The former legal manager at the now defunct News of the World has told the Leveson Inquiry he first advised the paper on phone hacking in 2004, two years before the first arrests were made in relation to the practice.

After being pressed by an impatient Lord Justice Leveson, Tom Crone, visibly concerned about breaching legal privilege, revealed that he had advised the paper on the practice two years before the then royal reporter Clive Goodman and private investigator Glenn Mulcaire were arrested and later convicted for hacking into the phones of members of the Royal family.

With Leveson anxious not to prejudice the ongoing criminal investigation into the practice, Crone was not asked further questions about the issue, but did add later that he believed the paper’s defence that hacking did not go beyond “one rogue reporter” was “erroneous from the outset”. Meanwhile, in a letter to MPs released today, News Corp boss James Murdoch said he had not read a key email sent to him in June 2008 by former editor Colin Myler that indicated the practice was not limited to the “rogue reporter”. One email in the thread warned of a “further nightmare scenario” arising out of a phone hacking case brought forward by Professional Footballers’ Association CEO Gordon Taylor.

Moving on from matters of phone hacking, Crone described the News of the World’s use of private investigators. He said the only ones he knew of that were commissioned by the paper were Mulcaire and Steve Whittamore, the PI involved in personal data breaches uncovered in Operation Motorman. He added that PIs were not used at the paper after the Goodman-Mulcaire convictions in 2007, and that Myler introduced measures to “eliminate illegal or unethical practices”.

Crone’s written evidence also stated that private investigators were commissioned “on a handful of occasions” to check matters that may arise in post-publication litigation.

Crone told the Inquiry he was “not a guardian of ethics” and that his job was merely to “advise on legal risk”.

He denied being consulted about plans for a follow-up story to the paper’s notorious 2008 splash on Max Mosley that accused the ex-Formula 1 boss of taking part in a Nazi-themed orgy. Crone also claimed he was not asked to advise on the posting of a video of Mosley apparently engaging in the orgy to the paper’s website. He said he felt the footage was “pushing it”, but did not advise for it to be removed.

Mosley sued the paper for breach of privacy in 2008 and was paid £60,000 in damages. Crone claimed he was not asked to advise the paper in relation to any appeal, and said he was unaware if chief reporter Neville Thurlbeck had been disciplined after Mr Justice Eady’s ruling on the case.

Crone received a thorough grilling on his involvement from a stunned Lord Justice Leveson and Robert Jay QC. “Here was a high court judge,” Jay said, “was it not of interest to you…didn’t you feel that it fell within your jurisdiction?” Crone responded it did not.

In his testimony he also defended the publication of the Mosley article, arguing it was a “justifiable story without the Nazi element”, but conceded that Thurlbeck’s emails to two women involved in the orgy about a follow-up story were “close to” blackmail.

Also speaking today was Julian Pike, a partner at Farrer & Co, which has advised News International for around 25 years. He revealed that he knew in April 2010 that surveillance ordered by the News of the World was being carried out on phone hacking victims’ solicitors Mark Lewis and Charlotte Harris, but did not know of its nature or who was conducting it.

One hoped, Pike said, that the paper “would be able to carry out a very straightforward job of surveillance”. He denied knowledge of Derek Webb, the PI hired to survey Lewis and Harris, in 2010, and insisted that a surveillance operation would not always involve a private investigator, noting that a freelance journalist may also be commissioned to do the work.

Farrers was commissioned in May 2010 to look into the pair, over what Pike said was “perceived to be some very serious breaches of confidentiality over a significant period of time.” He added that it was a “perfectly legitimate exercise” but did not condone the subsequent surveillance of Lewis and Harris’s families.

Earlier in the day the Inquiry heard from Lawrence Abramson, formerly of solicitors Harbottle & Lewis, who were hired by NI to review around 2,500 internal emails following claims by Goodman that the then editor, Andy Coulson, knew about phone hacking at the paper and that others were involved.

Abramson revealed that around a dozen emails reviewed by the firm could have been “potentially embarrassing”, leading to “adverse publicity” and showing NI in “an unfavourable light”. He said the emails showed confidential sources, cash payments and an “active involvement” in Goodman’s prosecution, namely that NI “tried to influence how the defence was conducted”.

He added that he felt the emails “fell outside what I had been asked to consider because they did not suport Mr Goodman’s allegations.”

He also noted that, while working for NI, he had not seen emails from 2003 that may also have been significant. Abramson was asked if he has since seen them, and said his advice to the company would have been different had he known about the emails in 2007.

The Inquiry continues tomorrow with further evidence from Tom Crone, as well as the News of the World’s former editor, Colin Myler, and Jon Chapman, News International’s former legal affairs chief.

Follow Index on Censorship’s coverage of the Leveson Inquiry on Twitter – @IndexLeveson.