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Legal professional privilege has long been regarded as one of the strongest protections available to organisations. It encourages clients to seek frank legal advice without fear that confidential communications will later become public, writes Melissa Randall.
But whether responding to a cyber incident, commissioning an internal investigation, or navigating a regulatory inquiry, many organisations still assume that simply involving lawyers means their communications will be protected.
Recent Australian court decisions suggest that assumption is becoming increasingly risky.
Across cases involving Optus, Noumi, Mastercard, and lawyers employed in the APS, the courts have reinforced that legal professional privilege documents must meet the dominant purpose test; that is, they must be created for the dominant purpose of legal advice or for use in litigation, and confidentiality must genuinely be maintained.
For organisations managing regulatory investigations, governance reviews, or major incidents, these decisions offer three important lessons.
Involving lawyers doesn’t automatically create privilege
One of the biggest misconceptions is that documents become privileged simply because lawyers are copied into emails or oversee an investigation.
Instead, courts focus on whether the dominant purpose of creating a communication was to obtain legal advice or prepare for litigation.
That distinction can become blurred during complex investigations. Following a cyber breach or governance issue, organisations often commission reviews that are intended to identify operational failures, satisfy regulators, reassure customers, and improve future processes, all while lawyers are involved.
An example of this is the Optus litigation, which followed the company’s 2022 data breach. Optus commissioned a forensic report after the incident, but the court found the report served significant operational and technical purposes alongside legal advice. Because obtaining legal advice was not the dominant purpose, legal professional privilege did not apply.
The decision is a reminder that organisations should think carefully about the purpose and governance of investigations from the outset. If legal advice is intended to be the primary objective, reporting structures, engagement documents, and communications should consistently reflect that purpose rather than attempting to characterise it after the fact.
Government lawyers also received useful clarification through the Burford decision, which considered whether documents withheld under the Freedom of Information Act were protected by legal professional privilege. The tribunal confirmed that privilege extends to in-house government lawyers when they are acting independently in their capacity as legal advisers, not when they are performing broader policy or operational functions. The decision reinforces that privilege attaches to the legal function being performed, not simply to a person’s job title.
Privilege can be lost through your own conduct
Even where privilege exists, organisations can lose it through conduct that is inconsistent with maintaining confidentiality.
Most executives appreciate that forwarding legal advice externally may waive privilege. Fewer realise that relying on legal advice to justify a decision, summarising its contents publicly or giving evidence that places the advice “in issue” can produce the same outcome.
The Mastercard litigation, which arose from ACCC allegations that the company had entered into anti-competitive agreements, provides an important reminder. During the proceedings, senior executives gave evidence about their decision making and the legal advice they had received when negotiating the agreements. The court found that, by relying on those consultations to explain the company’s state of mind, Mastercard had effectively put its legal advice “in issue”. Once that occurred, privilege over the relevant advice and the underlying communications could no longer be maintained.
Privilege is not simply created once and preserved forever. It requires organisations to carefully consider how legal advice is used throughout the life of a matter, including in evidence, public statements, and dealings with regulators.
Courts are recognising the realities organisations face
Modern organisations routinely manage enormous volumes of electronic documents under significant time pressure, particularly during litigation and regulatory investigations. Recent decisions have acknowledged those practical realities.
The Mastercard proceedings also considered the consequences of inadvertently disclosing privileged documents during discovery. In responding to extensive compulsory information notices from the ACCC, privileged draft agreements and lawyer email chains were accidentally produced. The court accepted that this did not automatically waive privilege because Mastercard had taken reasonable steps to preserve confidentiality and acted promptly to correct the mistake. However, the inadvertent disclosure still had consequences, with the court reducing Mastercard’s costs recovery by 50 per cent.
Similarly, the full Federal Court’s decision in McLeod provides useful guidance for organisations working cooperatively with regulators. The case arose from an ASIC investigation into inventory accounting practices at Noumi Ltd, which voluntarily provided a consultant’s report that had been prepared to assist its lawyers in giving legal advice to the regulator.
The court found that, in providing the report to the regulator, Noumi did not intend to waive legal professional privilege. The report was used by the regulator to guide further lines of inquiry, and as such, the report remained confidential and met the dominant purpose test. The court held that, in these circumstances, privilege over the report was not waived. This decision offers greater certainty for organisations seeking to cooperate with regulators without automatically sacrificing the confidentiality of legal advice.
These decisions remind organisations that privilege must be deliberately established and consistently protected.
As investigations become more complex and regulatory scrutiny intensifies, organisations that are deliberate about why documents are created, how legal advice is sought, and how privileged material is handled will be far better placed to preserve one of the law’s most valuable protections.
Melissa Randall is an expert adviser and team lead in public law at SPA Australia. This article summarises the insights Melissa presented as part of a broader conversation at a professional development day for government employees hosted by SPA Australia.
