Hacking*: Is Litigation Funding Compromising the Lawyer Client Relationship?

There’s a very interesting story from Roy Greenslade on the Guardian about journalists arrested in the ongoing hacking investigations. If his informants are right then there is a serious risk that News International funding of employee defences is compromising the administration of justice in these cases.

He reports that some of the journalists,

“would like to help Scotland Yard police who are investigating the alleged paying of public officials but feel constrained from doing so because of the unique situation in which they find themselves.

“They say they have refused to answer questions because they fear News International might react by refusing to go on paying their wages and also by cutting off the funding for the lawyers hired to act for them.

The implication appears to be that the journalists might incriminate more senior executives within the Company but for the risk to their jobs and to their legal funding.

The more serious insinuation from the point of view of this blog is that advice to remain silent may be influenced by who is funding the advice, though the words of the informants do not appear to actually make that allegation:

“One of them said: “I do trust my lawyer, and I understand that it’s normal practice not to answer questions. On the other hand, I don’t see why I should be in this position when other people in the office knew all about the money I paid and why I paid it.

…The second person, speaking separately and unaware of the other source’s statement, also said he accepted legal advice not to answer questions.

He said he did not believe his lawyer had a conflict of interest and accepted his advice. Nevertheless, he is anxious to give his side of the story and is aware that this would involve the naming of names.

The informants concerns are influenced by the absence of police offers of immunity deals. According to the story, police have not so far made an offer of immunity from prosecution should the journalists speak out. This was confirmed by the other journalist. Hopes that the police might offer a deal were crushed when an officer told him that he did not expect that to happen.

He said: “Consider how weird our situation is. The evidence against us that led to our arrests and possible prosecution was provided by News International through its management and standards committee (MSC).

An interesting question not answered by the story if whether the employees understand the adverse inferences that can be drawn from their silence should they run defences which have not been mentioned in interviews. A lot will depend, I would guess, on the extent to which the lawyers think their clients have meaningful defences and the extent to which the police have sufficient evidence to mount a case against the individual journalists. Both issues would affect whether it is wise to remain silent in an interview.

Under the solicitors code of conduct those giving advice to the journalists are obliged not to let their independence be compromised. That there is a risk of compromise is clear; but there are two possibilities – News International is behaving as a good employer standing by their employees or it is covering its own back. It would be interesting to know the extent to which clients have made their lawyers aware of their concerns and how the lawyers have responded to those. If they are not aware, the funding of their client defences operates as a barrier to their ability to take proper instructions.

This may well be through no fault of their own. They will owe their clients not News International duties of loyalty and confidentiality. Are such duties being implemented clearly enough and persuasively enough to encourage the proper level of trust between lawyers and clients? The implication of the story is that the lawyers are doing fine. There is a somewhat laboured emphasis that, “Neither journalist was in the least critical of their legal advisers. They understand that a lawyer’s responsibility is to represent the client (and not the paymaster).” And yet the implication appears to be that the funding arrangements have compromised the lawyer client relationship.

The issue of whether such funding should be permitted needs some thought and scrutiny.

* I am grateful to Neil Wallis for pointing out that the cases under scrutiny are probably operation Elvedon cases about payments to public officials not cases where hacking is being investigated.

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