Privilege: the key developments from 2025

Legal professional privilege was described by Lord Taylor as "a fundamental condition on which the administration of justice as a whole rests". In the past year, the courts of England and Wales have continued to safeguard this right, which enables a party to seek confidential legal advice without having to disclose it.

The scope of the protection provided by privilege continues to be a complex area, with each case turning on its own facts, and the courts are often called upon to resolve the most challenging privilege issues.

This briefing rounds up the most important privilege decisions from the last year and highlights the practical lessons you should be aware of.

Companies can assert privilege against shareholders

The Privy Council has confirmed the abolition of the long-standing 'Shareholder Rule', which previously prevented a company in the course of litigation against its shareholders, from withholding documents from them on the basis of legal advice privilege (Jardine Strategic Ltd v Oasis Investments II Master Fund Ltd & Ors No 2 (Bermuda) [2025] UKPC 34 (1)). This was already the direction of travel following the High Court's judgment in Aabar Holdings in November 2024. The Jardine decision is directly binding on the English courts and effectively carries the authority of a Supreme Court decision.

The removal of the Shareholder Rule means company directors may now obtain candid legal advice on contentious corporate actions with much greater confidence that it will remain privileged. The decision removes a key disclosure weapon from the arsenal of activist and dissenting shareholders and strengthens the protection provided by privilege to companies.

For further consideration of the judgment in Jardine, please see our article here.

How does privilege protect documents created for litigation?

During litigation, it is often straightforward to identify documents that are protected by legal advice privilege (ie documents containing or referring to confidential legal advice). It can be harder to identify documents protected by litigation privilege (ie confidential communications created for the dominant purpose of litigation). Clients and practitioners will be reassured by the courts' recent application of a commercial, common-sense approach to litigation privilege.

In Krishna Holdco Ltd v Gowrie Holdings Ltd [2025] EWHC 341 (Ch) (29 January 2025), the court examined whether a company valuation report would attract litigation privilege. Usually, a report exploring the sale of a company would not be expected to be privileged. However, in this case, the report had been obtained by one of the parties to inform its position in a dispute between joint shareholders in the company. The court determined that the report had been obtained for the sole or dominant purpose of allowing the party to respond in a practical way on one of the key issues in the dispute. As such, it was protected by litigation privilege.

The court confirmed that it was the party that had commissioned the report that was entitled to assert privilege over it – a factor that is typically relevant, as it is usually that person whose interests the privilege is intended to protect.

The court also observed that both counsel and solicitors had reached the view that privilege applied, underscoring the practical value of obtaining external legal advice.

Can a party refer to legal advice in a witness statement without waiving privilege?

The courts have continued to be relatively cautious about determining that privilege has been waived. A reference to the fact that legal advice has been taken is unlikely to amount to a waiver at all, although if a witness statement makes assertions on the basis of the advice received (even without stating explicitly what the advice was), there is a risk of waiver.

Where the court determines that privilege has been waived, it can place limits on the scope of the waiver. For instance, in Aslani v Sobierajska [2025] EWCA Civ 391, in contempt of court proceedings, the Court of Appeal upheld a finding of waiver but directed that the privileged material could only be used at the sentencing stage after liability had been determined.

Can a party rely on inadvertently disclosed privileged documents?

In certain circumstances, the court may permit an opposing party to rely on inadvertently disclosed privileged documents. In The New Lottery Company Ltd v The Gambling Commission [2025] EWHC 1058 (TCC), the court granted permission for the recipient to use a category of privileged documents which had been inadvertently disclosed during the disclosure exercise. However, the court will generally not allow reliance on privileged documents if the recipient knew, or it would have been obvious to a reasonable person in their position, that the documents had been disclosed by mistake.

The court will be much more reluctant to allow the use of documents that may have been illicitly obtained. In a situation where a solicitor obtains privileged documents known or suspected to have been illicitly obtained without the consent of the other side, they have a duty to ensure that the documents are returned to the party to whom they belong. This point was confirmed by the Court of Appeal in The Federal Republic of Nigeria v Process and Industrial Developments Ltd [2025] EWCA Civ 715.

Does the without prejudice rule apply to third-party communications?

Though not strictly speaking a form of legal professional privilege, the 'without prejudice' (WP) rule prevents the parties from disclosing to the court statements made in a genuine attempt to settle an existing dispute. Generally, this rule applies only to communications between the parties to a dispute and not to third-party communications or documents.

In two judgments in 2025, the court determined that expert reports commissioned as a result of WP negotiations were not protected by WP privilege (BNP Paribas Depositary Services v Briggs & Forrester Engineering Services [2024] EWHC 2575 and Mornington 2000 v Secretary of State for Health and Social Care [2025] EWHC 540). In both cases, the party asserting WP privilege relied on a little-known 1954 Court of Appeal decision (Rabin v Mendoza & Co [1954] 1 WLR 271), in which the court found that WP privilege applied to a surveyor's report commissioned as a result of an agreement to seek a report during WP negotiations. However, in each of these two decisions this year, the court found that the report in question was not protected by WP privilege.

The court will be reluctant to extend WP privilege to a report merely on the basis that WP negotiations mention the commissioning of a report. In order to ensure protection, the parties should reach an explicit agreement that any report will be WP.

It is worth noting that these are the first cases to have invoked Rabin in more than 70 years, and we may see its principles developed further in future cases.

Other applications of the without prejudice rule

Singh v Bains & Anor [2025] EWHC 141 (Ch) served as a reminder that there must be objective evidence of a dispute between the parties for WP privilege to apply. The court will question whether, in the course of negotiations, the parties contemplated (or might reasonably have contemplated) resorting to litigation if no agreement was reached. In Singh, the court held that although the parties had discussed asset division, there was no mention of a dispute or anticipated proceedings. Litigation was not reasonably contemplated by either party, and the email exchange reflected negotiations rather than settlement of a dispute. Accordingly, the emails were not protected by WP privilege.

The iniquity exception will not apply on a blanket basis

The iniquity exception provides that a party cannot benefit from the protection of privilege to avoid disclosing documents that are created in furtherance of, or as part of, a crime or other iniquity. The judgment in Foundation Stimm v King & Spalding International LLP and Anor [2025] EWHC 1067 (Ch) was a rare reported judgment about a successful application for disclosure on the basis of this exception.

The court emphasised that, in order for the exception to apply, the iniquity must involve abuse of the lawyer-client relationship, though the legal advisor need not be aware of the iniquity. In this case, the court found that there had been multiple iniquities that engaged the iniquity exception and therefore the claimant was entitled to inspect various categories of documents relating to a particular transaction which would ordinarily have been privileged. However, it did not follow that none of the defendant's documents relating to that transaction were privileged. Each document must be reviewed on an individual basis to determine whether it is sufficiently connected to the alleged iniquity and whether it actually involves an abuse of the lawyer-client relationship. Any application for disclosure on the basis of the iniquity principle must be specific and supported by sufficient evidence.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, January 2026