Advice from claims consultants is not privileged

Parties involved in construction and engineering disputes,particularly contractors and subcontractors, are often advised and representedby claims consultants. There are many businesses operating in the UK andthroughout the world who provide claims consulting services. Some people inthese businesses are practising lawyers (solicitors or barristers), but manyare not. They may provide legal or commercial advice, but will not usually doso in the capacity of a solicitor or barrister.

The capacity in which a claims consultant acts issignificant insofar as legal privilege is concerned. Privileged communicationsare those between a solicitor or barrister and his or her client. The effect ofa communication being privileged is that it does not have to be disclosed to anopponent or to the court (or tribunal). This may be critically important to thesuccess of a party’s case, because if the legal advice it receives is capableof being disclosed and used in court, its opponent may be able to weaken thatparty’s case if the advice reveals perceived weaknesses in its legal position,or it gives away that party’s strategy and objectives.

In a recent TCC judgment, the court held that communicationsbetween a contractor and its claims consultant were not privileged. Thecommunications in question concerned legal and commercial advice relating to adispute over an extension of time / loss and expense claim for a project inLondon.

Commercial implications

The implications of this case are serious for parties whouse claims consultants and for claims consultants themselves. To ensure thatprivilege exists between a claims consultant and its client for commercial andlegal advice given, it will be necessary to ensure that the claims consultant,or a person in the claims consultant’s team giving the advice, is a practisingsolicitor or barrister. If this does not occur, privilege will not attach tothe communications, and they will therefore in principle be disclosable (unlesssome other head of privilege exists, which it may not).

Note, however, that the rules concerning legal privilege incommunications between clients and their non-legal advisors are under review,and a major case will be heard later this year by the Supreme Court on whethertax advice given by accountants attracts privilege. The result of this SupremeCourt case will almost certainly have implications for claims advice given bynon-lawyers to their construction clients.

Other issues associated with using claims consultants mayarise where:

The claims consultant purports to act in a dual role ofparty representative and expert witness. This is not permitted, as expertwitnesses are required to be independent of the parties, and not act as theiradvocates or representatives.

The claims consultant’s client is successful in the disputeresolution process and an award of costs is made in its favour. There may be anissue over whether, under the rules of the procedure in question, the claimsconsultant’s fees and expenses count as recoverable “costs”.

Claims consultants act on a contingency fee basis in courtor arbitration proceedings. A claims consultant who is a practising solicitoror barrister currently may not recover his or her fees as a proportion of anyamount awarded (that is, as a contingent fee), whereas a claims consultant whois not a practising lawyer may do so. This is likely to change next year, withthe implementation of the Jackson reforms (which will permit practisingsolicitors and barristers to act on a contingency fee basis).

Claims consultants certainly have a role to play inresolving construction and engineering disputes. But it must not be assumedthat engaging a claims consultant is no different to engaging a solicitor orbarrister. There are significant legal differences between the two, and caremust be taken to ensure that the client’s interests are protected when a claimsconsultant is used.

This article first appeared in Law-Now, CMS CameronMcKenna's free online information service, and has been reproduced with theirpermission. For more information about Law-Now, click here.