We live in an ever more regulated age. European and global markets are increasingly regulated and this trend looks set to continue. The chances of a business or even an individual falling foul of this degree of regulation, committing a criminal offence and suffering the reputational damage and expense of prosecution loom larger than ever before.

Regulatory breaches may, for example, include any of the following:

  • exposing people to a risk of death or personal injury
  • causing or allowing environmental breaches such as noise, water or land pollution, waste disposal or tree damage
  • misleading consumers leading to trading standards offences or product safety, quality or fair trading issues


Sanctions for regulatory breaches can be very serious. A court will often have unlimited powers to fine companies on conviction. Increasingly, in England & Wales, fines of over £100,000 are being imposed. Indeed, this level of fine can almost be expected as a minimum where there has been a fatal accident. Current proposals link fines to turnover and therefore, for larger businesses, fines of several million pounds will become more common particularly in injury cases. Adverse publicity orders are also increasingly likely. A criminal record will often have to be disclosed on tenders and there is a trend to investigate and prosecute individuals who will additionally face the risk of imprisonment as well as action to preclude them from acting as a director. An investigation is always disruptive, often costly, affects morale and has the potential to damage even the strongest of brands.

First steps following an incident

Correct action taken immediately after an incident will have an important impact on the ultimate outcome. We recommend that the following issues are considered:

  • Internal investigation

An internal investigation of the incident should be conducted as soon as possible. This may, for example, include taking photographs of an incident site as well as contemporaneous witness statements. An investigation report should be produced (having considered the requirements of disclosure and privilege outlined below). In brief, it is advisable for all such reports to be commissioned by a lawyer (whether internal or external) and marked as 'Privileged' and 'Private and Confidential'. Reports should not be forwarded without careful consideration and should not contain any opinion at all, simply the facts of the incident.

  • Reporting

Incidents must be reported accurately and factually as soon as possible to the relevant external authorities. For example, many accidents will need reporting to the Health and Safety Executive (HSE) to comply with The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations. Failure to make a report can itself be a criminal offence.

  • Document retention

Documents relevant to an incident must be retained. In the event of litigation or prosecution, production of relevant documents is required in accordance with court rules and the documentation can provide you with a defence or substantial mitigation. In this context 'documents' can, for example, include letters and photographs, maintenance and training records as well as information held electronically, such as emails or on databases, even when they have been 'deleted'. Steps should therefore be taken to prevent document destruction.

  • Privilege

Some documents attract 'privilege' which means that they do not have to be disclosed externally for example to investigators or in subsequent litigation. Our forthcoming alerts on privilege (part 9) and disclosure (part 12) will provide further information on these areas.

'Legal advice privilege' protects from disclosure communications between a lawyer acting in his/her professional capacity and his/her client, provided they are confidential and for the purposes of giving or seeking legal advice. It will not apply to advice of a purely strategic or commercial nature. It might extend to reports obtained following an accident. Beware though of inadvertently waiving privilege which can happen through unnecessary internal circulation of a document. Communications with an independent third party are not covered by this head of privilege.

'Litigation privilege' protects confidential communications between a client and his/her lawyer (or between one of them and a third party) where the dominant purpose of the communication is obtaining legal advice in relation to actual or contemplated litigation.

  • Notification to insurers

Relevant insurers must be notified following any event if there is any possibility of cover existing for civil damages or for legal costs for potential claims. Failure to notify in accordance with the policy may lose you the cover you thought you had.

  • Powers of investigators

Be prepared for thorough investigations by empowered authorities such as the police, HSE or local authority. Wide powers allow authorities to gather information to decide on appropriate enforcement action. Such powers include: inspection of premises without notice; the ability to inspect and retain original documents, information from a computer, articles or substances; and taking statements from employees and indeed anyone else who may have any relevant information.

Policies and procedures – some recommendations

We recommend that:

  • regulatory compliance is on your agenda, reinforced from the top down
  • you have in place simple and clear procedures and checklists which enable those who may, understandably, be very distressed following an incident, particularly one involving serious injury or serious risks to: manage what happens next; prevent the risk of any further regulatory breach; avoid compromising potential defences; put you in the strongest position to manage the outcome of any investigation and proceedings