In recent years the Courts have been at pains to highlight and reinforce the narrow ambit of legal professional privilege and its ability to protect sensitive documents from disclosure. However, in a Judgment handed down earlier this month (Property Alliance Group Limited v The Royal Bank of Scotland Plc  EWHC 3187), the High Court has upheld a claim by the Defendant bank to assert legal advice privilege over a series of confidential internal reports prepared for its “Executive Steering Group”, which was set up in the wake of the LIBOR scandal.
The litigation in question concerns a claim by Property Alliance Group (PAG), a property developer with a portfolio of some £200 million. PAG is pursuing a £30 million damages claim against its former bank, RBS, for the mis-sale of interest rate swaps between 2004 and 2008. The key allegation in the claim is that the swaps were referenced to 3 month LIBOR and that, as such, they came with an inherent representation by RBS that it was not improperly manipulating the LIBOR rate.
The LIBOR scandal is well known and has been highly publicised since 2012. As part of that scandal, RBS has faced numerous regulatory investigations from different regulators across the globe. RBS therefore established the Executive Steering Group (ESG) to oversee those investigations and any related litigation. In doing so, it took advice from various lawyers, who would sit in on any meetings the ESG had and would often prepare summary reports before or after the meetings. It was those reports which PAG sought disclosure of, but which RBS withheld on the grounds that they were covered by legal advice privilege.
Legal Advice Privilege – What is it?
There are two main forms of legal professional privilege, namely litigation privilege and legal advice privilege, which if they apply will protect documents from having to be disclosed in the course of litigation with a hostile third party.
Legal advice privilege covers confidential communications made between a solicitor and his / her client for the purpose of giving or obtaining legal advice.
When one unpacks this definition, a few salient points emerge:
- The communication in question needs to be with a lawyer. This was the effect of a Supreme Court decision in 2013, which declined to extend the protection of legal advice privilege to non-lawyers (such as accountants or consultants).
- Privilege will only protect advice given to the lawyer’s “client”, which is a narrowly defined concept and can for example cover only a small number of people within a larger organisation.
- The protection afforded to legal advice can extend beyond simply telling clients the law and will cover advice given in a “relevant legal context”.
The Challenge to Privilege
In this case, PAG’s main challenge to RBS’s claim of legal advice privilege was to focus on the precise roles of the ESG and its lawyers in preparing the documents sought. They argued that even if privilege attached to some specific aspects of the ESG reports (which could be suitably redacted before inspection), it would be extremely unlikely if the whole reports were privileged.
The Judge (who had actually reviewed the documents in question) did not, however, accept PAG’s submissions and upheld the claim of privilege. Central to his decision appears to be the fact that the ESG reports were in fact prepared by the lawyers for the ESG, they were expressly marked “privileged and confidential” and were all communicated by the lawyers to the ESG before or after its meetings.
Lessons Learned – How to Effectively Maintain Privilege…
The case is a good example of a party doing the right things in order to effectively maintain privilege in potentially damaging documents.
However, the case could have had a different outcome if the documents in question had been prepared slightly differently. For example, the Judge made it clear that if the reports had been prepared by the ESG itself to record the outcome of its deliberations, or if for example the lawyers had not taken such a central role in the preparation of the reports, then the privilege assertion may well have not been upheld. In that scenario, some potentially damaging documents could have emerged.
In terms of the lessons learned from the case, the following tips can be drawn out, which should be heeded whenever someone wants to maximise the chances of maintaining privilege over any sensitive documents:
- When faced with an investigation into a particular incident, it is often helpful to nominate a specified individual or individuals to be the focal point for any legal advice. If possible, avoid circulating any advice wider than this group.
- Whilst it may seem self-serving in an article written by a lawyer, if you are planning to claim legal advice privilege it is crucial to instruct a qualified lawyer (who may be internal or external), rather than relying on the advice of non-lawyer professionals.
- Be very careful when committing sensitive comments to paper and consider whether oral briefings are best to convey particularly damaging news. If a written report must be prepared, it is preferable to get the lawyers to draft it and to head it clearly “privileged and confidential”.
- Consider carefully what role a lawyer is performing at any meetings – do not automatically assume that absolutely everything prepared by or given to a lawyer will amount to privileged legal advice. For example, if Board minutes are being taken where legal advice on sensitive issues is given, it may be safest to prepare a separate paper / annex which contains that advice.
Ultimately RBS and its lawyers got it right in this case and they were able to successfully withhold privileged reports from inspection. Each case will turn on its own facts, but it would nevertheless be sensible to take the same precautions as RBS, which should put you in the best possible position to resist any calls for disclosure by a determined third party.