Overhaul of client legal privilege in federal investigations

The Australian Law Reform Commission (ALRC) has recommended 45 changes to the handling of claims of client legal privilege over material sought by federal investigatory bodies and royal commissions of inquiry. The ALRC report Privilege in Perspective: Client Legal Privilege in Federal Investigations, tabled in Parliament today, is the culmination of a year-long public inquiry into this controversial area highlighted in the report of the AWB Royal Commission. 

‘Our inquiry found general support for maintaining privilege as a fundamental right of clients, which only should be abrogated or modified in exceptional circumstances,’ said ALRC President, Prof David Weisbrot.

‘When properly exercised, privilege encourages compliance with the law, by creating an environment in which clients can make full and frank disclosure and receive accurate legal advice.  

‘However, privilege must be balanced with the other public interest in ensuring efficient, effective investigations. Unfortunately, there are cases in which it appears claims of privilege have been used primarily to delay or frustrate investigations—with some disputes taking years to resolve.  Many of our recommendations focus on streamlining the process for handling claims of privilege, and deterring or punishing abuses.’

Professor Rosalind Croucher, Commissioner in charge of the Inquiry, said that the central idea behind the ALRC’s recommendations is the need for a single federal statute addressing the application of privilege in all federal investigations.

‘Our research identified over 40 federal investigatory bodies with coercive information-gathering powers, as well as Royal Commissions. These include: law enforcement agencies, such as the Australian Federal Police; bodies concerned with the collection or administration of public funds—such as the ATO, Medicare and Centrelink; the major corporate regulators, such as ASIC and he ACCC; and a number of smaller, specialised regulators focusing on specific industries, such as the Fisheries Management Authority.

‘There are many dozens of federal laws that address the powers of these bodies. However, most of this legislation is silent on the application of client legal privilege, and where it is addressed, there is no consistent approach—creating confusion and cost for clients, lawyers and investigators.

‘A single federal statute would make clear that privilege applies unless expressly modified or abrogated by another statute, as well as establishing a system in which regulators and clients would have to operate in a much more open and transparent manner, according to published policies.’

Other key proposals include:

  • extending privilege to advice on tax law provided by accountants, where that advice is sought by the Australian Taxation Office (ATO)—in effect, formalising the ATO ‘accountants concession’.
  • introducing a model fast-track procedure for resolving disputes about privilege;
  • improving lawyers’ understanding of their legal and ethical obligations in this complex area, through targeted legal education; and
  • clarifying and strengthening the professional disciplinary procedures to apply in cases where the assertion or maintenance of privilege claims may amount to unethical conduct.

View the Final Report Privilege in Perspective: Client Legal Privilege in Federal Investigations online.


The Australian Law Reform Commission (ALRC) today released a Discussion Paper, Client Legal Privilege and Federal Investigatory Bodies (DP 73), containing 42 proposals aimed ataddressing lengthy and costly disputes over client legal privilege in federal investigations.

ALRC President, Professor David Weisbrot, said that the ALRC recognised the need for a clear and consistent approach to privilege.

“Client legal privilege is a fundamental principle of common law. It encourages clients to speak fully and frankly with their lawyers, so that they can receive the best possible legal advice—including advice on how to comply with the law.

“However, our research and consultations reveal that privilege claims are sometimes used as a tactic to delay or frustrate investigations or legal proceedings, such as happened in the AWB Royal Commission. There are many cases in which disputes over privilege have taken many years to resolve—and that is before the court can even consider the merits of the case.

“One thrust of our proposals is that we need a simple, less costly process for resolving disputes over privilege. Another is where there is evidence that privilege has been misused for cynical or tactical reasons, with the aim of frustrating or delaying the investigations or proceedings. This should be grounds for disciplinary action by legal professional associations.”

Commissioner in charge of the Inquiry, Professor Rosalind Croucher, said that much of the confusion and uncertainty stems from a lack of legislative clarity and transparent processes. “Our research has identified 41 federal investigatory bodies—as well as Royal Commissions that are established from time to time—that have coercive information-gathering powers. Many of the laws governing these bodies provide no guidance about whether client legal privilege applies wholly or in part. In those laws that do address privilege, there is no consistency of language or approach.

“We propose that where privilege applies, there should be a consistent legal framework. Where Parliament determines that privilege should be abrogated, this should be on the basis of clear principles—that is, where there is a significant public interest, and where legal advice is central to the matters being investigated. Where it is abrogated, appropriate safeguards should be put in place about the subsequent use of the information disclosed.”

Other key proposals include:

  • to allow privilege to apply to advice on taxation law provided by accountants— in effect formalising the Australian Tax Office “accountants’ concession”;
  • requiring parties claiming privilege to provide details of privileged documents and the basis of the claim; and
  • improved education and training for lawyers concerning their ethical responsibilities in relation to making privilege claims.

DP 73, Client Legal Privilege and Federal Investigatory Bodies, is available from the ALRC website, www.alrc.gov.au. The ALRC is seeking community feedback before a final report is completed in December 2007. Submissions close on 1 November 2007.

Thursday, 30 November 2006: The Australian Law Reform Commission (ALRC) says its new review of legal professional privilege could have a major impact on the way clients and lawyers will interact in future.

The ALRC inquiry will concentrate on the application of legal professional privilege to the coercive information gathering powers of Commonwealth bodies—such as the Australian Federal Police, the Australian Crime Commission, the Australian Securities and Investments Commission, the Australian Taxation Office and federal royal commissions.

ALRC President Professor David Weisbrot said the ALRC had looked at legal professional privilege generally in its recent report Uniform Evidence Law (ALRC 102), released earlier this year, and in somewhat greater detail in its 2002 report, Principled Regulation (ALRC 95).

“In both of those reports, the ALRC highlighted the need for a ‘root and branch’ review of legal professional privilege in the context of the coercive investigatory powers of federal regulatory agencies and royal commissions.

“This also was squarely raised as an issue in the recent report of the Cole inquiry into the Australian Wheat Board and, before that, in the report of the HIH Royal Commission. Commissioner Cole noted that a conflict sometimes arises between the public interest in discovery of the truth—which is the prime function of a royal commission—and the right of persons to communicate with their lawyers and obtain legal advice under conditions of confidentiality.

We are pleased to have been asked to conduct this Inquiry,” Professor Weisbrot said, “the essence of which will be to determine if there are circumstances in which maintaining client legal privilege must bend to the broader public interest. Common law courts have held consistently that legal privilege is a fundamental right and not merely a procedural safeguard.

Professor Weisbrot said extensive consultation would be a key feature of the Inquiry.

“The ALRC will identify experts and key stakeholders in this area. We’ll be seeking their input—as well as views from the wider community—about both perceived problems and potential solutions.

This obviously involves some very complicated technical issues and we anticipate that the legal profession, judges, former royal commissioners and counsel assisting, and Commonwealth investigatory bodies will have considerable input into the ALRC’s Inquiry.

“However, these matters also impact on many members of the community—just think about all of those people affected by the corporate collapses of HIH and One.Tel—so we are keen to hear from anyone who has had experience in this area.”

He said the ALRC would begin work on an Issues Paper, outlining the scope of the Inquiry, and seeking feedback on a range of questions.

“We urge anyone with an interest to contact the ALRC. The ALRC’s website will be updated with information on the inquiry as it progresses,” Prof Weisbrot said.

The ALRC is due to report by December 2007.