Do Claimants Waive Privilege When Discussing The Case With Third-Party Funders?

Are Confidentiality and Common Interest Agreements sufficient to protect privilege when discussing arbitration claims with potential funders?

What is privilege?

Arbitration often obliges a party to disclose documents relevant to its case, whether helpful or not. Being able to establish privilege in a document allows a party to withhold such documents from production to a third-party, court or tribunal. If privilege is established, this will ensure that advice, such as the strengths and weaknesses of a case, between a lawyer and his client is kept confidential, allowing the management of the case to proceed most effectively.

The types of privilege that can be claimed under English law are:

Legal advice privilege: confidential communications between a lawyer and his client, which have come into being for the purpose of providing and receiving legal advice. Litigation privilege: communications between either a lawyer and his client or Common interest privilege: this applies to documents which are otherwise privileged and are shared between parties who have a 'common interest'. Whilst disclosure of a privileged document to a third-party would ordinarily lead to the privilege being waived, by demonstrating a common interest, the privilege remains. Maintaining privilege over documents provided to / created by third-party funders

Claimants do not necessarily waive privilege when discussing a case with a third-party funder. Firstly, for privilege to be claimed the evidence in question must be confidential.

However, disclosure of documents to a third-party i.e. a third-party funder, may lead to confidentiality being waived. It is therefore important that any documents provided to a funder are given on the explicit basis that the funder will keep all documents confidential; this can be done by way of a confidentiality and common interest agreement (see below).

A third-party funder is introduced into the relationship between a lawyer and a client for the purposes of furthering the possibility of litigation or arbitration normally at the due diligence phase before proceedings have been formally commenced to consider the merits and costs of legal action.

There are two types of documents a third-party funder will have access to:

lawyer to client communications - these relate to the potential action and are created by the parties' for the purposes of their own due diligence of the litigation / arbitration. These are then shared with third-party funders...