Do your lawyers know who they are acting for? Court finds lawyer was jointly retained to represent parties in a commercial transaction
What you need to know
- The existence of a lawyer/client retainer is determined objectively. In the absence of a written retainer agreement, the Court will look to other circumstances, including the parties' communications and conduct, to determine the existence and scope of the retainer. A lawyer's subjective understanding of the scope of their retainer is generally not relevant.
- In WIJOAV Services Pty Ltd v Goldstone Private Equity Pty Ltd (No 7) [2026] FCA 423, the Federal Court of Australia found that a lawyer was jointly retained to represent two clients in a commercial transaction. The lawyer opened the matter in the name of the first client only, and gave evidence that he was only acting for the first client. There was no written retainer agreement.
- The Court disagreed. It found that the contemporaneous written communications demonstrated the lawyer had been jointly retained by the first and second client. The Court also found the lawyer's recollection or understanding could not be regarded as objectively correct in light of those communications.
- As a result, the first client could not maintain a claim of legal professional privilege against the second client over documents relating to the joint retainer. The law firm was required to produce its entire legal file for the retainer to the second client.
What you need to do
- Be aware that joint clients will not be able to claim legal professional privilege against each other, including in any subsequent dispute. Unexpected loss of privilege in the event of a dispute may reveal strategy, result in satellite disputes, and provide forensic ammunition that could damage the prospects of your case.
- If your lawyer will be acting on the instructions of another party, consider whether the other party could also be regarded as your lawyer's client. This will depend on the circumstances. Remember that courts will look to substance over form.
- Remember if your lawyer is also acting for the other party, you can only keep your communications with the lawyer confidential from the other party in limited circumstances. Consider whether the other party should engage a separate lawyer.
WIJOAV Services Pty Ltd v Goldstone Private Equity Pty Ltd (No 7) [2026] FCA 423
Summary
- A recent decision of the Federal Court of Australia provides a timely reminder of the fundamental principles governing legal retainer agreements. The existence of a legal retainer, like any contract, is determined objectively. Its existence and terms do not depend on the subjective understanding of the lawyer or client.
- A legal retainer may, but does not need to be, reduced to writing. Where a legal retainer has not been reduced to writing, the Court will look to the other circumstances (including the communications between the parties and other conduct) to determine the fact of the retainer and its subject matter and scope.
- The Court found that because a legal retainer may be proved by objective evidence, it is not necessary for a party to lead evidence of their subjective understanding of the terms, subject matter or scope of the retainer. In this regard, there is an important distinction between proving the existence of a legal retainer, and proving a claim for legal professional privilege. In privilege claims, parties can, and often do, lead evidence of their subjective purpose in making particular communications in order to establish the communications were made for the dominant purpose of obtaining legal advice.
- The Court confirmed that parties who jointly retain a lawyer cannot maintain claims for legal professional privilege against each other in relation to the subject matter of the retainer. This means that if there is subsequently a dispute between joint clients in relation to the subject matter of the retainer, they cannot "shield" joint legal advice from one another. However, joint clients can still claim privilege over joint legal advice against third parties.
Background
The Plaintiff and Defendant agreed to establish a private equity fund using a "venture capital limited partnership" structure. A law firm was engaged to advise on the establishment of the fund and prepare the fund's constituent documents. Following establishment, a dispute arose about control of the fund. In the ensuing litigation, the Federal Court ordered (among other things) that the Plaintiff transfer her "partnership interest" to the Defendant at a price to be determined by the Court.
The Defendant (and his co-defendant company) issued a subpoena to the law firm for production of its legal file for the fund's establishment. The law firm and a company controlled by the Plaintiff resisted production on the basis that the legal file was subject to a claim of legal professional privilege by the company. The Plaintiff's company claimed that it had solely engaged the law firm to represent its interests in relation to the fund.
The Defendant argued that he had engaged the law firm – either solely, or jointly with the Plaintiff's company – and, accordingly, the Plaintiff's company could not maintain a claim of legal professional privilege against him. The Plaintiff's company argued the Defendant had only been involved in communications with the law firm for transparency because he was the "cornerstone investor", but that he was never the law firm's client.
Accordingly, the question for the Court was whether the Defendant had engaged the law firm and, if so, whether he had done so jointly with the Plaintiff's company.
The existence of a retainer is an objective question
The Court observed the existence of a retainer – including an implied retainer – is determined by inference from objective facts, not by the lawyer's belief as to which clients he or she was acting for. It cited with approval the statement in Dal Pont’s Lawyers’ Professional Responsibility (cited in Watson v Ebsworth & Ebsworth (a firm) (2010) 31 VR 123 and Salmon v Albarran (2023) 414 ALR 36) that "[p]roof of an implied retainer rests on proof of facts and circumstances sufficient to establish a tacit agreement to provide legal services. Its existence is determined by inference from objective facts, not merely by the lawyer’s belief as to which clients he or she was acting for."
The Court also relied on observations in Pegrum v Fatharly (1996) 14 WAR 92 that where both parties to a transaction consult the same solicitor and together provide the information needed to prepare the relevant documents, and the solicitor accepts the responsibility without any indication that they cannot fully discharge their professional duties to both, there is a strong bias towards finding that the solicitor tacitly agrees to act for both parties.
The evidence
The Plaintiff and the lawyer acting at the law firm gave evidence in support of the company's privilege claim. The Plaintiff's evidence included that she called the lawyer to seek to engage the law firm on behalf of her company, and the Defendant was included on communications as a matter of transparency because he was the cornerstone investor. The lawyer's evidence included that he considered the Plaintiff's company was his client, and that he included the Defendant in some communications because the Plaintiff had requested this as the Defendant was to be the cornerstone investor.
In contrast, the Defendant relied solely on contemporaneous written communications between the parties relating to the transaction. The Defendant did not give evidence of his understanding of the retainer.
Contemporaneous documents prevailed over witness recollections
The Court undertook a detailed review of the contemporaneous communications and found they showed the recollection or understanding of the Plaintiff and the lawyer could not be regarded as objectively correct. The Court found these communications showed that the Plaintiff and Defendant had jointly selected the law firm, jointly agreed to the retainer, jointly discussed payment of legal fees, and jointly provided instructions to the responsible lawyer throughout the establishment of the fund. The lawyer communicated with and provided advice to both of them.
Importantly, the Court found that contemporaneous written communication had to be "regarded as providing a more reliable guide to events than the high-level recollections of witnesses some years later". Instructively, neither the lawyer's own identification of the Plaintiff's company on his file, nor the sworn evidence of both the lawyer and the Plaintiff, was sufficient to displace the inferences drawn by the Court from the documentary evidence.
Does a party claiming privilege need to give direct testimonial evidence?
The Plaintiff's company argued that the absence of affidavit evidence from the Defendant was fatal to any claim that the Defendant held joint privilege in the document.
The Court rejected this argument for several reasons.
First, as noted above, the Defendant could prove there was a joint retainer by objective evidence. The existence of a retainer did not depend on the subjective purpose for which those communications were made.
Second, the Plaintiff gave evidence that the communications with the law firm were made for the dominant purpose of obtaining legal advice. The Court was satisfied, based on the Plaintiff's evidence and the documents themselves, that they were made for the dominant purpose of both clients obtaining legal advice. It was not necessary for the Defendant to also give testimonial evidence that his purpose was to obtain legal advice.
In other words, once the Defendant established that he was a joint client of the law firm, it followed that the privileged communications with the law firm were held jointly by the Plaintiff's company and the Defendant.
Practical implications
The case has several important lessons for clients who want their lawyers to deal with stakeholders beyond their immediate client.
Where multiple parties are involved in a transaction and consult the same lawyer, there is a real risk that a joint retainer could be implied from the circumstances – even if the lawyer does not intend or appreciate this.
If a lawyer does not intend to act for a particular person, the authorities indicate the lawyer should actively take steps to dissuade that person from a belief that the lawyer acts for them. It is worth recalling the general contractual principle that the uncommunicated subjective intentions of one party are generally not relevant in establishing the existence or terms of a contract.
If a lawyer acts for multiple clients in relation to the same or related matters (or is found to have been doing so), the joint clients will not be able to claim privilege against each other in relation to the engagement. This can have important consequences if, for example, there is subsequently a dispute between the joint clients relating to the matter.
Where a lawyer acts for multiple clients on the same or related matters and receives confidential information of one client that is material to the interests of another client, the lawyer must not continue to act unless:
- each client consents to the lawyer using the information for the benefit of the other client; or
- with each client's consent, the law firm establishes and maintains an effective information barrier to protect the confidential information of each client.
See Australian Solicitors' Conduct Rules, rule 11.4.
Accordingly, your lawyer may need to share your confidential information with any other client for whom they act in the same or a related matter. Alternatively, your lawyer may need to cease acting for the other client.
Other authors: Elizabeth Hewish, Graduate
