In Short
- Privilege is not absolute: Lawyers must keep client communications confidential, but privilege does not apply to dishonest or criminal conduct.
- Disclosure obligations: Lawyers may need to report suspected financial crime or dishonest activity, even if it involves privileged information.
- Waiver risks: Privilege can be lost if legal advice is shared with others or handled carelessly.
Tips for Businesses
If you seek legal advice, keep your communications confidential and clearly mark them as privileged. Avoid sharing legal advice with third parties. Remember that lawyers must report dishonesty or suspected financial crime, even if the information is otherwise protected. Seek legal guidance if you are unsure whether privilege applies.
Though being a lawyer and providing legal advice may sometimes seem as cool as an episode of Suits, lawyers have vital responsibilities to uphold the sanctity of the justice system. Lawyers have obligations to ensure that privileged information shared by clients remains completely confidential. However, there are some cases where lawyers will need to share privileged information, for instance, when that information is evidence of a financial crime or money laundering. There are exceptions to client legal privilege when the information is being used:
- for a dishonest purpose; or
- to commit an offence.
This article will outline client legal privilege, in what circumstances it is appropriate to void it, and how to report dishonest conduct or evidence of a financial crime while including privileged information.
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What is Client-Lawyer Privilege?
People providing legal services, often including legal office staff, have unique legal obligations due to their position of power within the justice system. However, legal counsel has a unique position of power in the legal sphere as they provide legal advice and help with legal proceedings. As a result of this power, they deal with sensitive information and vulnerable clients when providing legal assistance. Because of this, lawyers have substantial obligations to their clients to ensure that they are not abusing their power inappropriately.
Maintaining client legal privilege is vital to the administration of justice. This obligation is set out in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. These rules highlight the importance of confidence and trust in the relationship between clients and lawyers.
Client-lawyer privilege protects information shared by a client to a lawyer if the communications were:
- meant to remain confidential communications;
- are regarding a legal matter; or
- made to obtain legal advice.
What is Client Confidentiality?
You may have heard the term ‘client confidentiality’ used before and assumed it was the same as legal privilege. However, client confidentiality and legal professional privilege are two related but distinct concepts. Lawyers must keep client information confidential unless it involves a potential crime punishable by over three years’ imprisonment. In contrast, legal professional privilege protects client communications with their lawyer when made for the purpose of seeking legal advice. The lawyer cannot disclose any privileged information or client communications under any circumstances.
Continue reading this article below the formWhen Can Information Disclosure Happen?
However, there are a few cases where it is appropriate for a lawyer to disclose privileged information that their client has told them.
Legal professional privilege may not apply to confidential communications made:
- for a dishonest purpose; or
- to enable the commission of an offence.
Often, the lawyer will have to balance their obligations and judge whether it is appropriate to disclose the client communications despite the client’s legal privilege.
An example of where privilege may be voided is where a client seeks legal advice on how to structure transactions to specifically avoid detection by financial authorities. Another example is where a client asks their lawyer to hold funds that the lawyer suspects are proceeds of a crime, or where a client provides false information about the source of their funds or the nature of their transactions.
What is a Dishonest Purpose?
It is usually easy to determine if information is enabling the commission of an offence. However, the standard for whether dishonesty has occurred can be slightly more challenging to determine. Typically, it is whether or not a reasonable person would believe there is dishonesty. There must be evidence of this for the lawyer to report it. However, this does not even have to be if they believe that a client is acting illegally; any dishonest conduct is enough for a lawyer to report it.
Lawyers don’t need to investigate dishonesty, but must report it if they learn of it during the course of their retainer.
How Should I Disclose Privileged Information?
Suppose a lawyer believes that they are uncovering a suspicious transaction or dishonest conduct. In that case, they must file a suspicious transaction report to the Department of Internal Affairs or the Law Society. Additionally, if the lawyer believes that a financial crime is occurring, the lawyer may also have to report to the police’s Financial Intelligence Unit.
If a lawyer can report a suspicious transaction without disclosing any privileged or confidential information, they should do so.
Waiving Privilege
Client-lawyer privilege can be waived intentionally or inadvertently, permanently removing protection from previously privileged communications. A waiver occurs when a client voluntarily discloses privileged information to third parties, such as sharing legal advice with business partners, employees, or other advisors who are not covered by the privilege. An inadvertent waiver can happen if you share documents carelessly, do not clearly label legal advice as privileged, or talk about legal advice in places where others can overhear. Once privilege is waived for a particular communication or subject matter, it is generally lost forever and cannot be reclaimed.
Key Takeaways
In conclusion, protecting confidential and privileged information is one of a lawyer’s most important duties when providing legal assistance or helping with legal proceedings. However, lawyers also must disclose client communications, despite the lawyer-client privilege, if they believe that a financial crime or dishonest conduct occurs. Deciding whether to disclose confidential information is a complicated process for legal counsel. Still, the questions and resources listed above can help determine whether it is appropriate to disclose the information.
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Frequently Asked Questions
No, dishonest conduct is not only criminal behaviour or offences. Lawyers should report any behaviour that may be dishonest.
No, privileged information is a very high standard of information that should be prioritised over almost anything else. For example, information is privileged if it was meant to remain confidential, is regarding a legal matter, or was shared to maintain legal advice.
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