President of the UK Supreme Court, Lord Neuberger delivered a speech this month regarding the challenges arising for companies and lawyers when claiming legal professional privilege over internal investigations. The issue of whether such investigations will attract privilege is a complex one. The lawyer advising his/her client can rarely give a 'safe' answer: "Go wrong one way, and she will be advising her client to break the law; go wrong the other way and she will be unnecessarily disadvantaging her client."
The scenario of a company carrying out its own internal investigation into a matter and then a regulatory body requesting the resulting documents is not uncommon. If litigation privilege can be claimed, then the issue is not so difficult. However, legal proceedings must be in contemplation and the investigation must be for the dominant purpose of preparing for that proceeding in order to claim litigation privilege.
If the company is relying on legal advice privilege, one issue is whether the scope is so broad that it extends beyond individuals that can constitute 'the client'. Legal advice privilege applies only to communications passing between the client and their solicitor. It does not apply to documents passed between a client and its solicitor for advice to be given in respect of them. It also does not apply to communications between the solicitor and employees or agents of the corporate client other than the individuals actually instructed by lawyers (for example the Board, CEO, CFO or other executives). Issues can arise if, for example, witness statements were taken from employees and third parties who are not 'the client'.
Lord Neuberger explains that when a company is carrying out an internal investigation, it is sensible to decide from the start which group of individuals constitute the client. If a court considered the group was artificially large, then "the greater the risk of loss of confidentiality" may well result in a finding that not all members of the group are the client and privilege may be lost.
Lord Neuberger also referred to corporate internal investigations into bribery and similar crimes. The policy of the UK Serious Fraud Office (SFO) is that prosecution might be avoided if the company concerned had shown a "genuinely proactive approach" of self-reporting. The SFO said that "in considering whether a self-reporting corporate body has been genuinely proactive, prosecutors will consider whether it has provided sufficient information, including … disclosing the details of any internal investigation, about the operation of the corporate body in its entirety".
Lord Neuberger rightly expresses his concern that legal professional privilege is "a very valuable right" and to waive it is "a big and irrevocable step". As a result, this "puts any legal adviser of a company framing her advice to the company as to whether to self-report in something of a quandary." Ultimately, however, the choice may not be that of the company. The SFO has had both wins and losses in having internal investigation documents handed over to it. The take-home message from Lord Neuberger to legal advisers was clear: tread carefully.