After IGGillis Holdings: Protecting privilege when giving common legal advice

  • March 29, 2018
  • Mark Tonkovich and Stephanie Dewey

The Federal Court of Appeal’s recent decision in IGGillis Holdings brings comfort and certainty to transactional and advisory lawyers working collaboratively in today's complex legal environment.  While the case arose in the context of a tax audit, its teachings on privilege should reach all areas of practice.

IGGillis Holdings soundly affirms that sharing legal advice with other transacting parties, or working together with other parties' lawyers to develop that legal advice, will not waive solicitor-client privilege where the collaboration is done in pursuit of a transactional common interest.  As explained in CBA National last fall, the CBA intervened in this closely-watched appeal to assist in fully canvassing the underlying issues and the common practices of the Canadian bar.

The CBA argued in its factum that "[t]he more significant and complicated a legal issue, the more likely that clients will engage teams of specialized lawyers across multiple firms to jointly provide legal advice to them."  The practice of active collaboration between different parties and their respective lawyers was thrown into serious doubt by the Federal Court's earlier ruling, which held that the common interest exception to the waiver of privilege rule did not apply in the transactional or advisory (non-litigation) context.  This led lawyers to step back and reconsider how best to protect their clients’ privilege rights, while recognizing that clients will often have a practical interest in sharing privileged advice or directly collaborating with another party's counsel. 

Some lawyers found creative solutions to the issue, such as the use of joint retainers between multiple transacting parties and joint counsel over discrete mandates.  However, such solutions were not always possible and, when they were, they required additional time, effort, and communication to reach the same result that the common interest exception would have achieved directly.  The added complexity in the underlying relationships also increased the burdens on lawyers in managing their professional obligations to their clients.

The Federal Court of Appeal confirmed that the transactional common interest exception is firmly established in Canadian law.  It held that it was not appropriate for the Federal Court to effectively allow a decision of a New York court to overturn the relevant Alberta and BC cases that applied in the IGGillis Holdings case. 

The Crown has not yet communicated whether it will seek leave to appeal to the Supreme Court of Canada.  Applying the Court of Appeal's decision, clients and their counsel may comfortably return to the practice of sharing and working together with other parties and their counsel toward a common interest without inadvertently waiving privilege.  Such a collaborative approach can save time and money, and can reduce the potential for disputes down the road. 

As the Federal Court of Appeal noted, "[w]hen dealing with a [complex statute], it may well be more efficient and the interests of the respective clients may well be better served if the lawyers collaborate on the opinion that is to be provided in relation to the application of that statute to the series of transactions to be completed by the parties."

Although IGGillis Holding is welcome news for transactional and advisory practices, it also serves as an important reminder to the profession of the need to be vigilant about protecting privilege.  Lawyers would do well to implement the following CBA best practices when sharing privileged communications or when working collaboratively with counsel and other parties to develop common legal advice:

  • Counsel should explain to their clients the key considerations and challenges posed by collaborating with other parties/their counsel, including potential benefits, their duties to clients, conflicts of interest, the potential for waiver of privilege, withdrawal of services, and any methods for minimizing or resolving related challenges or disputes;
  • Counsel should satisfy themselves that they are able to act as instructed by their clients and that the particular collaborative activity is in their clients’ best interests, at all times representing their clients loyally and in accordance with the rules of professional conduct and the best traditions of the profession; and
  • Counsel should document clients' understandings and intentions for clarity and posterity; in particular, they should clearly express the intention to maintain confidential all privileged materials as against third parties, and the limited circumstances (if any) in which such materials may be disclosed to third parties (e.g., only on consent of all parties, only after sufficient notification is given to other parties, or only where required by law).

Mark Tonkovich, Jacques Bernier, and Stephanie Dewey of Baker McKenzie acted for the CBA in its intervention before the Federal Court of Appeal in the IGGillis Holdings appeal.

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