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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 privilege. This article considers the doctrine of privilege in the context of investigations and provides some practical tips for its preservation in that context.

What is privilege?

In England and Wales, privilege allows a party to withhold evidence from being disclosed to third parties, an opponent in proceedings, a regulator or the court. There are two limbs to this concept: (i) legal advice privilege; and (ii) litigation privilege

• Legal advice privilege applies to confidential communications (and evidence of those communications) between a lawyer and client, made for the sole or dominant purpose of giving or receiving legal advice.
• 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 sole or dominant purpose of obtaining information or advice in connection with litigation.

The context of any investigation will determine which type of privilege applies and there may be a cross over between the two. For example, if an investigation arises as a result of allegations of wrongdoing within a company and lawyers are engaged to advise on those allegations, 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.

Tips for preserving privilege in an internal investigation

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.

1. Engaging lawyers. Although it is important to engage lawyers as soon as it becomes clear that legal advice is required, 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.
2. 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, the client is the legal person seeking advice and only communications involving those individuals expressly or impliedly authorised by or on behalf of an organisation to provide instructions to the lawyer or receive the legal advice will be protected by legal advice privilege. To minimise any scope for argument that privilege does not apply, 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” 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 [2016] 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 above. Such interview notes will therefore only be protected if litigation privilege applies.
3. 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 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. Such monitoring is particularly important to determine the point in time at which litigation privilege may apply. For example, as mentioned above, it is possible to assert litigation privilege over lawyers’ notes of interviews with a company’s employees in the context of an investigation at a time when litigation or adversarial proceedings become in reasonable contemplation (meaning more than a mere possibility, though the prospect need not be greater than 50%).
4. Marking documents as “privileged and confidential”. Although it is important to mark documents as “privileged and confidential” such a label will not be determinative.
5. Apply the correct redactions. It may be the case that only part of a document is privileged. The Court of Appeal’s decision in GE Capital Corporate Finance v Bankers Trust [1995] 1 WLR 172 confirmed that where only a part or parts of a document are privileged, the correct procedure is to disclose the document and redact or blank out the privileged parts of the document. On this basis, it may be advisable that legal advice appears separately in board minutes to allow for easier redactions.