To what extent can legal privilege be relied on to resist disclosure of documents created during internal investigations where there have been potential breaches of criminal regulations?
This was the question at the heart of the recent case of Serious Fraud Office v Eurasian Natural Resources Corporation Ltd in which the High Court ruled on the availability (or lack of availability) of legal privilege in the criminal regulatory context. As the name of the case suggests, the facts did not relate to health or social care provision (it was a fraud/corruption case about a mining company), but the issues raised in relation to privilege are applicable to the investigation of any criminal regulatory matters, including those investigated in the health and social care context by the Police, Care Quality Commission (CQC), and Health and Safety Executive (HSE).
In short, the case places stringent limits on the extent to which legal privilege can be relied on to limit disclosure of documents created as part of internal investigations where the Police/regulators are looking into potential criminal regulatory breaches. As a result, organisations need to be alert to the steps they can take to maximise the protections which legal privilege can still offer within the scope of the current law.
In this briefing we look at the practical implications of this case for health and social care providers who may be faced with the prospect of investigation/possible criminal prosecution by regulators following a serious incident.
What was the case about?
This is the first case to look in detail at how legal privilege applies to criminal, rather than civil, litigation.
The case was brought to Court by the Serious Fraud Office (SFO) which was carrying out an investigation into fraud/corruption allegations against a company (ENRC) in relation to its mining operations in two countries overseas. ENRC had initially co-operated with the SFO as part of a self-reporting process and the company had engaged lawyers and forensic accountants to carry out an internal investigation into the allegations. However, further down the line, ENRC decided that it no longer wished to engage in this process and refused to comply with the SFO's attempts to compel production of internal investigation documents under its statutory powers (similar to powers available to the CQC under section 64 of the Health and Social Care Act 2008 and available to the HSE under section 20 of the Health and Safety at Work etc Act 1974), arguing that the documents were protected by legal privilege on the basis that they were created in connection with anticipated adversarial litigation (i.e. in this case, possible investigation/prosecution by the SFO).
The Court was asked to rule on whether a variety of documents - including forensic accountant reports, notes of evidence gathered by those conducting the internal investigation (e.g. lawyers' notes of interviews with the company's employees/former employees) and slides of a presentation to the company's board about the outcome of the investigation - could rightly be considered as privileged or if they should be disclosed to the regulator in response to the statutory request for disclosure. In reaching a decision on this, the Court has to consider the actual state of mind of the party claiming privilege and, specifically, whether they are aware of circumstances which make litigation (including, in this context, criminal prosecution) a real likelihood. Just a 'distinct possibility' of future litigation is not enough.
What did the Court decide?
It may first be helpful to outline what legal privilege is. There are two types of legal privilege relevant to this case - (1) 'Litigation privilege' - which applies to communications between parties/their solicitors/third parties for the purposes of obtaining information or advice in connection with existing or reasonably contemplated litigation (which must be adversarial, not investigative/inquisitorial) for the sole or main purpose of conducting that anticipated litigation; and (2) 'Legal advice privilege' - which applies to all communications passing between the client and its lawyers for the purposes of giving or obtaining legal advice (with no need for litigation to be contemplated), including advice about what should prudently and sensibly done in the relevant legal context.
Applying these definitions in the context of the internal investigation documents in this case, the Court made the following key findings:
Litigation privilege will only protect documents from disclosure in the criminal regulatory context if those creating the documents perceive a real likelihood of a prosecution at the time. The mere fact that a regulator might investigate or is investigating the case is not enough. There has to be a real likelihood of prosecution. This is a very narrow interpretation of 'litigation privilege' which very much limits the scope of when this can be relied on in the criminal regulatory context.
Legal advice privilege will only protect documents from disclosure if those documents are genuinely created for the sole or main purpose of giving or obtaining legal advice (or would betray the tenor of legal advice). In line with other recent case law, the communications must be between a lawyer and their 'client' to attract this protection. The 'client' in this context must be someone authorised by the organisation to give instructions and to receive legal advice. Communications with the organisation's employees/former employees generally will not attract this protection. Further, documents which do not constitute 'legal advice' - e.g. notes of what witnesses say in interview as part of an internal investigation - will not attract this protection, whether or not they are made by lawyers (unless the information in the document would give a clue as to the legal advice provided).
On the facts of this case, the Court found that ENRC had to disclose almost all the documents sought by the SFO because they were not created for the purposes of preparing for/defending an actual or likely criminal prosecution. The fact that the documents were created in anticipation that the SFO might carry out a criminal investigation into ENRC's affairs was not enough.
The Court found that ENRC could not rely on legal advice privilege either (with one exception, explained below) because the documents in question - e.g. lawyers' notes of witness interviews - did not constitute legal advice to the client. The only exception was the board presentation given by the company's lawyers, which the Court concluded had been prepared for the specific purpose of giving legal advice linked to the findings of the internal investigation.
Faced with the many competing pressures in play in the immediate aftermath of a serious incident, the last thing health and social care organisations may be focusing on is the extent to which documents produced in connection with investigating and seeking advice about the incident may be legally privileged. Whilst there will be many circumstances where it is appropriate to adopt an open and co-operative approach to disclosure of documents to regulators, it is equally important that organisations faced with the prospect of criminal investigation/prosecution understand the circumstances in which legal privilege can properly be relied upon to protect documents which they may not otherwise wish to disclose.
Given the stringent limitations this recent case places on the scope of 'litigation privilege', it will be more important than ever to be able to rely on 'legal advice privilege' if documents generated as part of internal investigations are to be protected from disclosure. To achieve this, the following practical steps will be important when seeking legal advice in the aftermath of a serious incident and/or in the context of potential/actual investigation or prosecution by regulators:
- it should be made clear from the outset that the purpose of the investigation is to seek legal advice and the scope and nature of the advice requested should be properly defined;
- a record should be made of who within the organisation is authorised to request and receive legal advice and all privileged correspondence between the organisation and external lawyers should be directed to these individuals only. The chances of being able to rely on privilege will be enhanced if the party claiming privilege can produce contemporaneous evidence about the purposes for which particular documents were created;
- the position on privilege should be reviewed regularly, with an ongoing record kept of the organisation's reasons for seeking legal advice, the nature of advice being provided as the case progresses and any factual information that is needed in order to inform that advice;
- in situations where there may be benefit in sharing specific information with a regulator (e.g. to demonstrate that immediate actions have been taken to address risks of a recurrence of a similar incident), this information should be gathered and recorded separately from any broader investigation undertaken for the purpose of obtaining legal advice. Documents created in anticipation of being shared with a regulator (even if they are not eventually shared) will not be considered privileged as they were not created for the dominant purpose of seeking legal advice.
Having lost the case in the High Court and been ordered to disclose internal investigation documents which it had hoped to claim privilege over, it is understood that the company involved in this case - ENRC Ltd - may appeal to the Court of Appeal.
In the meantime, health and social care providers should take stock now to ensure they understand the steps which can be taken (including those set out above) to maximise the protections afforded by legal privilege.