Reported at  UKHL 48.
Lord Scott said,
34. None of these judicial dicta tie the justification for legal advice privilege to the conduct of litigation.
They recognise that in the complex world in which we live there are a multitude of reasons why individuals, whether humble or powerful, or corporations, whether large or small, may need to seek the advice or assistance of lawyers in connection with their affairs;
they recognise that the seeking and giving of this advice so that the clients may achieve an orderly arrangement of their affairs is strongly in the public interest;
they recognise that in order for the advice to bring about that desirable result it is essential that the full and complete facts are placed before the lawyers who are to give it; and
they recognise that unless the clients can be assured that what they tell their lawyers will not be disclosed by the lawyers without their consent, there will be cases in which the requisite candour will be absent.
It is obviously true that in very many cases clients would have no inhibitions in providing their lawyers with all the facts and information the lawyers might need whether or not there were the absolute assurance of non-disclosure that the present law of privilege provides.
But the dicta to which I have referred all have in common the idea that it is necessary in our society, a society in which the restraining and controlling framework is built upon a belief in the rule of law, that communications between clients and lawyers, whereby the clients are hoping for the assistance of the lawyers’ legal skills in the management of their (the clients’) affairs, should be secure against the possibility of any scrutiny from others, whether the police, the executive, business competitors, inquisitive busybodies or anyone else (see also paras 15.8 to 15.10 of Zuckerman’s Civil Procedure (2003) where the author refers to the rationale underlying legal advice privilege as “the rule of law rationale”).
I, for my part, subscribe to this idea. It justifies, in my opinion, the retention of legal advice privilege in our law, notwithstanding that as a result cases may sometimes have to be decided in ignorance of relevant probative material….
38. In Balabel v Air India  Ch 317 Taylor LJ said,
at p 330, that for the purposes of attracting legal advice privilege
“legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context”.
I would venture to draw attention to Taylor LJ’s reference to “the relevant legal context”. That there must be a “relevant legal context” in order for the advice to attract legal professional privilege should not be in doubt. Taylor LJ said, at p 331, that
“to extend privilege without limit to all solicitor and client communication upon matters within the ordinary business of a solicitor and referable to that relationship [would be] too wide”.
This remark is, in my respectful opinion, plainly correct. If a solicitor becomes the client’s “man of business”, and some solicitors do, responsible for advising the client on all matters of business, including investment policy, finance policy and other business matters, the advice may lack a relevant legal context.
There is, in my opinion, no way of avoiding difficulty in deciding in marginal cases whether the seeking of advice from or the giving of advice by lawyers does or does not take place in a relevant legal context so as to attract legal advice privilege.
In cases of doubt the judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law.
If it does not, then, in my opinion, legal advice privilege would not apply.
If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law.
Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply?
The criterion must, in my opinion, be an objective one.
Edited for ease of reading. See the other postings on this case under the same tag.