The High Court in London has recently held that documents produced by lawyers during an internal investigation may not attract legal privilege. Privilege, when conducting internal investigations is far from straightforward and organisations and their lawyers need to be cognisant that notes and documents they produce may not attract legal privilege.
There are many instances in which organisations require the assistance of their legal advisors when undertaking an internal investigation. These may include, for example, an internal disciplinary investigation, a health and safety investigation or an investigation into certain events or individuals within the organisation. The existence of legal privilege in such circumstances provides an organisation with a degree of comfort that it can get to grips with the underlying issues without documents becoming discoverable during any subsequent court or regulatory proceedings.
There are two primary forms of legal privilege. The first applies to correspondence passing between solicitor and client for the purpose of providing legal advice. The second relates to documentation that has come into existence for the purpose of providing or receiving legal advice in a legal context, for example, documents prepared in contemplation of litigation.
A recent decision of the High Court in London reminds us that privilege is not a given and organisations and their lawyers need to both understand the minutiae of the rules around privilege and also be cognisant that privilege may not apply when drafting notes or other documents.
The case involved an internal investigation in Royal Bank of Scotland ("RBS") and concerned the "RBS Rights Issue Litigation". This litigation was taken by shareholders in RBS who sought to invoke statutory remedies to recover investment losses after the collapse of RBS shares. Some of the shareholders sought to make RBS directors responsible for the prospectus which was published to potential investors in respect of the Rights Issue.
Privilege was claimed over two primary categories of documents. The first related to transcripts, notes or other records of interviews with RBS employees or ex-employees involved in an internal RBS investigation in response to US Securities and Exchange Commission actions in relation to sub-prime exposures. The second were similar documents but relating to an internal investigation into allegations concerning the marketing of Super Senior CDOs.
It was argued that while these documents did not form part of the communication between the lawyers and RBS directly they were communications between a lawyer and a person authorised to speak with and be interviewed by the lawyer on the employer's behalf. It was argued that all resulting documentation fell within the general "attorney-client privilege" category. As a second bite of the cherry, RBS also argued that, in any event, the attorney notes, which were not a verbatim transcript of the interviews, were attorney work product and therefore privileged.
The High Court rejected this argument. The Court applied a restrictive test and held that a "client" consists only of those people authorised to seek and receive legal advice on behalf of the employer. This did not extend to the 124 employees and ex-employees interviewed during the investigations.
The court had previously found that the transcripts of the interviews were not privileged. It held that in order to be privileged the attorney's notes or documents would have to have some other feature which would highlight or indicate the legal advice being or to be provided to the employer. Mere "mental impressions" formed by lawyers about an interviewee or the content of their interview were not privileged.
Implications in Ireland
This decision highlights that the issue of legal privilege is far from black and white and that organisations and their lawyers must always be mindful that privilege may not apply in the context of internal investigations.