Mr Justice Birss's last judgment in Property Alliance v RBS, a pending LIBOR lawsuit in England, rejected RBS's bid to keep communications with US regulators private. It was of no consequence that RBS and the regulators had a confidentiality agreement. But Mr Justice Birss's newest judgment in the same case comes out the other way, at least in theory. What gives? And what's the upshot for US litigators?*
In an earlier disclosure dispute in Property Alliance, which I discussed here, RBS sought to protect a US Department of Justice document listing areas of interest in the LIBOR investigation. The Department had provided that document to RBS pursuant to a confidentiality agreement, leading both RBS and the Department to assume the document would stay private. But when private litigants asked for RBS's copy of the list, Mr Justice Birss decided the confidentiality agreement didn't shield the document from disclosure.
In this most recent disclosure dispute, RBS sought to protect . . . more regulatory communications made under confidentiality agreements. But this time, the communications weren't just a list of topics drafted by the Department of Justice. They were six documents that, regardless of any confidentiality agreement, were protected by legal advice or litigation privilege. (For US litigators, these are English privileges roughly analogous to our attorney-client communications privilege and work-product protection.) So far as the judgment reveals, no one disagreed that the documents were privileged when written. Instead, Property Alliance contended that RBS had waived privilege by showing the documents to US regulators including the Department of Justice, the Securities and Exchange Commission, the CFTC, and various state attorneys general-plus the Japan Financial Services Authority. That's where the confidentiality orders came in. Mr. Justice Birss concluded that the confidentiality orders, combined with the fact that RBS generally didn't let the regulators walk away with copies of the documents, meant that the communications were at most “limited disclosures”. Under English privilege law, that meant that the documents kept their privilege – no waiver. So the confidentiality order didn't create privilege, but it did preserve privilege.
In one sense, there's nothing surprising about the fact that privileged materials are more likely to stay private than non-privileged materials. But the interplay of Mr Justice Birss's last judgment and this one should inform how American lawyers communicate with regulators when the spectre of English litigation looms. To keep communications with US regulators out of English courts, it's not enough to slap signatures on a confidentiality agreement and call it a day. Rather, confidentiality will be best achieved by communicating pre-existing privileged material rather than documents created specifically for the regulator. And if possible, documents should be shown to regulators rather than given outright.
Another takeaway, which should have been obvious by now but bears repeating, is that American lawyers can't be content to understand American privilege law. Mr Justice Birss applied English law to the waiver question without even the slightest hint that American law might be relevant – even though the events on which the claim of waived was based happened in America, and despite considering the privilege law of several other common-law jurisdictions. In other words, foreign judges might apply foreign privilege law whether you like it or not.