Client-facing outputs and risk - Confidentiality and without...

Learning Outcomes

This article explains confidentiality, legal professional privilege, and the correct use of 'without prejudice' and other labels in client-facing outputs, including:

• the scope and limits of a solicitor’s duty of confidentiality, typical exceptions, and practical safeguards in day‑to‑day practice (letters, emails, calls, remote meetings)
• the distinction between confidentiality and legal professional privilege and the circumstances in which legal advice privilege or litigation privilege applies, including dominant purpose and reasonable contemplation of litigation
• application of the without prejudice rule to negotiations (including ‘without prejudice save as to costs’) and recognition of the main exceptions (for example, unambiguous impropriety)
• identification of how privilege can be waived (expressly, by conduct, or through collateral waiver) and how to avoid inadvertent waiver in client‑facing outputs
• drafting clear, risk‑aware correspondence using appropriate labelling (‘confidential’, ‘legally privileged’, ‘without prejudice’, ‘without prejudice save as to costs’, ‘subject to contract’) and knowing when each applies
• managing common risks such as mislabelling or over‑labelling, mixed open/WP content, multi‑addressee emails, forwarding and attachments, and inadvertent disclosure
• advising clients on the strategic use of offers and negotiation labels and the costs implications of ‘save as to costs’ communications

SQE2 Syllabus

For SQE2, you are required to understand the professional obligations surrounding confidentiality and legal privilege and the function of without prejudice communications in legal practice, with a focus on the following syllabus points:

• the core requirements of confidentiality and privilege in client communications
• the practical use and correct application of 'without prejudice' labelling
• risks arising from incorrect or unclear use of labelling and common pitfalls
• how to draft and advise on correspondence to ensure client protection is maintained

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the difference between a confidential and a privileged document?
2. When should you mark correspondence as 'without prejudice'?
3. If a solicitor mistakenly labels a letter as 'without prejudice' when it contains no settlement offer, does the label apply?
4. True or false: Legal advice privilege always applies to written advice given to a client by a solicitor.

Introduction

Solicitors routinely produce documents for clients and correspond with third parties. You must understand how obligations of confidentiality and legal privilege operate when providing client-facing outputs, and know when and how to apply the 'without prejudice' label to negotiations. Errors in these areas can result in the inadvertent waiver of privilege, loss of client protection, or increased risk of evidence being used against a client. This article covers the essential legal concepts, correct procedures, and risk management techniques you must know for SQE2.

Key Term: confidentiality
A solicitor's professional duty not to disclose information about a client or their affairs to others without the client’s authorisation, except where permitted or required by law.

Key Term: privilege
A legal protection allowing certain communications (such as between solicitors and their clients) to be withheld from production in legal proceedings.

Key Term: without prejudice
A phrase indicating that a document or communication is made in an attempt to settle a dispute and cannot generally be disclosed in court without both parties' consent.

Key Term: legal advice privilege
A subset of privilege protecting confidential communications between a client and their legal adviser for the purpose of obtaining legal advice.

Key Term: litigation privilege
A subset of privilege applying to confidential communications created for the dominant purpose of conducting or advising on actual or reasonably anticipated litigation.

Client Confidentiality and Legal Privilege

Professional Duty of Confidentiality

Solicitors have a strict duty to keep information relating to clients and their matters confidential. This applies to all information provided by the client or created in the course of acting for them. The duty extends beyond the end of the retainer and covers all individuals in the firm. Confidentiality obligations also apply at initial contact stage even if a formal retainer is not taken on.

Breaches of confidentiality can result in disciplinary action. However, there are limited exceptions—such as client consent (express or properly implied for the conduct of the retainer), legal compulsion (e.g. court order), or where the law requires disclosure (e.g. anti-money laundering reporting obligations). Where disclosure is required, disclose only what is necessary and document the basis for doing so.

In practice:

• guard against accidental disclosure (misaddressed emails, wrong attachments, overheard conversations, unlocked screens, shared printers)
• use firm systems to restrict access on a “need‑to‑know” basis and maintain adequate information barriers where appropriate
• consider encryption or secure portals for strictly confidential materials and sensitive personal data sent by email

Key Term: confidentiality
A solicitor's professional duty not to disclose information about a client or their affairs to others without the client’s authorisation, except where permitted or required by law.

Legal Advice and Litigation Privilege

Certain communications or documents may attract legal privilege. Privilege enables clients to refuse disclosure of protected documents in legal proceedings and, unlike confidentiality, is a substantive right of the client that the court will uphold unless waived or an exception applies.

• Legal advice privilege covers confidential communications between client and solicitor for the purpose of seeking or receiving legal advice. In a corporate setting, consider carefully who constitutes “the client” for the purposes of privilege and avoid copying-in a wide internal audience unnecessarily.
• Litigation privilege covers confidential communications with third parties (e.g. experts, witnesses) made for the dominant purpose of actual or reasonably anticipated litigation. Litigation must be reasonably in contemplation; a mere possibility is insufficient.

Key Term: privilege
A legal protection allowing certain communications (such as between solicitors and their clients) to be withheld from production in legal proceedings.

Key Term: legal advice privilege
A subset of privilege protecting confidential communications between a client and their legal adviser for the purpose of obtaining legal advice.

Key Term: litigation privilege
A subset of privilege applying to confidential communications created for the dominant purpose of conducting or advising on actual or reasonably anticipated litigation.

Key Term: common interest privilege
A protection allowing parties with a common interest in the subject matter of a privileged communication or litigation to share privileged material without losing privilege as against third parties.

Privilege belongs to the client and can be waived—intentionally or accidentally—by the client. Waiver can be:

• express (e.g. deliberately disclosing advice)
• implied (e.g. relying on the gist of legal advice to justify conduct, or “cherry‑picking” helpful extracts)
• collateral (waiver over wider related material where fairness requires context)

Careless reference to privileged content in open correspondence can result in waiver. Avoid mixing privileged content with non‑privileged business messages. With multi‑addressee emails (e.g. client and non‑lawyer recipients), consider sending separate communications: one seeking legal advice (labelled and confined to that purpose) and another on operational matters.

Consider creating and maintaining a privilege log during disclosure exercises in litigation to record the basis on which documents are withheld.

'Without Prejudice' Communications

Communications made in a genuine attempt to settle an existing dispute may attract the 'without prejudice' (WP) rule. This rule protects those communications from disclosure in most court proceedings about the dispute, encouraging parties to negotiate freely. Content and context are more important than the label, but the label provides practical clarity.

Key Term: without prejudice
A phrase indicating that a document or communication is made in an attempt to settle a dispute and cannot generally be disclosed in court without both parties' consent.

The WP rule generally requires:

• a real dispute on foot
• a genuine attempt to compromise the dispute
• a communication made for that purpose

Common exceptions include:

• unambiguous impropriety (e.g. blackmail, perjury)
• misrepresentation, fraud or undue influence (to set aside a settlement)
• interpreting, rectifying or enforcing a concluded settlement agreement
• communications “without prejudice save as to costs” at the conclusion of proceedings for costs purposes

Key Term: without prejudice save as to costs
A form of WP communication that remains privileged until the question of costs arises, at which point it can be shown to the court on costs only.

Do not assume that marking a document ‘without prejudice’ will cloak routine correspondence with protection. Conversely, a failure to mark settlement communications as WP does not automatically destroy the protection if the substance meets the test, but labelling helps avoid disputes and limits the risk of misuse.

When to Use 'Without Prejudice' and 'Confidential'

• Use 'without prejudice' when a letter, email or conversation contains a genuine offer of settlement or elements of settlement negotiation. Where you intend to rely on costs consequences of an offer (outside Part 36), consider ‘without prejudice save as to costs’ so it can be shown to the court on costs only.
• Use 'confidential' for internal memoranda, draft client documents, or lawyer-client communications that should not be shared externally. If privileged, state ‘confidential and legally privileged’ to clarify the basis.

Avoid mixing open material (e.g. factual updates) with WP proposals in the same document. Send separate communications: one open, one WP. Similarly, keep privileged legal advice separate from commercial updates sent to non‑lawyers.

Key Term: subject to contract
A label indicating that no binding contract is intended to arise until a formal agreement is executed; used to preserve negotiating positions without creating legal relations inadvertently.

Incorrect labelling can lead to loss of privilege, misunderstandings, or client complaints. Over‑labelling (e.g. marking everything WP or privileged) can dilute credibility and obscure which protections truly apply. Under‑labelling increases the risk that sensitive communications are admitted into evidence or that privilege arguments are undermined.

Worked Example 1.1

A solicitor sends a letter to the opposing party marked 'without prejudice', putting forward an offer to settle an ongoing contractual dispute. During trial, the opponent tries to include this letter as evidence of an admission of liability. Can it be admitted?

Answer:
No—the content of a genuine settlement offer, labelled 'without prejudice', cannot generally be disclosed or used as evidence of liability, unless both parties agree or an exception applies.

Worked Example 1.2

A solicitor, without considering the content, marks all outgoing correspondence as 'without prejudice', including routine status updates containing no settlement offers. The matter proceeds to trial. Is the routine update protected from disclosure in court?

Answer:
No—the mere use of the 'without prejudice' label is not decisive. The court will look at substance over form. Unless the correspondence genuinely relates to settlement, it can be admitted.

Worked Example 1.3

You email the client’s project team (operations, finance and in‑house lawyer) about a regulator’s letter. You ask for “thoughts,” add legal analysis on potential exposure, and propose commercial steps. The email is labelled “Privileged and Confidential.” Is the whole email privileged?

Answer:
Not necessarily. Legal advice privilege protects communications for the dominant purpose of obtaining legal advice between client and lawyer. Where an email combines legal advice with business input for a wide audience, only the legal advice parts may be privileged. Best practice is to separate: send one email to the designated client team seeking or giving legal advice (clearly labelled) and a separate operational email to others.

Worked Example 1.4

You send an offer letter labelled “Without Prejudice Save as to Costs” making a realistic proposal to settle. The other side rejects it and you later win at trial. Can you rely on that letter?

Answer:
The letter remains privileged until the court decides costs. At that stage, it may be shown to the court to support a favourable costs order by demonstrating a reasonable settlement stance. Use the ‘save as to costs’ label carefully and consistently to preserve the admissibility limitation.

Worked Example 1.5

Your client discloses in an open witness statement that they “acted at all times on legal advice” to justify a decision under challenge. The opponent seeks disclosure of the advice in question. Can they compel it?

Answer:
There is a real risk of collateral waiver: by putting the effect of the advice in issue, the client may be taken to have waived privilege over the advice to the extent fairness requires. Avoid such “gist” references in open documents unless the client is prepared for the potential scope of waiver.

Exam Warning

The courts may disregard incorrect labels. Labelling correspondence inaccurately as 'without prejudice' does not guarantee privilege or protection. Always consider the content, context, and purpose before applying labels.

Risks with Client Outputs and Document Labelling

Common risks arise at the point of creation and transmission of documents, especially in fast‑moving matters and email-heavy exchanges:

• Misleading or inconsistent use of 'without prejudice', 'without prejudice save as to costs', 'confidential', 'legally privileged' or 'subject to contract' can waive protections or create confusion about admissibility and binding intent.
• Failing to label a settlement communication can expose a client if the other party seeks to admit it in court. Conversely, overuse of labels undermines credibility and may not be upheld.
• Mixing open content (e.g. factual narratives, updates) with WP proposals in a single document risks the whole being treated as open. Separate the communications.
• Partial or “gist” disclosure of legal advice in open materials can trigger collateral waiver extending to the advice and related documents where fairness so requires.
• Multi‑addressee emails (client, external consultants, non‑lawyer team members) risk destroying privilege for large parts of the message. Keep the legal advice channel narrow and purpose‑specific; circulate non‑privileged content separately.
• Inadvertent disclosure (wrong recipient, wrong attachment, embedded tracked changes, auto‑complete errors) creates immediate privilege and confidentiality risks. Have a rapid response protocol: notify, request return/deletion, and record the incident.
• Forwarding or quoting from privileged or WP communications into open emails or to third parties may waive protections; avoid onward sharing without advice and client consent.
• Using unsecure channels for highly sensitive information increases risk of interception or unauthorised access; use encryption or secure portals for strictly confidential client material.
• Assuming an email disclaimer creates privilege or makes correspondence WP is a mistake. Only the legal criteria and the substance of the communication determine protection.

Practical drafting and labelling guidance:

• For legal advice: use “Confidential and Legally Privileged—Legal Advice” and restrict recipients to the defined client team. Keep the purpose clear and focused on legal advice.
• For settlement: use “Without Prejudice” or “Without Prejudice Save as to Costs.” Keep settlement content separate from open correspondence.
• For negotiations where no binding deal is intended: add “Subject to Contract” in line with the parties’ intentions.
• For litigation preparation or expert instructions: if litigation is reasonably contemplated and the dominant purpose is litigation, label as “Confidential and Privileged—Litigation Privilege.”

Where privileged material must be shared with another party who shares the client’s interest (e.g. a co‑defendant or insurer), consider documenting the basis for common interest privilege and limit onward disclosure.

Revision Tip

Before sending any client-facing output, check whether the content is confidential, privileged, or relates to settlement. Apply the correct label only where appropriate, and keep a clear record for the file. Prefer separate communications for open, privileged, and WP content. Use clear subject lines and consistent labelling to avoid confusion.

Additional Practical Points for Everyday Practice

• Emails: keep them short, purposeful, and accurately labelled. Avoid “reply all” where privilege is at stake. Double‑check recipients and attachments. Consider whether a letter or secure portal upload is safer for strictly confidential content.
• Notes and attendance records: mark privileged legal analysis as such and keep separate from purely administrative notes. Record the purpose (e.g. “for the dominant purpose of litigation”).
• Experts and third parties: if litigation privilege does not apply, understand that sharing privileged advice with third parties can waive privilege. Use written agreements and control distribution, but remember agreements cannot create privilege where the legal test is unmet.
• Mediation: mediation communications are usually treated as WP; use the label consistently and agree a mediation confidentiality protocol in advance.
• Offers: consider whether to use formal Part 36 offers (civil) or Calderbank offers (‘without prejudice save as to costs’) depending on strategy. Ensure offer letters are self‑contained and clearly labelled.
• In-house counsel: legal advice privilege applies to legal advice given by qualified lawyers acting in their legal capacity. Mixed communications involving business advice should be carefully structured to preserve privilege where appropriate.

Key Point Checklist

This article has covered the following key knowledge points:

• The professional duty of confidentiality is strict, with limited exceptions; manage human and system risks to prevent accidental disclosure.
• Legal privilege protects certain communications and documents from compulsory disclosure; keep legal advice and litigation material separate and purpose‑specific.
• Correct use of 'without prejudice' and ‘without prejudice save as to costs’ labelling is essential for settlement discussions and later costs arguments.
• The label itself does not confer protection; substance is decisive. Avoid over‑labelling and mixing open/WP/privileged content in the same document.
• Privilege can be waived expressly or by conduct (including putting legal advice in issue or partial disclosure). Manage multi‑addressee emails and forwarding risks.
• Use ‘subject to contract’ to avoid unintended legal relations in negotiations; it is distinct from WP.
• Robust processes (separate channels, clear labels, access controls, encryption for strictly confidential material) materially reduce client and firm risk.

Key Terms and Concepts

• confidentiality
• privilege
• legal advice privilege
• litigation privilege
• common interest privilege
• without prejudice
• without prejudice save as to costs
• subject to contract