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The Cat’s Out of the Bag: legal advice privilege and the risks of being caught with a divorce lawyer

Samuel Littlejohns, pupil at 1 Hare Court, examines whether the very fact that a party consulted a lawyer at a given time is privileged information, and the practical consequences of this for practitioners.

Samuel Littlejohns, pupil barrister, 1 Hare Court














Samuel Littejohns
, pupil, 1 Hare Court

Suggesting that a party has rearranged their assets post-separation, in order to support a particular presentation to the courts, is a common cry in family law. In many circumstances the court looks at the totality of financial arrangements to determine how a family lived its life together – but what if it could be shown that matters were only arranged that way after meeting with a lawyer?

Being able to prove that any adjustments to financial behaviour occurred after legal advice was taken and suggest therefore that they were not a true reflection of the financial aspects of the party's relationship could be a powerful litigation tool, adding evidence to many traditionally run arguments. At first, it would seem that such consultations with lawyers are inadmissible evidence on the basis of litigation advice privilege but now it appears that the mere fact that a lawyer has been consulted (as opposed to the content of that advice) is perfectly admissible evidence.


Legal Advice Privilege

Legal advice privilege has long been seen as fundamental to an adversarial justice system. If people are going to engage with the justice system freely and fairly, an individual has to be able to seek proper legal advice and information without the fear of doing so harming their position. To allow people to share relevant information fully with their lawyers, and therefore get accurate advice, the common law recognises that these communications cannot be raised against that individual in court without their consent.

Particularly within a system that relies on full and frank disclosure, it is very important that individuals can share information freely with their lawyers and receive complete advice. This is critical when there are so many misconceptions about, and complications in, financial remedy and cohabitation proceedings.

Lord Scott highlighted the importance of legal advice privilege in Three Rivers District Council and others v The Governor and Company of the Bank of England [2004] UKHL 48 at [34]:

'the seeking and giving of this advice so that the clients may achieve an orderly arrangement of their affairs is strongly in the public interest…in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it … it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers' legal skills in the management of their (the clients') affairs, should be secure against the possibility of any scrutiny from others'

However, it seems there are now instances where a party tries to prove that their former spouse or partner visited a family lawyer in order to bolster their case. How can lawyers best act and advise their clients in the light of this?


The issue in context

The desire to prove when an opponent first consulted lawyers can arise in a host of different ways in relation to the family law cases:

• Date of separation: It is not uncommon, most particularly in a "sharing" case where there has been a significant recent increase in wealth, for divorcing parties to dispute the date on which the relationship broke down. The argument often revolves around which falling-out was the "final straw", after which all suggestions of the parties reuniting were meaningless. In the circumstances, proof that the other party visited specialist financial remedy lawyers several years ago can be used to show that that was the effective end of the marriage and therefore any claim to sharing even if proceedings were not brought or progressed to a final hearing until some time later.

• Engineering "needs" arguments: At both interim and final hearing stages, the party who will have to pay maintenance often suggests that the recipient of maintenance has been deliberately outspending their previous spending habits in order to support an inflated budget. The suggestion can then be made that that this had been done in contemplation of the divorce in order to increase their claim. Being able to demonstrate when the payee first contacted lawyers, and therefore began contemplating divorce and understanding the factors that would be taken into account, can be a powerful tool. If the timing of a marked increase in spending can be identified as having commenced at approximately the same time as legal advice had been sought, then the party paying maintenance has a greater chance of only having to meet needs at the lower, previous level.

• Making assets non-matrimonial/non-relationship: In a similar vein, parties may seek to tie the date of legal advice to the rearrangement of any finances to make them appear to have been kept entirely separate, either during the marriage or the parties' cohabitation. If it can be demonstrated that this organisation of finances was not the normal pattern of the relationship, or was not based on a lack of common intention to share between the parties, but was instead purely in contemplation of proceedings, then this property can be brought back into the pot for the court the split. This is especially so following the Jones v Kernott  [2011] UKSC 53 line of authorities, where a party's arrangement of their finances can be used to show both how they intended to hold property in equity and then what a fair distribution of any commonly held property would be.

• Jurisdiction shopping: especially when establishing habitual residence, the fact that a move to a more favourable jurisdiction only occurred following legal advice can help to suggest that a family never truly had sufficient connection with the alternative jurisdiction, but instead that this was simply an opportunistic move for the sole purpose of selecting the best jurisdiction for a party's claim.

In each of the above circumstances it becomes advantageous to prove that the other party only began arranging their life in a certain way after they had taken legal advice. But even though this is using part of the relationship between a client and their lawyer against them, and making taking legal advice a risk in itself, is it currently covered by litigation advice privilege?


The law

Perhaps paradoxically given this risk, the current state of the law strongly suggests that the fact that a party has consulted a family lawyer and the date of that consultation must be disclosed if asked for and used to full advantage (as long as there is no direct attempt to explore the contents of the consultations). There are two significant reasons for this: (1) the overarching authorities in the area refer only to communications between lawyers and their clients being privileged. The fact that a consultation occurred does not include any of this communication. It is also not considered confidential, as is required for litigation advice privilege. (2) A specific case which developed from a very a different situation but has been taken to apply more generally.

General case law on legal advice privilege

The principal authority on legal advice privilege is the Three Rivers case (ante). For a matter between a lawyer and client to be covered by the privilege, this case makes it clear that there is a requirement that the matter is (a) a communication and (b) one to which confidentiality attaches 1.

Arguments that the fact that a lawyer has been consulted is privileged will fall at the first hurdle because it does not constitute a communication. Paragraphs 24 and 25 of the judgment refer solely to 'the communication or document'. Although it could be argued that the matter was outside the scope of the case on the facts presented, the judgment does not include anything other than communications or documents within legal advice privilege.

Protection of the fact that a party has taken legal advice with privilege also fails at the second hurdle: confidentiality. The documents typically used to prove that a lawyer has been consulted would be the receptionist's signing-in book at a firm or Chambers, or even the lawyer's diary entries.

A lawyer who is asked, even away from court, who had instructed him and when may consider that information to be confidential. The case of Financial Compensation Scheme Ltd v Abbey National Treasure Services plc [2007] EWHC 2868 (Ch) specifically considered which documents incidental to the running of a legal practice have privilege attached to them. Richards J held at [17] that 'a document which does not contain the communication [between lawyer and client] in any form contains nothing to which privilege attaches'. A document only evidences such communications, and therefore only attracts privilege, if it is one "reproducing, summarising or paraphrasing the communication". At [19] the judge specifically rejected extending privilege to any document from which legal advice may be inferred:

'I do not consider that [the authority cited to him] provides a basis generally for a claim for privilege in any document from which legal advice may be inferred.'

The ability to infer legal advice from a document is not enough to extend privilege to it.

Therefore, while heavy and detrimental inference may be drawn from the records of the client attending a law firm, it is neither a communication, nor a confidential one to which privilege may attach.

In case this analysis seems to place too much emphasis on using a document as evidence (as opposed to other evidence), historic authority sadly rules this out of privilege as well. The 19th-century case of Levy v Pop (1829) M & M 410 held that the retention of a lawyer and their services is not to be considered something communicated confidentially. Therefore, however the matter is raised in evidence, the mere fact that legal advice has been taken cannot fall within the second requirement of Three Rivers.

Specific case law

An analogous case to the family law circumstances was considered by the High Court in R v Manchester Crown Court (Ex parte Rogers) [1999] EWHC Admin 94.

The factual matrix of the case was unusual. The police knew the address where a taxi had dropped off a suspect seen fleeing the scene. It happened to be that the address was that of a firm of criminal  law solicitors. The police therefore sought to use as evidence the signing-in book from the firm's reception, in order to prove the name of the man (their suspect) that had entered the firm immediately after the perpetrator had been left outside. At [28] Lord Bingham stated that:

'the record of time on an attendance note, on a timesheet or fee record is not in my judgement in any sense a communication. It records nothing which passes between the solicitor and the client and it has nothing to do with obtaining legal advice… It is not in my judgement, without more, be regarded as made in connection with legal advice so to hold would extend the scope of legal privilege far beyond its proper sphere'

Modern authority therefore squarely places any evidence of when a client first sought legal advice outside the scope of legal advice privilege.

It is submitted that the peculiar facts of this case may have influenced the outcome and led to the exception to litigation advice privilege being drawn too widely. The police and prosecution were in no way trying to rely on the fact that it was legal advice that the defendant was seeking. While it may appear obvious why the defendant was in such a hurry to take legal advice, the fact that he ordered the taxi to take him to a solicitors firm was purely incidental to the legal point.

The evidence was sought only to prove his movements at the time of the offence, and link his name to the individual that had been seen committing a crime.

Lord Bingham's words could not be clearer though; his conclusion that the fact that a lawyer has been consulted can be proven in court and used to detrimental effect against the client was unquestionable.

The fraud exception
The family law situations envisaged above are not wholly dissimilar to the 'fraud exception' to legal advice privilege 2, which extends well beyond criminal fraud 3. While there is some debate about the precise level of iniquity required for the exception 4, Munby J (as he then was) made it clear that it can be used in section 37 Matrimonial Causes Act 1973 claims regarding dissipation of assets in C v C (Privilege) [2006] EWHC 336 (Fam). A level of prima facie evidence 5 would be needed then to show that a disposition has been made (or is about to be) with the intention of defeating a financial relief claim, but then the content of the relevant advice should be disclosed.  The parallel between this situation and a suggestion that finances have been rearranged to mislead the court is strong. However, using the fact of a legal consultation to bolster evidence of the latter does not appear to have even a 'prima facie' threshold requirement.


A righteous challenge?

Ramsey J was faced directly with the issue of whether privilege applied when the communication in question was a material fact in itself in Farm assist Limited (in Liquidation) v Secretary of State for Environment Food & Rural Affairs [2008] EWHC 3079 (TCC). At first glance, it may seem like the judge in this case successfully reasserted the principle behind legal advice privilege and confirmed that it would cover the situations envisaged in this article. At [54], he states:

'Rather, English law maintains the right of a party to maintain legal privilege. Whilst a person's state of mind and also that person's actions may well have been influenced by legal advice, there is no general implied waiver of privileged material merely because a state of mind or certain actions are in issue. This means that, in the absence of disclosure of the privileged legal advice, the other party is precluded from being able to put that legal advice to a person to show that the advice influenced the state of mind or actions of that person. In many cases it could be said that privileged legal advice might be relevant to establishing an issue and that, in this way, the privileged material could be said to be put in issue. That is not the approach taken in English law. Rather, the underlying policy considerations for creating privilege to protect communications between a client and solicitor are treated as paramount even if some potential unfairness might occur.'

It is submitted that, regrettably in the author's view, even this strident passage is not sufficient to extend the principle to protect disclosure of the time when a party first sought legal advice:

1. The judgment only applies to material that is already protected by privilege. As highlighted in the authorities above, the mere fact that legal advice has been sought does not attract a privilege. The issue of waiver cannot even be engaged.

2. Following Financial Compensation Scheme Ltd, it is clear that this will be so even if the communication would imply the content of the legal advice given.

3. At its highest, the principle in the final sentence of the extract could be taken to suggest that evidence could not be adduced to even indirectly prove the content of the advice. The argument would then go that, by suggesting that a rearrangement only happened after advice was taken, the content of advice was effectively being placed before the court. Specifically, it assumes that the advice gave certain information about how the court would view different arrangements of assets. For the use of such evidence to be effective, the tribunal would have to find that the advice included this material.

However, even if this argument could survive the lack of privilege attached to items that only imply the advice given, it would fail in that the content of the advice does not even have to be hinted at. The case against the 're-arranging party' could be made purely on the basis that the date of consultation demonstrates when the relationship broke down, and that any organisation of finances after that does not merit significant judicial consideration (beyond determining what is available to meet current needs). The purpose of adducing the evidence is no longer that the party changed their finances after receiving advice and realised how a court may perceive their lifestyle in evidence. It becomes that the state of their lifestyle should be assessed before the date that they saw the relationship as over, which is demonstrated by their consulting family lawyers.

The practical implications
The first outcome of this state of the law is that practitioners should be aware that their clients may have to disclose the fact that they consultation has taken place, if they are directly asked. Especially in the context of full and frank disclosure proceedings, it may be that lawyers would be obliged to withdraw from the case should their client refuse to allow them to disclose when a first consultation occurred (although, as explained above, this information may not be confidential in and of itself – it would seem prudent however not to release it without a client's consent).

The natural consequence of this is that lawyers should advise their clients, potentially at a first consultation, that the client may have to reveal when they consulted a lawyer should the matter proceed to direct litigation.

On the other side of the equation, if you are representing a party who believes their soon-to-be former partner has been reorganising assets, inflating budgets or moving jurisdictions it could be valuable to put questions to the other side about when legal advice was first sought. Marrying the information up with the dates of a change of country, or a shift in use of a bank account could provide the basis of a strong case for re-evaluating needs or jurisdiction.

In high net worth financial remedies proceedings and especially those with a very recent increase in the wealth of the parties, it might provide the base for an uneven distribution case on sharing.

Particularly though in cohabitation claims, it could be used to suggest to a judge that they should push back the date at which they analyse the family's finances in order to assess whether there was a common intention to share property in sole names, and/or to determine how to equitably divide any property in which both are determined to have a beneficial interest.

If such arguments are made against a client, the response must be that this is only evidence of breakdown, not the end of a relationship as a matter of law. The lawyer could have been consulted for any reason. The consultation does not definitively prove that a marriage or relationship had broken down irretrievably at that point; many relationships falter and then regain strength and return to being a genuine partnership (in the White sense) before they finally fail. This would be a matter of fact for the court to determine.


A point of principle?
If, as Lord Scott held in Three Rivers, all the relevant material needs to be made available to a party's legal advisers without fear of consequence, for the benefit of the proper administration of justice, is it sustainable that there is risk in a potential party seeking advice?

As his Lordship pointed out, so fundamental is litigation advice privilege that, while all other confidential conversations with professionals can be disclosed to a court in the interests of justice, the importance of communication with lawyers to the administration of justice is held in an entirely separate regard:

'In relation to all other confidential communications, whether between doctor and patient, accountant and client, husband and wife, parent and child, priest and penitent, the common law recognises the confidentiality of the communication, will protect the confidentiality up to a point, but declines to allow the communication the absolute protection allowed to communications between lawyer and client giving or seeking legal advice … There is a strong public interest that in criminal cases the innocent should be acquitted and the guilty convicted, that in civil cases the claimant should succeed if he is entitled to do so and should fail if he is not, that every trial should be a fair trial and that to provide the best chance of these desiderata being achieved all relevant material should be available to be taken into account.' 6

It would appear that the narrow, relatively technical exception attached to the mere fact that someone has sought advice runs contrary to these principles.


Conclusion
The current state of the law therefore appears to be that evidence can be freely adduced as to precisely when a party first (or subsequently) sought legal advice about their relationship breakdown. While the purpose of adducing such evidence may be to prevent sharp practice from clients in tweaking their lifestyle post-advice, it also encourages sharp practice (at best) in terms of making a visit to a lawyer a risk.

This would seem to be fundamentally at odds with principles for which the common law grants legal advice privilege, and either allows harm to come to those who have sought to find out how best they can interact with the justice system, or may simply discourage them from doing so. The legal authorities are based on factual matrices removed from the arguments used in family law. There could be ample scope for appeal from cases decided outside the family law arena.

The law, as it stands, is clear though. Clients and their legal advisers on either side of a dispute about artificially manufactured financial circumstances should take note.
_____________________________________

1 At [23]-[24]
2 See, for example, R v Cox and Railton (1884) 14 QBD 153
3 O'Rourke v Darbishire [1920] AC 581
4 Thanki, Law of Privilege, Second Edition (Oxford, 2011)
5 See C v C (Privilege) [2006] EWHC 336 (Fam) [44]-[47]
6 At [28]