Conducting investigations into allegations of regulatory breaches, fraud or corruption can present serious legal and commercial risk if privilege cannot be asserted over the findings of those investigations. That risk may be compounded if boards choose to conduct such investigations in-house, often with compliance managers or in-house counsel reporting the findings of those investigations directly to the board. Waiving or losing privilege can have serious consequences if any conclusions (or preliminary findings) about who is culpable needs to be disclosed to a regulator before an organisation has concluded its investigation. This can obviously have repercussions for the organisation and potentially the directors themselves.
There have been significant developments in legal professional privilege in the last decade. The High Court has made it clear that legal professional privilege is a substantive right, that cannot be abrogated by statute, save by the clearest words or necessary implication. The adoption of the “dominant purpose test” in Australia has brought Australia into line with other common law countries, now enshrined in the Uniform Evidence Acts.
For in-house counsel conducting internal investigations, it is important that they are careful not to act inconsistently with the maintenance of the confidence in the documents or communications over which privilege is to be asserted. The issue of legal professional privilege is particularly difficult for in house or corporate counsel, because of the perceived difference in the role that in house counsel fulfil, as opposed to an outside lawyer. As a result, in house counsel must be particularly vigilant to ensure that they maintain independence and segregate any legal advice from other considerations that are being considered by the organisation, especially where investigations are concerned.
Assuming that a decision has been made to investigate an allegation or complaint in-house, and ensuring adequate protections are in place if the issue was raised by a whistleblower, it is possible that any company led investigation will not be covered by legal professional privilege. The current trend of decisions in Australia is that a report into an incident or investigation prepared or commissioned by an in-house lawyer may not be considered by a court to be for the “dominant purpose” of providing advice or for use in litigation. This is because in most cases the reports have multiple purposes.
Whether legal professional privilege can be maintained over documents created by in-house counsel is not an easy question. Some suggested approaches to maintaining privilege in the case of internally created investigation reports:
- Keep legal advice about the investigation and operational advice separated.
- Document the dominant purpose of your legal advice.
- Avoid referring to legal advice in board minutes and papers. If legal advice must be discussed, ideally the minutes should briefly state that an issue the subject of legal professional privilege was discussed, rather than dealing with that issue in detail. If the legal advice must be recorded, keep it in a separate document which can be annexed to the minutes or in a separate section with the heading “subject to legal professional privilege”.
- Do not refer to specific legal advice in correspondence with other parties, including to third party vendors who might have been retained to assist with an investigation.
- Ensure internal investigation policies are in place that create a clear chain of reporting findings and which ensures that legal advice is only provided to those who need it and upon confidential terms.
- Be admitted to practice and maintain a current practising certificate (or report to someone who does).
- Ensure that you sign legal advices (including email advices) in your capacity as the organisation’s solicitor, not in a dual capacity.