- Multidisciplinary practices, where both legal practitioners and non-legal practitioners are involved in the work, may be able to establish a lawyer-client relationship sufficient for legal professional privilege.
- It will be necessary to consider legal professional privilege claims over individual documents by reference to the content and context for each document. The relevant test is whether the document in question records communications made for the dominant purpose of giving or receiving legal advice.
- Claiming privilege and assessing such claims over a large volume of documents will give rise to logistical challenges, as well as time and cost issues.
A long awaited decision of the Federal Court of Australia in relation to legal professional privilege (‘LPP’), Commissioner of Taxation v PricewaterhouseCoopers  FCA 278, was handed down on 25 March 2022. The decision was significant given the sheer scope of the documents over which the privilege was claimed and that the context of the claim involved a multidisciplinary practice.
The Commissioner of Taxation sought access to documents under s 353-10 of Sch 1 to the Taxation Administration Act 1953 (Cth) for the purposes of auditing Flora Green Pty Ltd, a company within the JBS Australia group of companies (‘JBS Parties’). He issued notices to produce to a partner of PricewaterhouseCoopers Australia (‘PwC Australia’) and Flora Green Pty Ltd. In response to the notices, LPP was claimed over some 44,000 documents on behalf of the JBS Parties. In response, the Commissioner sought declaratory relief to the effect that approximately 15,500 documents held by the respondents were not covered by LPP (‘Disputed Documents’). The Disputed Documents comprised emails and attachments to emails brought into existence within a particular period.
The Commissioner’s application was based on three grounds:
- The form of the engagements by which PwC Australia purported to provide legal services to the JBS Parties did not establish a lawyer-client relationship sufficient to ground a claim for LPP.
- As a matter of substance, the services provided by PwC Australia to the JBS Parties were not provided pursuant to a lawyer-client relationship sufficient to ground a claim for LPP.
- Each of the Disputed Documents did not record communications made for the dominant purpose of giving or obtaining legal advice from lawyers of PwC Australia.
The first two grounds, if established, would have impugned, on a global basis, the LPP claim with respect to all of the Disputed Documents. The third ground required review of each document.
Given the impracticality of reviewing all of the Disputed Documents, the Court set down for hearing, by way of separate question, determination of whether the Commissioner was entitled to the relief sought with respect to 100 sample documents. Half of the sample was required to be selected by the Commissioner and the balance, by the JBS Parties.
The Commissioner did not have access to the documents to make his selection but could refer to an itemised schedule. To assist, the Court appointed three barristers as amici curiae who had access to the to the sample documents and the confidential material on which the respondents relied in relation to the privilege issue.
The sample list underwent successive iterations as the JBS Parties successively withdrew their claims for privilege and released certain documents to the Commissioner. The final sample list comprised some documents over which the JBS Parties had also, ultimately, withdrawn their claims, but which the Court determined would, nonetheless, form the sample list for the purposes of the separate question.
The application was heard over five days before Moshinsky J. In the published judgment, the background facts and part of the reasons for decision are redacted. However, the Court noted the following:
- PwC Australia is a multi-disciplinary partnership which provides legal and non-legal services. Some of its partners are legal practitioners and some are not.
- The relevant services were generally provided by PwC Australia to the JBS Parties pursuant to an umbrella engagement agreement and nine statements of work which identified the work to be carried out. Those statements of work described such work as ‘legal services’.
- Each statement of work identified legal practitioners and non-legal practitioners as the team that would carry out the work. They also contained statements to the effect that non-legal practitioners may assist in providing legal services under the direction of legal practitioners, and that the JBS Parties appointed the non-legal practitioners as their agents for the purpose of communicating with the legal services team, including giving instructions to and receiving legal advice, to assist in the provision of legal services.
- Some statements of work set out the charge-out rates for each legal practitioner and each non-legal practitioner. The charge-out rate for at least one non-legal practitioner was higher than that for legal practitioners.
- Overseas PricewaterhouseCoopers (‘PwC’) firms were involved in many of the same projects under separate engagements. In the case of PwC Brazil and PwC USA, these firms were not able to provide legal advice in Australia and made it clear that they were not doing so.
One of the issues expressly raised for determination was the question of onus. PwC Australia submitted that the onus rested on the moving party and not the party claiming LPP. It stated that authorities assuming otherwise had not had the benefit of argument on the issue. Moshinsky J did not accept this was the case and considered it was appropriate to follow previous authorities expressing the clear view that the respondent in this type of application bore the onus of establishing that LPP applied.
[T]he decision provides guidance to practitioners in multidisciplinary practices on the content and structure of retainers sufficient to attract LPP to the services to be performed. However, the risk in such practices is that the dominant purpose of a particular communication may be to provide accounting, commercial or other non-legal advice. This may be so even where the content of that communication informs the provision of legal advice.
General grounds 1 and 2
Moshinsky J found against the Commissioner on the first two grounds and was satisfied that a lawyer-client relationship existed between some of the PwC Australia lawyers and the JBS parties sufficient to ground a LPP claim. In doing so, his Honour rejected the Commissioner’s argument that the interposition of a non-lawyer as both the client’s agent and provider of assistance to the client’s legal advisers gave rise to a conflict and undermined the independence necessary to a client-lawyer relationship (Ground 1). The example of in-house lawyers was cited by analogy in his Honour’s reasoning. In circumstances where a client-lawyer relationship was established, his Honour could not be satisfied that, as a global matter, the services performed with respect to that relationship were not subject to any form of LPP (Ground 2).
Ground 3 – sample documents
The third ground required a document-by-document analysis to determine whether a particular document is subject to LPP. Ultimately, 116 sample documents were the subject of the determination.
Moshinsky J confirmed that the common law test applied, namely, that they must record communications for the dominant purpose of giving or obtaining legal advice. Further, that question must be determined by reference to the content of the document, its context, and the relevant evidence relating to the document. His Honour noted that critical contextual matters included the multi-disciplinary nature of PwC Australia and the involvement of the overseas PwC firms.
In summary, 49 of the sample documents were found to be privileged and 6 partly privileged. A substantial portion of the sample documents (61 documents) were found not to be privileged.
While the reasons and judgment have been partially redacted, it is apparent that the dominant purpose of a number of the documents over which LPP was claimed was to provide accounting and not legal advice. While the Court accepted that the content of some of the communications was relied upon or referred to in legal advice, it did not mean that the communication itself was brought into existence for the dominant purpose of PwC Australia providing legal advice to its client. In some instances where LPP did not apply, the Court determined that there were multiple purposes for the communication, including the giving of legal advice, which were of equal weight. In many instances, the Court discounted the label or express description given to the document as ‘legal advice’ or ‘privileged’.
The decision confirms that the lawyer-client relationship may be established in multidisciplinary practices where legal advice is only one component of the service provided and non-lawyers are key participants in its delivery. In this respect, the decision provides guidance to practitioners in multidisciplinary practices on the content and structure of retainers sufficient to attract LPP to the services to be performed. However, the risk in such practices is that the dominant purpose of a particular communication may be to provide accounting, commercial or other non-legal advice. This may be so even where the content of that communication informs the provision of legal advice. Whether this is so will depend on the context and content of each particular communication.
The case illustrates the need to examine carefully claims for privilege with respect to each document and that where there has been overreach, the Commissioner will not hesitate to require each claim to be interrogated in Court.