"It's a Lawyer Jim, But Not As We Know It" - Limitations on claiming Legal Privilege for advice from in-house Counsel

Created: Tuesday, 07 July 2015 02:01

"It's a Lawyer Jim, But Not As We Know It" – Limitations On Claiming Legal Privilege For Advice From In-House Counsel

A recent decision by the Ombudsman on the release of information under the Official Information Act 1982 (OIA) is a timely reminder of the limitations on claiming legal privilege for advice from in-house counsel.

In the decision (reference 334056, May 2015), the Ombudsman concluded that advice provided to the Minister from a practising lawyer employed as a public servant was not legally privileged because it could not be demonstrated affirmatively that the public servant was acting in a legal capacity.

The context may be familiar. The Campaign Against Foreign Control of Aotearoa complained to the Ombudsman about the Overseas Investment Office’s (OIO) decision to refuse a request for information relating to Kim Dotcom’s applications for consent to invest in New Zealand. The OIO sought to withhold two memoranda to Ministers, setting out the OIO’s advice on the applications, to maintain professional legal privilege (section 9(2)(h) of the OIA).

Relevant considerations

As there was no suggestion that privilege had been waived, the decision turned on whether solicitor-client privilege attached to the information.

The OIO argued the information was legal advice from a solicitor (public servant) to the client (Minister). In this context the Ombudsman identified the following relevant considerations:

1. The author: Was the author a lawyer holding a current practising certificate?

1. The capacity in which the author is acting: Was the author acting in a legal capacity or some other executive or administrative capacity?

1. The relationship between the author and recipient: Was it in the nature of a solicitor-client relationship?

1. The purpose of the document: Was it brought into existence for the purpose of giving legal advice?

1. The content of the document: Is it in the nature of legal advice?

The author of the advice in question was the Manager of the OIO. She held a practising certificate, and the Ombudsman accepted the information at issue was advice on the application of the law (being the good character requirement in section 16(1)(c) of the Overseas Investment Act 2005).

Acting in a legal capacity?

However the Ombudsman did not accept that she was acting as a solicitor at the time, and that the purpose of the document was to provide legal advice to a client. Citing Miller v Commissioner of Inland Revenue [1999] 1 NZLR 275 at 296 the Ombudsman held that for in-house lawyers it must be "demonstrated affirmatively" that they are acting as a lawyer and not as an employee possessing specialist skills.

In this regard, the OIO advice fell short. The advice was signed off by the Manager of OIO and included phrases such as: “the [OIO] is satisfied that ...”; “the [OIO] recommends that”; and “our view is ...”. On this basis the Ombudsman was not satisfied it was "demonstrated affirmatively" that the Manager was acting as a lawyer. Instead the Ombudsman considered she was acting in her capacity as the Manager of the OIO, and the advice was that of the regulator of the Overseas Investment Act 2005 to the Minister.

Accordingly, the Ombudsman concluded that professional legal privilege did not attach to the advice.

Claiming legal privilege

In an interesting twist, the Attorney General agreed to waive privilege and release the advice. The fact a waiver was given suggest the Attorney General was not entirely convinced by the Ombudsman's reasoning, but nonetheless agreed to the release.

This decision from the Ombudsman highlights a critical limitation to a claim of legal privilege for communications with lawyers who also act in other capacities (for example as Directors or Trustees). Often the line between legal advice and regulatory, business or other forms of advice can be blurred. However legal privilege may only be claimed where it can be "demonstrated affirmatively" that the lawyer is acting in their legal capacity and the purpose of the communication is the provision of legal advice.

As a result, lawyers in dual roles must take care to ensure a clear separation exists between the advice given under their respective roles. The five relevant considerations set out by the Ombudsman in this decision (and set out above) provide a useful guide to achieving this separation and ensuring legal privilege is maintained.