Privilege has become critical in context of outsourcing of legal or paralegal work

For most professionals, including business lawyers, client engagements always provide for, if not preceded by confidentiality agreements. While secrecy and nondisclosure are integral and apply to all players in a commercial relationship, the attorney client privilege was recognised under common law as far back as in Elizabethan England, and introduced in India under Sections 126 to 129 of the Indian Evidence Act, 1885, which provides that the lawyer is bound not to disclose any communication made to him, state the contents or conditions of any document with which he has become acquainted, or disclose any advise provided to his client in the course and for the purpose of his professional engagement.

Each jurisdiction has its own versions, and privilege has several connotations. 

For the attorney client privilege to apply, there has to be a communication, or a representation by the client seeking legal advice. 

Privilege can be waived only by the client; and there are situations which contemplate waivers and exceptions. 

Privilege is waived if the client inadvertently discloses the information to others, or the communication from the client is made in the presence of third parties. 

Privilege will not apply when the attorney is not acting primarily as a lawyer, but in a non-legal role such as a Board member.

In the USA, when an attorney prepares and files tax returns, then privilege does not apply. 

Another exception is when the client sues the attorney challenging his professional competence – clearly the privilege cannot deprive the lawyer of his defence. 

 Under Indian law, any communication made in furtherance of any illegal purpose, or any observation by the attorney of a crime-fraud commission, are situations in which the protection will not apply.

An in-house counsel in India being in full time employment of a corporation is not bound by privilege, as he is not recognised as an ‘Advocate’ under the Advocates’ Act 1961, being required to surrender the professional licence. 

The US Supreme Court’s landmark  judgement in Upjohn vs. United States held a company could invoke privilege to protect communication between company lawyers and non-management employees clarifying that privilege was not  the prerogative of individual lawyers.

The challenge to privilege for the in house corporate counsel in jurisdictions  such as the US which recognise them as attorneys and treat the corporation as possessing the  attorney client privilege, is an unenviable predicament, as they effectively wear two hats being part of the Corporation’s business team.

For a  company into innovations and using patent agents or lawyers, privilege assumes even more complex proportions since much of the work is non legal,  in demarcation, courts take into account the conduct and the risks, whether disclosure was inadvertent, capable of rectification, implications of disclosure.      

The attorney client privilege work product doctrine is a more inclusive concept, which includes materials prepared in relation to a possible and even impending litigation.  This covers materials, briefs, legal advises prepared by the attorney himself. 

While it’s not a privilege, it’s a doctrine which is recognized under in law for exclusion of work products from discovery, unless the party seeking discovery establishes disclosure to be indispensable.

This has assumed criticality for India in the context of outsourcing of legal or paralegal work. Jurisdictions such as the UK which have the same language and common law tradition, as India, have extended this in their Law Society rules to include outsourcing.

However in the aftermath of Sarbanes Oxley, the US Department of Justice and SEC have frequently required waiver of immunity, imposed duties of reporting to Government agencies of matters such as currency transactions. 

These inroads threaten to undermine the lawyer’s ethical obligation to hold confidences inviolate.

 But in certain situations, dilution is unavoidable as in investigations of corporate fraud, but not at the cost of constitutional rights.

(Kumkum Sen is a partner at Rajinder Narain & Co., and can be reached at kumkumsen@rnclegal.com)