Published in Solicitors Journal, 19th July 2017
Not all documents prepared by lawyers can benefit from protection unless there is a clear indication of a qualitative legal assessment for advice purposes, warns Caroline Field.
Privilege in communications between clients and lawyers is a fundamental human right. The decision in Three Rivers District Council and others v Governor and Company of the Bank of England (No 5)  EWCA Civ 474 was widely regarded as an attack on that right. Some hoped that the impact of Three Rivers would be mitigated by subsequent decisions confining the scope of that case to its own particular facts.
Recent UK decisions such as RBS Rights Issue Litigation  EWHC 3161 (Ch) and Serious Fraud Office v Eurasian Natural Resources Corporation  EWHC 1017 (QB) make clear the support for its general application such that legal advice privilege (LAP) does not extend to documents obtained from third parties – defined as anyone other than the client (or a person tasked by the client) seeking or obtaining legal advice. This is so even if those documents were prepared for the purpose of being shown to a solicitor in order to obtain legal advice. Nor are witness interview notes privileged because lawyers conduct the interview.
Where a lawyer is carrying out, or directing others to carry out, a fact-finding or evidence-gathering exercise before litigation is contemplated, the fruits of that labour are not privileged. This was fatal to RBS’s claim for LAP covering interview notes from discussions with 124 employees and former employees in relation to a Securities and Exchange Commission subpoena and an investigation triggered by a whistleblower.
In the context of an internal investigation into suspected fraud, bribery, and corruption under advice there was a real prospect of litigation, ENRC claimed litigation privilege and/or LAP in relation to (i) lawyers’ interview notes, (ii) forensic accountants’ reports of books and records reviews, and (iii) lawyers’ reports containing factual evidence in a two-year period preceding a criminal investigation by the Serious Fraud Office. The claim to legal advice privilege in respect of (i) failed following the RBS decision.
Additional claims that the interview notes amounted to lawyers’ working papers also failed. A note-taker’s own thoughts and comments on what they are recording with a view to advising their client which ‘betray the tenor of the legal advice’ are likely to be privileged. Verbatim transcripts are not.
Evidence of qualitative assessment by lawyers is likely to be required to establish the protection. Caution must be exercised to avoid undermining the very matters the privilege is designed to protect. Lawyers’ reports which make reference to information or findings containing legal advice are more likely to be regarded as part of the confidential solicitor/client communication.
On the facts of ENRC, it was reasonable to contemplate an SFO investigation, but not a prosecution. The conditions for litigation privilege (requiring litigation to be ‘reasonably in contemplation’ and communications made with the dominant purpose of conducting anticipated adversarial litigation) were not met.
The cases demand a clear record from the person whose motivation and state of mind was in issue from those responsible for giving instructions. In a criminal context, this may present the unenviable choice of providing an explanation of the incriminating factors justifying a prosecution, or inspection. ENRC suggests demonstrating reasonable contemplation of civil proceedings may be less onerous but the position with regard to regulatory proceedings is less clear.
Parties should proceed with caution in the context of internal investigations. The following considerations may assist in maximising protection:
- Work with external lawyers to determine how to structure an internal investigation and record key information (including employees’ interviews). Consider carefully the level of legal expertise now required to undertake witness proofing.
- Establish the authority of in-house lawyers to instruct external lawyers.
- Consider litigation privilege. Keep a record of what was contemplated and why.
- The threshold for contemplation for different litigation may vary. Documents produced during a regulatory investigation may be disclosable to a civil claimant.