A business may need to conduct an internal fact-finding investigation for a variety of reasons and at any time. When doing so, it will, understandably, be minded to ensure that its findings (and any underlying documents and information that informed such findings) are kept confidential and – to the greatest extent possible – protected by legal privilege. This article considers the doctrine of legal privilege in the context of investigations and provides some practical tips for its preservation in that context.
What is legal privilege?
The doctrine of legal professional privilege is comprised of two types of privilege: (i) legal advice privilege; and (ii) litigation privilege.
- Legal advice privilege applies to confidential communications or documents between a lawyer and client, which have as their sole or dominant purpose the giving or obtaining of legal advice or assistance.
- Litigation privilege exists to protect confidential communications or documents between a lawyer and client (or a lawyer and third parties) where the document: (i) has been created by or on behalf of the client or lawyer; (ii) came into existence once litigation is contemplated or has commenced; and (iii) is for the dominant purpose of use in litigation. Litigation privilege can therefore be wider in scope than legal advice privilege as it can also protect communications with non-lawyer third parties.
The context of any investigation will determine which type of privilege applies and there may be an overlap between the two. For example, if an investigation arises as a result of allegations of wrongdoing within a company, then legal advice privilege may apply. However, if the investigation is triggered by an event such as the threat of litigation or a regulatory investigation, then both types of privilege may be applicable.
Litigation privilege – timing issues
As litigation privilege only applies once litigation is contemplated or has been commenced, which itself is a fact specific enquiry, the timing of a document’s creation is key to understanding if it might benefit from such privilege.
As a result, litigation privilege is unlikely to apply to purely internal investigations or investigations in furtherance of early-stage regulatory investigations, but there are nuances. For example, litigation privilege may not apply where a notice has been served in the course of early stage adversarial investigations, unless the notice sets out the relevant authority’s legal argument against the company (Tesco Stores Ltd v Office of Fair Trading  CAT 6).
Relatedly, it is not necessary that self-reports to relevant authorities have been made in order for litigation privilege to apply. The Court of Appeal has confirmed that it is in the public interest for companies to be able to investigate allegations prior to reporting to a prosecutor without losing the benefit of litigation privilege (Director of the SFO v Eurasian Natural Resources Corporation Ltd  EWHC 1017 QB).
Tips for preserving privilege in an internal investigation
Separate to timing considerations, while there is no one factor which is exhaustive or determinative in preserving privilege in an internal investigation, there are certain protections which, if in place, might assist.
- Engaging lawyers. It is important to instruct lawyers at an early stage and as soon as it becomes clear that legal advice is required. However, simply copying a lawyer to a communication between two non-lawyers will not in itself create privilege. For a document to benefit from such privilege, it will need to be clear that legal advice (rather than commercial advice) is being sought. Further, communications should, in any event, be marked as “privileged and confidential” although even that will not be determinative.
- Consider privilege from the outset of the investigation and throughout. To ensure that any available privilege protection is obtained, it is vital to bear privilege in mind from the outset of an internal investigation. In the event of a later dispute regarding privilege, it will assist if the party claiming the benefit of privilege has, from the outset, documented the purpose and scope of the investigation, outlined terms of reference for those responsible for the investigation, and recorded the basis on which applicable privilege protection is anticipated to apply. The availability of privilege protection for certain documents or communications should also be monitored throughout an investigation. In particular, any potential sharing of documentation or reporting of findings should be carefully considered from a privilege perspective before such disclosures are made.
- Consider carefully who constitutes the “client”. As legal advice privilege applies only to communications between lawyer and client, and “client” is narrowly defined, it is important to establish who, exactly, the client is for the purposes of the investigation. In practice, only communications between lawyers and those individuals within an organisation authorised to seek and receive legal advice on behalf of the organisation will be protected by legal advice privilege. Therefore, to minimise any scope for argument it is preferable for the relevant employees or directors seeking advice to be referenced in internal records (for example, board minutes or terms of reference in connection with the investigation) as holding the requisite level of authority. For external lawyers, the question of who is the “client” for the purposes of advising in connection with any investigation may be covered in the engagement letter. The question of whether privilege is available to protect lawyers’ notes of interviews with company employees during an investigation is a topic that has ignited significant interest in recent years. In the RBS Rights Issue Litigation  EWHC 3161, the Court held that lawyers’ notes of interviews with a company’s employees in the context of an investigation were not protected by legal advice privilege, given that the employees could not be described as the “client”, for the reasons set out in the paragraph above. Such interview notes will therefore only be protected if litigation privilege applies.