In context

UK judgment further limits applicability of legal privilege in internal investigations

May 17, 2018
In context

In a recent judgement, the UK High Court criticised the Serious Fraud Office (SFO) for failing to request detailed interview notes and records taken during an internal investigation into corruption at XYZ. Instead of receiving detailed notes and records, the SFO agreed to receiving “oral proffers” after the company claimed legal privilege over the documents. Oral proffers are oral summaries of a statement read out by a lawyer (without a copy being provided).


This judgment may significantly impact the SFO’s future approach on legal privilege claims and on how companies should conduct their internal investigations. It may also create challenges for companies subject to investigation by authorities worldwide, due to diverging expectations and requirements in the process of cooperation. Following this judgment, companies should be mindful that internal investigation interview notes may not always be protected by legal privilege, and may need to be handed over to the relevant authorities in the process of cooperation.

Two UK High Court Administrative Division judges ruled on 19 April 2018 that neither litigation nor legal advice privilege can protect written interview notes from being requested by the authorities as part of an internal investigation. According to the ruling, the SFO should have requested the detailed written internal interview notes from XYZ before offering it a Deferred Prosecution Agreement (DPA). Under the DPA, XYZ was required to cooperate with the SFO. One component of this requirement, according to the judgment, was “a duty of XYZ to disclose to the SFO all information and material in the possession, custody or control of the company “…not protected by a valid claim of legal professional privilege or any other applicable legal protection against disclosure…”, in respect of its activities and those of its present and former directors, employees and agents concerning all matters relating to the conduct described in the draft indictment and the Statement of Facts”.


The claim was brought by AL, a former employee of XYZ. AL was charged by the SFO with conspiracy to bribery and corruption, and was trying to obtain the detailed interview records to prepare for his own trial.


XYZ entered into the DPA with the SFO in 2016. Originally, the SFO requested XYZ to provide the interview notes. However according to the judgment, the company argued that these documents were privileged. Although the SFO disagreed with XYZ on this point, it did not pursue the matter further and XYZ provided the SFO with oral proffers of the interviews it had conducted with the employees, including a 15-hour interview with AL.


Although the judges said that the case was brought in the wrong forum, they criticised the SFO for not obtaining the interview records. According to the judgment “the law as it stands today is settled and privilege does not apply to first interview notes”. It also cited earlier landmark jurisprudence on legal advice and litigation privileges, Three Rivers (No 6), RBS Rights Issue Litigation, SFO v ENRC and R v Jukes (see previous In context articles here and here).


In addition, the court stated that the SFO’s opinion that the claim of privilege was “not obviously invalid” was not sufficient to decline to pursue the matter further: “The argument “not obviously invalid” is boldly stated but lacks any supporting analysis. In any event we have real difficulty with the “not obviously invalid” test apparently applied by the SFO. Regulatory decision-making cannot proceed upon the basis of cursory tests of obviousness. Something that is not “obviously” wrong may still be thoroughly wrong on proper, detailed, analysis by a competent lawyer or by independent counsel.”


The judges further held that the SFO did not prove that it had thoroughly examined XYZ’s privilege claim and that, in any case, the documents containing privileged information could have been submitted in redacted form during the disclosure process.


Later, the court addressed the issue of waiver of privilege. It rejected XYZ’s argument that the provision of oral summaries did not amount to a waiver, stating that disclosure of the notes’ content had to include a waiver. Furthermore, even if the waiver was limited, that limitation would, according to the court, have excluded disclosure to employees charged in connection with the investigation of the company. This decision establishes the rule as to the rights of these individuals.


This judgment highlights the SFO’s obligation to obtain documents from a company before offering the company a DPA. This will most likely result in a stricter SFO approach to disclosure by companies during the process of DPA negotiations. It also indicates the approach taken by English courts to privilege affecting internal investigations.


Companies should be aware of the diverging approaches to privileged documents in different countries. Given the increase in the limitation of applicability of the legal advice and litigation privilege in the UK, companies should be diligent when conducting internal investigations there. Companies should also be mindful that internal investigation interview notes may not always be protected by legal privilege, and may need to be handed over to the relevant authorities in the process of cooperation. These developments emphasise the importance of ensuring the protected status of documents and information subject to professional legal privilege.

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