Yes.  In Scotland, solicitor-client privilege covers communication between a legal advisor and client where the purpose of the communication is to obtain legal advice, whether or not litigation is contemplated.  It is often referred to as “legal advice privilege”.

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Legal advice privilege and professional confidentiality apply in relation to civil and criminal proceedings. They can in principle be overridden but generally only in exceptional circumstances where there is a specific order from the court, specific legislation or where the client choses to waive the privilege or confidentiality.  A recent Scottish case confirmed that it is possible to disclose a document which contains redacted privileged advice without waiving privilege.  Whether or not a client has waived legal advice privilege in this situation is an objective test and not based simply upon what was intended.  All of the circumstances are considered including whether the client has acted in a manner consistent with maintaining confidentiality; whether they have attempted to “cherry-pick” the information being disclosed in a way that is favorable to their own case; and the question of fairness.  

In Scotland, we have a limited number of authorities discussing the definition of “the client” in the context of legal privilege.  Prima facie anyone at a client company would be considered to be the client for the purpose of relying upon legal advice privilege. It is possible that the Scottish courts would look to English authorities which are considered to be persuasive, but not binding, if they were required to consider the definition of “client” for legal privilege. 

The current position in England on this issue is that, where the overall client is a corporate entity, the “client” for legal privilege will be the person or persons who are instructing the lawyers for the purpose of obtaining legal advice and not all employees. The list of people will be restricted and should be identifiable. This means that correspondence between solicitors and other employees outside of this group may not attract legal advice privilege (but might attract litigation privilege – see below).  As a result, corporate entities must be cautious about sharing legal advice even within the organization. If the advice is too widely shared, it could unintentionally lose its privilege.  
 

In relation to legal advice privilege, the same principles apply to communications to and from in-house counsel as they do for outside counsel communication.  

For legal privilege to apply, the communication must be for the purpose of providing legal advice and therefore in-house counsel must attempt to have a clear distinction between legal advice and commercial/general advice.  

The only exception to this rule in Scotland (as in the rest of the UK) is in relation to EU competition cases where it was decided by the European Court of Justice that litigation privilege does not extend to an in-house lawyer for EU competition law matters.   
 

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In Scotland, there is limited authority on the law of privilege but it is thought that the common interest doctrine would be recognized on the basis that the Scottish courts may look to English authorities for guidance.  

Although not tested, in Scotland it is thought that third parties where common interest privilege is likely to apply include: co-defendants; insured and insurer; reinsurer and reinsured; companies in the same group; agent and principal; and parties who do or might use the same solicitor.

 The doctrine will only apply to documents which are already covered by legal advice privilege.  The extent to which the privilege will continue will depend on the dissemination of the documents in question and care must be taken to ensure documents are not shared too widely as that may result in privilege being waived. 

The doctrine has not been formally articulated in Scotland but as noted above, the Scottish courts may look to English decisions on this issue.  If that is the case, then common interest privilege would apply when a person voluntarily discloses a privileged document to a third party who has a common interest in the subject matter of the privileged document, or in the litigation in connection with which the document was brought into existence.  The basis of the right to assert the common interest privilege would be the common interest in maintaining the confidentiality of the communication.  

As matters stand, and taking into account English authorities, there is no requirement for anything to be in writing for common interest privilege to apply. 

Litigation funding is permitted in Scotland and our rules are currently being developed. 

At the moment, litigation funding is available via third party funders – either After the Event Insurers or claims management companies.  Damages-based fee agreements between solicitors and their clients are not enforceable.  As a result, some law firms (particularly firms dealing with individuals who may not have the ability to fund expensive litigations) have created limited companies who can enter into damages-based agreements with clients and therefore fund the litigations.  These are not regulated.

The Civil Litigation (Expenses and Group Proceedings) Scotland Act 2018 introduces a number of changes to how costs and group litigations will be dealt with although secondary legislation is required to implement the changes.  In terms of litigation funding, the key change is that success fees (damages-based agreement between solicitors and clients) will be allowed.  All damages-based agreement will now be regulated and it is likely that a cap will be placed on the amount that can be deducted from the damages as a success fee.  Furthermore, there will be some risk placed at the door of the funder as their involvement will need to be disclosed and the court will be able to make an award of costs against them. 
 

Given the infancy of Scotland’s regulation of litigation funding, there has been little opportunity for the courts to consider whether communications with litigation funders are protected by legal privilege. However, there is a risk that disclosing legal advice to potential funders may waive privilege.  It has been suggested that during the initial stage, where the funders will look for information to assess the case and determine what funding they are prepared to give (and on what terms), attempts should be made to preserve privilege by (a) entering into a written agreement stating that any waiver of privilege is limited and the potential funder will keep all information confidential; or (b) relying upon litigation privilege.  It is thought that once a funder has been formally engaged, the common interest doctrine will apply and therefore information can be disclosed to the funder without waiving legal advice privilege. 

The crime-fraud exception applies to legal advice privilege in Scotland.  It means that a client cannot rely upon privilege to keep communications between them and their solicitor confidential where fraud or other illegality is alleged and the legal advisor is directly implicated.  The exception also extends to the situation where a solicitor and client act to gain benefit for the client from the client’s knowledge of fraud by another. 

The key cases which articulate the exception are:

Miscosta SA v Shetland Islands Council 1983 SLT 483: the only circumstances in which correspondence between a party and his legal advisors may not be privileged are where fraud or some other illegal act is alleged against the party and it is suggested that his legal advisors have been directly concerned in the carrying out of the illegal transaction.  

Conoco (UK) Ltd v The Commercial Law Practice 1997 SLT 372: the fact that the Commercial Law Practice’s client had attempted to take advantage of a fraud by a third party deprived them of the right to keep their client’s identity confidential as a matter of privilege.  They were ordered by the court to disclose the name of their client to enable Conoco to bring proceedings against the client. 

Frank Houlgate Investment Co Ltd v Biggart Baillie LLP [2013] CSOH 80: communications made with the intention of furthering criminal purpose did not enjoy the legal privilege of client confidentiality.  
 

In Scotland, in addition to legal advice privilege, we recognize litigation privilege.  This means that communication between lawyers and their clients/third parties and any documents prepared for the primary purpose of litigation are confidential.  

For litigation privilege to apply, the correspondence or information must have been prepared in contemplation of litigation and it must be possible to demonstrate that there is a reasonable prospect that the litigation is pending or contemplated.  It can apply between a lawyer and a client and also between the lawyer or client and a third party. 

Accountant-client privilege is not recognized in Scotland.  This question was considered in the case of R (Prudential plc and another) v Special Commissioner of Income Tax and another [2013] UKSC1 which went before the UK Supreme Court in 2013.  It was determined that the protection of legal advice does not extend beyond lawyers.  If privilege was to extend beyond lawyers, that was seen to be a significant change from a public policy point of view and therefore something that should be dealt with formally through legislation.  This was originally an English case and therefore strictly it is not binding in Scotland.  However, as it is a decision of the Supreme Court, which is the highest appellate court for both Scotland and England and Wales, it is a highly persuasive decision, particularly as the Scottish judge who heard this case commented that the although the law in this area has developed separately in Scotland and in England, the general principle of privilege, its fundamental importance and the considerations of public policy which underlie it, are common to both systems.  Furthermore, Scottish legal textbooks tend to conclude that privilege is restricted lawyers.  

Mediations in Scotland are considered to be without prejudice and confidential.  This means that anything said or discussed during the course of the mediation is seen to be confidential.  However there is no formal mediation privilege and so it is possible for the court to override the confidentiality provisions in any agreement to mediate for example in relation to a professional negligence claim, a claim for breach of contract or negligence, or in exceptional circumstances where it is in the interests of justice to do so. 

In Scotland, we recognize the concept of settlement negotiation privilege called “without prejudice privilege” although it does not have any formal legal definition in Scots law.  

Documents and correspondence are often noted as “without prejudice” (there is a particular formulation of wording usually inserted at the end of a letter or email).  The use of the words in any document acts as evidence of the spirit in which the communication was written.  However, for without prejudice privilege to apply, it is necessary to consider the content of the document rather than the context of the document.  In particular, without prejudice privilege in Scots law only applies to parts of any correspondence aimed at brokering an agreement.  Any unambiguous statements of fact, even if stated in a document marked “without prejudice”, may still be disclosable as statements not strictly related to the settlement negotiations may fall outside the protections.