In a recent case management decision in Property Alliance Group v Royal Bank of Scotland (2015), the Court upheld RBS's claim to legal advice privilege over documents prepared by the Bank's lawyers in the course of regulatory investigations. Legal advice privilege was held to be capable of covering not only direct legal advice, but also information provided by lawyers to their clients to support that advice, including progress updates and meeting summaries.
The Claimant in this case, Property Alliance Group, alleges that it was mis-sold four interest rate hedging products based on 3-month GBP LIBOR and entered into between 2004 and 2008. In particular, it claims that the Bank made representations about LIBOR which were clearly false in the light of its subsequent admissions of LIBOR manipulation in some currencies. The Bank has contested these particular allegations on the basis that it has made no such admission in relation to GBP LIBOR, the relevant rate in this case.
Disclosure first arose as an issue in the context of this distinction between GBP LIBOR and other LIBOR rates. The Bank was willing to carry out standard disclosure in relation to GBP LIBOR, which was clearly relevant, but attempted to resist disclosure obligations in relation to LIBOR in other currencies. The Court initially ordered disclosure of documents relating to all LIBOR currencies, but it soon became clear that this would be unworkable, given the volume of documents involved. To resolve that, it was proposed that disclosure should be limited to "high level" LIBOR documents only and the Bank accordingly produced a list of the relevant "high level" documents. The list indicated documents over which the Bank intended to claim privilege so as to prevent inspection by the Claimant.
The Claimant challenged some of the claims to legal advice privilege on that list. The disputed documents had been produced for the Bank's internal Executive Steering Group ("ESG"), which was tasked with overseeing regulatory investigations and related litigation, in conjunction with the Bank's legal advisers. One law firm had primary responsibility for these regulatory and litigation matters. In that capacity, the firm was responsible for the management of ESG meetings and had prepared the two categories of documents which the Claimant argued should be available for inspection:
- tables to update the ESG on the progress, stages and issues arising from the various ongoing regulatory investigations; and
- summaries of the discussions between the ESG and its legal advisers at meetings.
At an initial hearing, Birss J was unable to determine whether or not the Bank had made out a sufficient case for legal advice privilege without having the opportunity to consider the specific documents in question. He therefore ordered that the documents should be inspected by a different Judge with no involvement in the case who could determine whether or not legal advice privilege applied.
The Bank's claim to legal advice privilege was upheld. Snowden J (the Judge conducting the independent inspection) found that the documents fell within the scope of the established definition of legal advice privilege: communications between lawyers and their clients for the purpose of giving or obtaining legal advice. While the documents did not exclusively give legal advice in the strict sense, they clearly made up the backdrop against which advice could be given. The fact that the documents contained elements of information, as opposed to advice, did not preclude a claim to legal advice privilege over each document as a whole. Where information was provided, it was a necessary part of enabling the ESG to deal with the issues arising from the ongoing investigations. For example, the meeting summaries recorded that, when conveying information from tables at meetings, the lawyers would present it in the context of their own impressions and recommendations.
The Claimant pointed out that had these same tables and minutes been produced internally by the ESG, it would not have been possible to protect them from inspection, subject to the right to redact any direct legal advice. The Claimant argued that it could not be right that inspection could be prevented simply because a law firm had been involved in the administrative arrangements. However, the Judge found that these documents were not being produced simply to fulfil an administrative responsibility, but to support the substantive decisions that the ESG was taking. Accordingly, the documents were an "integral part of [the lawyers'] provision of legal advice and assistance to the ESG." In that context, it was right for them to be covered by legal advice privilege.
Snowden J also noted that there was a convincing public interest rationale for upholding the claim to legal advice privilege: the efficiency and effectiveness of regulatory investigations would be improved by the ability of lawyers to confidently provide their clients with "candid factual briefings as well as legal advice" without concern that the content of those conversations might have to be disclosed.
This is a reassuring decision for companies facing regulatory investigations. The Court recognised that the subjects of such investigations should be entitled to the benefit of full and detailed legal advice, and also acknowledged the practical realities of that advice: in complex situations, documents such as minutes and progress trackers may well be an inseparable part of the service that lawyers are providing to their clients.