RBS's solicitors have expressed disappointment that the Supreme Court will not now consider the issue of who is a client for the purposes of legal advice privilege, after its client dropped a planned appeal against the present "unhelpful and unworkable" position.
Herbert Smith Freehills (HSF) said contested applications relating to privilege may become increasingly common, "and it may not be long before these issues arrive at the door of the Supreme Court via some other route".
In December, Mr Justice Hildyard gave a narrow interpretation of who is a client in relation to interviews HSF carried out with RBS staff.
He granted a leapfrog certificate, saying the Supreme Court needed to look at the issue.
But according to HSF, recent amendments to the claimants' case meant the disputed documents were no longer relevant to the action and so the appeal has been dropped.
In a briefing issued today, the firm said: "It is regrettable that the Supreme Court will not be considering this issue, as the current position causes significant practical problems for corporates wishing to take legal advice with the benefit of privilege.
"As Three Rivers No5 has been interpreted in the RBS decision, legal advice privilege is restricted to communications between a lawyer and those individuals who are authorised to seek and obtain legal advice on behalf of the organisation.
"Importantly, it does not extend to those who are authorised only to provide information to the lawyers, even if the lawyers need that information to be able to advise the organisation.
"If this approach is followed in other cases, it may significantly restrict the number of communications that are likely to benefit from legal advice privilege in the corporate context. In some cases, the group of individuals authorised to instruct the lawyers and obtain their advice, as opposed to providing factual information to the lawyers, may be quite small.
HSF said the current position was "unhelpful and unworkable" and "arguably risks undermining the policy rationale" of free communication between lawyer and client that underlay legal advice privilege.
In any event, there are compelling reasons for adopting a 'dominant purpose test' in the context of legal advice privilege, so that it is no longer limited to lawyer-client communications, but instead covers all documents created for the dominant purpose of obtaining legal advice.