Before we begin the encryption process, your Mac’s internal startup drive must have Lion’s Recovery HD partition, which appears if you formatted your drive using the GUID partition scheme, as well as a single partition or multiple partitions created with Boot Camp Assistant. If you’ve partitioned your drive in a different way, you need to back up your data, erase and repartition your drive, and then re-install Lion, restoring your files, apps, and data afterwards.
To verify that the Recovery HD partition is on your Lion startup drive, restart your Mac and hold down the Option key. This will launch Startup Manager (pictured, top), where Recovery HD will appear if it is installed. You can also launch the Terminal, type
diskutil list and press Return. A list (pictured, bottom) of your hard drives and partitions will appear.
Learn more about Lion Recovery and Recovery HD.