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.