Lawyers, confidentiality and whistleblowing: lessons from the McCabe tobacco litigation.

Author:Parker, Christine

CONTENTS I Introduction II The McCabe Case Leak III The Significance of Whistleblowing A The Ethical and Regulatory Significance of Whistleblowing B Lawyers as Whistleblowers C Lawyer Whistleblowing and Gatekeeper of Justice Obligations IV Relationship A In-House and External Lawyers Vis-a-Vis Their Own Client B Lawyers Vis-a-Vis Within-Firm Colleagues and the Clients of Colleagues C Lawyers Vis-a-Vis Third Parties D Lawyers in Personal Capacity E Availability of Whistleblower Protections for Lawyers V Wrongdoing A What Type of Organisational Wrongdoing Can Be Disclosed by Lawyer Whistleblowers? B Need to Reform Professional Conduct Rules to Recognise a Gatekeeper of Justice Whistleblowing Exception C Availability of the Iniquity Rule Exception to Equitable Obligations of Confidentiality Already Supports Gatekeeper of Justice Whistleblowing D Availability of Public Policy Defence to Breach of Contractual Obligation of Confidence Already Supports Gatekeeper of Justice Whistleblowing E Crime-Fraud Exception to Privilege Already Supports Gatekeeper of Justice Whistleblowing F Need to Extend Legislative Whistleblowing Protections to Cover Lawyer Gatekeeper of Justice Whistleblowing VI The Process A Evidence: Judgement and Accuracy in Dissent B Last Resort: Exploration of Alternative Possibilities for Prevention C Fairness of Accusation VII Conclusion VIII Appendix: Timeline I INTRODUCTION

It's quite plain there's a great sense of miscarriage of justice in the McCabe camp and I might say some basis to reopen the matter. So what do you do? Do you just sit on that? Do you just ignore it all? It would have been a lot easier for me if I'd just remained quiet about this. It's moved way beyond any sense of pay back or revenge. I was motivated by my conscience--I could not sit idly by. (Christopher Dale) (1)

Readers of The Sunday Age on 29 October 2006 could hardly have missed the 'exclusive' with the headline: 'Exposed: Dirty Tricks behind Top Lawyers' Plot to Deny Justice to Cancer Victims'. (2) A follow-up headline was also attention-grabbing: 'Justice Denied: How Lawyers Set Out to Defeat a Dying Woman' (3) The articles detailed the outcome of an internal Clayton Utz investigation highly critical of two senior lawyers in that firm who had represented the British American Tobacco Company Services Limited ('BATAS') in litigation. Documents relating to the investigation had been leaked by an unnamed source. The case in question was a lawsuit brought by Rolah McCabe, who was suffering through the final stages of smoking-related cancer. The source of the newspaper stories was ultimately revealed to be Christopher Dale, formerly a partner with Clayton Utz. Dale had helped to conduct the internal review. (4)

Dale's leak raised the question of whether lawyer whistleblowing to protect the administration of justice is, or should be, permissible. There has, however, been no authoritative resolution of the legal and ethical appropriateness of Dale's whistleblowing. This article argues that it is appropriate for lawyers to whistleblow when the administration of justice is under threat, and that regulatory changes to facilitate this process are warranted.

Part II of this article briefly summarises the facts of Dale's leak (5) and its significance for the administration of justice. In Part III, we explain the ethical and regulatory significance of whistleblowing, its characteristics, and the issues it raises for lawyers specifically. We argue that lawyers are justified, and indeed obligated, in whistleblowing where they have information about clients or other lawyers using legal services to subvert the administration of justice. We contend that whistleblowing should be permitted in circumstances where courts or regulatory authorities would refuse to uphold client legal privilege due to conduct that would fall into the fraud exception. We go on to suggest, based on the literature on whistleblowing, that there are three relevant elements in considering the appropriateness of whistleblowing, and apply these to lawyer whistleblowing: the nature of the relationship between the lawyer and the wrongdoer; the nature of the wrongdoing itself; and the process that the lawyer whistleblower uses to address and ultimately disclose the wrongdoing. Parts IV, V and VI of the article consider each of these three key elements in turn using Dale's case to illustrate the legal, ethical and practical difficulties for lawyers considering whistleblowing to protect the administration of justice. On the basis of this analysis, we suggest changes to the professional conduct rules to allow and protect gatekeepers of justice whistleblowing.


It is now well known that tobacco products kill up to one half of all their users, around 6 million people per year. The harm is seriously compounded by the highly addictive nature of cigarette smoking and the fact that many users start young. (6) Serious global efforts are underway to restrict the marketing and sale of cigarettes, especially to children, to avoid others being exposed to second hand smoke and various other measures under the auspices of the World Health Organization Framework Convention on Tobacco Control, a treaty that has been signed by 180 parties representing 90 per cent of the world's population. (7)

Yet there is a long history of lawyers assisting tobacco companies to avoid public and legal scrutiny of their responsibility and culpability in relation to the marketing of cigarettes, their addictiveness and the associated harm. In the mid-1990s, it was revealed that tobacco companies in the United States of America ('USA') had, under direction from their lawyers, developed a concerted strategy to hide documents relating to the health dangers of smoking. (8) In Australia there is evidence that, as early as 1985, Clayton Utz established a database of scientific material that was intended to 'have documents stored offshore, again with the intention of putting them beyond reach for discovery' (9) Cameron argues that 'the Australian lawyers adjusted to the litigation culture already developed in the United Kingdom ('UK') and USA and firmly entrenched in the defendant's corporate strategy.' (10) In 2006 the New South Wales ('NSW') Dust Diseases Tribunal heard evidence from Mr Gulson, former Company Secretary and in-house solicitor for BATAS, and a whistleblower in his own right, that Clayton Utz was 'warehousing' 230 000 documents and claiming privilege over them. The copies had been given to Clayton Utz ostensibly for legal advice and the originals at BATAS destroyed. (11) Gulson also gave evidence that:

The Document Retention Policy, as written, required widespread destruction of documents, including the elimination of all scientific reports after a certain time period, but only at certain specified time periods and without regard to whether a document was helpful or harmful. The Document Retention Policy itself ... was specifically designed to destroy potentially dangerous documents --documents that could be used against the BAT Group in litigation. (12) The Tribunal found that BATAS's document retention policy met the meaning of fraud in the Evidence Act 1995 (NSW); therefore, legal professional privilege did not apply. (13) It ordered the release of thousands of documents (14) but the case settled before the release. (15) By July 2006, a judge of the US District of Columbia District Court had found that tobacco companies were attempting to 'defraud the public' by concealing the dangers of cigarette smoking, and that lawyers had played a central role in doing so. (16).

In the 2002 McCabe v British American Tobacco Australia Services Ltd ('McCabe') (17) litigation, it was claimed that BATAS marketed tobacco products to children and failed to take reasonable steps to reduce the risk to consumers. (18) Documentary evidence was clearly critical to support or undermine the claim that the company had access to scientific evidence, held knowledge of the health effects of tobacco products, and crafted marketing strategies to enlist child smokers and conceal the health consequences of smoking. (19) In support of a motion to strike out BATAS' defence, the plaintiff asserted that the defendant had 'followed a strategy designed to deny to any litigant access to documents to which the litigant would have been entitled and which would be of importance to the outcome of such proceedings.' (20) Eames J struck out BATAS' defence on the basis that the destruction of documentary evidence relevant to the claim had made a fair trial impossible. (21) Some eight months later, the Victorian Court of Appeal reversed the decision and remitted the case for trial. (22) The Court reversed a number of Eames J's findings and accepted the defence's contentions that the handling of the documentary evidence was within the bounds of appropriate document management despite the likelihood the documents would be relevant to inevitable future litigation. (23) The plaintiff, Rolah McCabe, died after the appeal was argued. (24)

Unsurprisingly, prior to the reversal, Eames J's decision made waves (25) and attention inevitably turned to the role of the lawyers. (26) Clayton Utz publicly announced a 'sweeping internal review' with the intention of identifying any conduct that did not meet the firm's ethical standards. (27) According to the Chief Executive Partner, David Fagan, this could lead to significant consequences, as 'you have got to adhere to those high standards to be a member of this firm'. (28) Christopher Dale, a partner at Clayton Utz, was charged with conducting the investigation. He had not been involved in the defence of BATAS in McCabe. (29) Soon after the review, Clayton Utz ceased its involvement in tobacco litigation, citing its small contribution to the firm's revenue and poor fit with its role providing strategic advice to government and corporate Australia. (30) One of the Clayton Utz...

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