The legal landscape around privilege is shifting and under mounting scrutiny in growing parts of the world.
The legal landscape around privilege is shifting and under mounting scrutiny in growing parts of the world. The European Parliament, following the unprecedented leak of the Panama Papers, approved late last year a long list of recommendations that take aim at legal privilege. In a case that reverberated across the legal world, the English High Court last year limited the scope of privilege for documents prepared during an investigation. The Association of Corporate Counsel, a global association representing more than 43,000 in-house lawyers in 85 countries, requested leave to file an amicus curiae urging the U.S. Court of Appeals for the Federal Circuit to make clear that in-house counsel’s post-complaint communications and work with clients are protected to the same extent as outside trial counsel’s attorney-client communications and work.
But Canadian lawyers, and particularly in-house counsel, can breathe easy. So far, Canadian courts and federal and provincial legislatures have shown little interest in foreign court decisions and legislative developments that seek to narrow the scope of privilege. The Federal Court of Appeal this year overturned a decision by a Federal Court judge who wrote a long and erudite decision based predominantly on American law and American academic writings to limit common interest privilege. “For some reason that is not clear to me, Canadian courts have taken a rather unique approach and have not been interested in developments around the world,” observes Adam Dodek, author of the “Solicitor-Client Privilege” report and dean of the common law section at the University of Ottawa. “So part of the result of that has been that Canada has emerged with arguably the strongest protection for solicitor-client privilege of any Commonwealth jurisdiction that I am familiar with.”
The Supreme Court of Canada has without question played the leading role in strengthening privilege. The nation’s highest court has over the past two decades consistently reiterated, strengthened and even elevated what was once merely an evidentiary privilege into a quasi-constitutional right. In two separate but companion decisions issued in late 2016, Alberta (Information and Privacy Commission) v. University of Calgary and Lizotte v. Aviva Insurance Co. of Canada, the Supreme Court robustly protected litigation briefs and privileged lawyer-client communications.
Yet, there are still palpable concerns within the Canadian legal community that privilege is being eroded or may be in the future. That is in large part more because Canadian courts are still grappling with the reach that privilege has, assert legal experts. The absence of clear legal guidance emanating from legislation or policies from regulatory bodies has made the task facing administrative tribunals and lower courts more daunting. The rising prominence of in-house counsel, especially over the past 20 years, too, has complicated matters, if only because of their mixed roles as legal and business advisers. On top of that, the courts and tribunals are still trying to interpret Supreme Court guidance.
“The Supreme Court has been continuing to increase the protection that privilege gives us, but that means it takes time for the new changes to work themselves through all the lower courts and to figure out the details and understand the new landscape — that is why there have been so many new cases around privilege in recent years,” explains Scott Bower, co-head of the research and opinion group at Bennett Jones LLP.
It should come as no surprise then that there may be “some resistance” toward increasing the protection of privilege by administrative tribunals because it makes their work more “difficult and challenging,” says Bower. Nor should it be startling that conflicting decisions from the lower courts may surface. The decision by the Federal Court of Appeal in IGGillis Holdings Inc. v. Minister of National Revenue is a case in point. The decision issued this past March literally sparked a collective sigh of relief within the legal community after the Federal Court of Appeal overturned a lower court ruling and confirmed the judge-made doctrine of transactional “common interest privilege.” In other words, following the decision by the Federal Court of Appeal, parties with a common legal interest can share privileged documents and information without waiving privilege under the doctrine of common interest privilege. Questions, though, remain over its reach and whether common interest privilege applies only to mergers and acquisitions, says Michael Feder, who represented the Federation of Law Societies of Canada, which intervened in the case. “The underlying idea that we shouldn’t treat privileged as waived just because there’s been a confidential sharing, that logic seems to hold outside the M&A context,” adds Feder, a litigation partner with McCarthy Tétrault LLP. “It could hold in the context, potentially, of an investigation, of other things that parties may be doing in which they have sort of interest in common. And I’d add it seems consistent with the modern approach to waiver of privilege, which is basically not to treat privilege as so easily lost.”
But it also appears that the courts, while heeding Supreme Court guidance and reiterating the central importance that privilege plays in the administration of justice, has over the past year arguably made it in certain cases more difficult, more time-consuming and in the end more expensive to assert privilege. That certainly seems to be the case in matters dealing with workplace internal investigations, an issue that presents unique challenges and is laden with booby traps for in-house counsel. In a closely watched decision, the Alberta Court of Appeal weighed in on the intersection between privilege and internal investigations and held that the contents of an internal investigation may be privileged, but the basis for the claim may be scrutinized. In Alberta v. Suncor Energy, the appeal court held that a statutory obligation to carry out an investigation and prepare a report does not preclude from asserting privilege over the documents and records stemming from the internal investigation. (The Supreme Court dismissed an application for leave to appeal this spring.) The decision at first glance is yet another positive decision that strengthens the standing that privilege holds. But, practically speaking, that’s another matter. “It’s going to be much more onerous now to logistically assert privilege because you are going to have to prove it on a document-by-document basis, which is a time-consuming thing to do and so it is going to be more costly to do,” says Bower.
More ominously, for some at least, the Supreme Court may have inadvertently emboldened legislators to pierce privilege by holding in both Lizotte and University of Calgary that legislatures will have to amend their laws should they wish to authorize any infringement of the privilege. “The direct impact of Lizotte and University of Calgary is to say to legislators and parliamentarians the only way you’re going to have any chance of overriding or piercing privilege is to be absolutely explicit,” notes Dodek. “So it will be interesting to see how legislators respond, and then how the courts will respond to those circumstances.”
The federal government is having a go at it with its introduction of Bill C-58, An Act to amend the Access to Information Act and the Privacy Act. Bill C-58 would expressly authorize both the Access to Information and Privacy commissioners to examine privileged government records as part of their assessment of the validity of claims made by government that those records are exempt from disclosure because they are shielded by professional secrecy, litigation privilege or solicitor-client privilege. Feder has no problem with it so long as the commissioners are reviewing privilege claims made by other parts of government in a quasi or even fully adjudicated process. “It is a relatively small incursion into privilege that carries with it a number of benefits. Government transparency is good, and allowing government to make privilege claims that no one can review is bad — it’s as simple as that.” Bower, on the other hand, believes that legislatures and Parliament can pierce privilege to some degree, “but I think there are going be limits on it to the degree they can.”
Others are not so sure. Anti-money-laundering and terrorist provisions are ripe areas that may in the future target the scope of privilege. According to one lawyer who spoke without attribution: “There’s nothing in the hopper presently, but the federal government may take a run at more extensive regulation of lawyers in the field of anti-money-laundering, and privilege will be at the centre of that fight. We have all this jurisprudence saying the sky will fall if ever a client is told that everything they say is not secret, and yet there are countries a lot bigger than ours and quite sophisticated that have managed to have functioning justice systems without a doctrine as strict as ours.”
All of these developments surrounding privilege make for heady times for in-house counsel. Jean-Simon Cléroux, the director of litigation at SNC Lavalin, says it is “absolutely essential” for him to stay on top of legal developments around privilege. Or as he puts it: “Solicitor-client privilege, litigation privilege and professional secrecy is part of my everyday reality. So I have to read as much as possible on the issue.” But he has had to do much more than that. Ever since the former civil and commercial litigator with De Grandpré Chait LLP joined SNC-Lavalin in October 2015, he’s been holding workshops on privilege, aimed not only at in-house counsel but management as well. “I quickly realized that litigation privilege and solicitor-client privilege were poorly understood, and people confused one with the other,” recalls Cléroux. “People used to mark confidential or privileged on more or less all documents and think they were automatically privileged, or if I attended a meeting that all that was said was privileged.” Besides holding workshops, Cléroux also “insisted” that he be involved in all litigation in which the company was involved from the onset. “I have to ensure that the maximum is done to put in place appropriate strategies internally to ensure that we do not waive privilege and that important and sensitive documents are circulated in the proper fashion,” adds Cléroux.
Tips over maintaining privilege while conducting internal investigations
Maintaining privilege while conducting internal investigations is a challenge. “This is an area fraught with peril,” says Michael Feder, a litigation partner with McCarthy Tétrault LLP. “It’s important to ensure that if in-house counsel is directing or conducting an internal investigation that the way the investigation is being conducted is in accordance with the company’s interests, the client’s interests and that it isn’t worsening the situation.” He says having an outside counsel look over an in-house counsel’s shoulder would be a wise thing.
Adam Dodek, author of “Solicitor-Client Privilege,” says the mandate is key. It has to be very clear that the lawyer that is being assigned to conduct the workplace internal investigation is expected to conduct a legal task and will provide legal advice.
Tips over common interest privilege
The Federal Court of Appeal confirmed the judge-made doctrine of transactional “common interest privilege, but” in-house counsel have to be nevertheless vigilant, warns Scott Bower, co-head of the research and opinion group at Bennett Jones LLP. In-house counsel have to be clear and purposeful when disclosing legal advice to the other side. Ideally, a common interest privilege agreement that governs the parties should be drawn. “As in-house counsel, you want to make sure that you papered that properly and made your intentions clear so that if it is ever challenged down the road you have something to demonstrate the purpose behind sharing that information,” advises Bower.