers. Successfully asserting joint interest legal privilege would mean that the Financial Services Authority (FSA) would not be able to use that correspondence in action against Mr Ford and the other directors.
Joint interest legal privilege can arise in two circumstances:
- When two or more legal persons jointly retain the same lawyer.
- When, even though there is no joint retainer, the parties have a joint interest in the subject matter of the communication in issue at the time that it comes into existence.
It was this second circumstance that was at issue in this case. Mr Ford was successful in asserting that he enjoyed joint legal advice privilege with Keydata in two communications sent by Irwin Mitchell. The result is that the FSA cannot rely on the content of those communications in its regulatory proceedings against Keydata or the directors.
In the judgment, Mr Justice Bennett set out the facts that an individual will need to establish by way of evidence when claiming joint privilege with others (such as a company of which he is a director or senior manager) in a communication with a lawyer, when there is no joint retainer:
“1. That he communicated with the lawyer for the purpose of seeking advice in an individual capacity;
2. That he made clear to the lawyer that he was seeking legal advice in an individual capacity, rather than only as a representative of a corporate body;
3. That those with whom the joint privilege was claimed knew or ought to have appreciated the legal position;
4. That the lawyer knew or ought to have appreciated that he was communicating with the individual in that individual capacity; and
5. That the communication with the lawyer was confidential.”
As to the relevance of the judgment, Mr Justice Bennett observed that:
“The circumstances in which joint privilege may arise are legion. In corporate bodies with a tight controlling management the legal interests of the company and its directors and senior employees will often coincide or overlap. This case arises in the context of financial regulation, yet very similar considerations might arise in other regulatory environments. For example, the possibility of regulatory action in the health and safety or environmental fields often engages legal questions for companies and potentially their directors personally. Public bodies take legal advice in contexts which engage the potential liabilities of officials and elected representatives. Corporate bodies seeking advice in connection with public inquiries may sweep within the ambit of the advice the conduct of their staff. The lawyers concerned may represent and advise the individuals or they may be separately advised. Examples could be multiplied.”
UPDATE 8 May 2012: See this note by Kingsley Napley for later developments in this case, which meant that the FSA’s action was largely unaffected by the joint legal privilege finding.
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