Privilege – what is it?
In short there are two categories:
Litigation Privilege – applies to communications/documents between parties/lawyers/third parties and documents created for the purpose of obtaining information or legal advice in connection with existing or reasonably contemplated litigation which is of an adversarial nature (not investigative/inquisitorial)
Legal Advice Privilege – applies to all communications passing between a client and its lawyers for the purpose of giving or obtaining legal advice
Both require confidentiality as a core principle.
Why might you want to assert privilege?
To limit disclosure of documents created during the course of an internal investigation.
Serious Fraud Office v Eurasian Natural Resources Corporation Ltd (SFO v ENRC)
The recent case of
Serious Fraud Office v Eurasian Natural Resources Corporation Ltd has revisited the issue of legal professional privilege particularly in the context of an internal investigation into potential breaches of and exposure to criminal regulations.
Although the subject matter related to bribery and corruption, the issues raised in relation to privilege are and will be relevant to any criminal regulatory matters, including health and safety (HSE), financial regulatory investigations (FCA), professional disciplinary investigations such as the SRA, ACCA, and healthcare regulators and obviously in the anti-bribery and wider corporate criminal liability sphere.
The headline from the case is that the court clarified and strengthened the limits on the extent to which privilege can be relied upon to limit disclosure of documents created during the course of an internal investigation where a company is looking into potential criminal regulatory breaches where a regulator or the police may also be investigating.
In relation to Litigation Privilege, the court held that this could only be relied upon where the documents over which privilege is asserted were created at a time where there was a
real likelihood of prosecution (in the criminal regulatory context) at that time. An anticipated potential criminal/regulatory investigation was not sufficient nor was the mere fact a regulator might investigate. In this case the SFO had not sent a notice of an investigation. The Court adopted a very narrow interpretation of “litigation”.
The question of whether an anticipation of a criminal investigation equates to anticipation of prosecution depended upon whether there was “at the very least… some material to support the allegations of corrupt practices”. ENRC's investigations were undertaken at a time when criminal investigation was anticipated, but it could not be said that they anticipated prosecution as a consequence.
The Court also held that the documents were not created for the dominant purpose of litigation, rather they were created at a time when the purpose of the internal investigation was to find out if there was any truth in a whistle-blower’s allegations.
In relation to Legal Advice Privilege, the Court held that the document had to be genuinely created for the sole or main purpose of giving or obtaining legal advice. Importantly the communications must be between a lawyer and the “client”.
The client must be someone authorised by the firm/company to give instructions and receive advice. One of the issues in the case was whether notes taken of interviews with employees attracted privilege – the court held that employees do not constitute clients unless authorised to provide instructions and receive advice.
What should companies do if faced with the prospect of an internal investigation?
It is important that companies faced with the prospect of investigating potential criminal/regulatory breaches understand the circumstances in which legal privilege can properly be asserted to protect documents from being disclosed that they might for one reason or another not want to disclose.
As a result of
SFO v ENRC, it is likely to be harder in the criminal/regulatory context to assert litigation privilege and thus more important that a company puts itself in the best possible position to assert legal advice privilege if documents from an internal investigation are to be protected from disclosure.
Once a company becomes aware of a potential criminal regulatory issue, it should act without delay to seek legal advice and should bear the following in mind to put itself in the best position to assert privilege:
An internal investigation project team should be set up as soon as possible with an appointed lead.
The name and scope of the investigation should be carefully thought about and, if at all possible, linked to any likely litigation.
Care should be taken to define who the client is.
A client list should be put together with those individuals who it is anticipated are likely to be involved in the internal investigation and as such will be authorised to give instructions and receive legal advice.
All correspondence between the company and externally instructed lawyers should be restricted to those on the above list.
A contemporaneous record should be kept of why a particular document was created in an internal investigation. The chances of being able to rely on privilege will be enhanced if the party claiming privilege can produce contemporaneous evidence about the purposes for which particular documents were created.
Be clear about the dominant purpose of any investigation and try and link it to prospective litigation rather than for example “unearthing facts for the company’s own purposes or an attempt to meet regulatory compliance obligations”. Documents created in anticipation of being shared with a regulator (even if they are not eventually shared) will not be considered privileged as they were not created for the dominant purpose of seeking legal advice.
In-house lawyers should ensure that when giving advice to the company (the client list) they are doing so in the course of their employment as a lawyer. Privilege will not attach if a lawyer is not giving their advice in the capacity as an employed lawyer or where they are not instructed as a lawyer. An example of this is where a lawyer is on the board but not employed as the general counsel; it is likely that if the board member gives advice to other members of the board, privilege will not apply.
Lawyers’ notes of conversations with witnesses are not automatically protected by legal advice privilege and they will not be treated as the lawyers’ working papers. To improve the chances of them being covered by privilege:
Ensure an external lawyer conducts any internal interviews
Ensure a plan of the interview is made
Ensure that any notes taken are not simply a verbatim record but incorporate comment or observations by the lawyers and contain decisions as to further questions or avenues of investigation
A “client” being present may assist in asserting privilege
Think carefully about the title of the document and its purpose – can the interview be said to be for the purpose of prospective prosecution or adversarial litigation?
Make time in an interview to regroup, assess strategy and reformulate questions based on answers given and record those steps
The position on privilege should be reviewed regularly as the case progresses, with an ongoing record kept of the company's reasons for seeking legal advice, the nature of advice being provided and any factual information that is needed in order to inform that advice.
The above points are a non-exhaustive list and any company contemplating an internal investigation should consult with its external lawyers as to the best approach to take in scoping and planning that exercise.
Irwin Mitchell’s Criminal and Regulatory Investigations Group has significant experience of advising corporates on and conducting internal investigations. If you need advice relating to any criminal regulatory matter, including but not limited to privilege, please contact
Craig Weston (+44 (0)207 421 3976; . email@example.com)
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