Earlier this year, we highlighted the importance of the decision of Birss J in Property Alliance Group Limited v The Royal Bank of Scotland plc regarding the applicability of legal advice privilege to documents generated by a committee of the bank set up to deal with a regulatory investigation (Under Investigation? Are your communications privileged?).
In considering whether privilege applied to a category of documents over which RBS had claimed legal advice privilege, referred to as the “ESG Documents”, Birss J held that the crucial question was the purpose of the committee, the “ESG”, which created them. Was it to enable the bank to obtain legal advice in connection with regulatory investigations into LIBORmanipulation or to provide a more administrative role in managing or overseeing the investigations? The latter would not attract legal advice privilege. Birss J could not however determine from RBS’ evidence whether its claims had been correctly made out and therefore ordered RBS to provide the ESG Documents to a different judge for inspection.
Having inspected the ESG documents, Snowden J upheld the RBS claim to privilege. He based his decision on the following:
- Clifford Chance, RBS’ external lawyers, had been engaged to advise and assist RBS in dealing with and responding to the numerous regulatory investigations concerning LIBORthat the bank was facing in several jurisdictions. Clifford Chance was therefore engaged in a “relevant legal context” as their advice related to the rights, liabilities and obligations of the bank in connection with these regulatory investigations.
- The ESG meetings organised and attended by Clifford Chance had a substantial legal content and the discussions were led by the bank’s lawyers. The administrative role provided by Clifford Chance in terms of organising and attending the ESG meetings, leading the discussions of the meetings and preparing the minutes formed an integral part of the provision of their legal advice and assistance to the ESG as part of their overall engagement to advise RBS on its response to the regulatory investigations.
- There were two types of ESG Documents created by Clifford Chance; (i) tabular memoranda recording the developments in the investigations, and (ii) summary minutes of the meetings of the ESG.
- The purpose of the tabular memoranda was to keep the ESG and its lawyers up to date with the developments in the investigations. The summary minutes evidenced that the tabular memoranda were then discussed at the ESG meetings at which the advice of the bank’s lawyers was obtained on these documents and other matters pertaining to the investigations.
- It was important, as a matter of public policy, that lawyers could provide clients with an accurate record of advice provided in discussions or meetings in order to prevent misunderstandings as to the facts, the advice given or the decisions taken.
The lesson from the case for companies facing similar issues in connection with regulatory investigations is clear: a committee managed by lawyers to conduct the process of analysing what has happened and its implications, and to advise on the company’s response, will greatly assist in establishing legal advice privilege over documents it creates.
The fact that process may incidentally involve the lawyers in an administrative exercise of managing the process will not of itself undermine the privilege attaching to documents created by the committee for the purpose of giving and receiving legal advice.
The committee’s purpose should also be clearly documented. Interestingly, PAG had initially decided not to pursue its concerns regarding RBS’ claim of legal privilege in respect of theESG documents following correspondence in which the purpose of the ESG meetings was described as being for the bank to receive legal advice. Those concerns were, however, reignited when the bank later referred in evidence to the role of the ESG as being to “oversee” the investigation.
This decision will understandably frustrate claimants who would clearly have benefited from direct access to documents examining the regulatory issue. It seems to us, however, that Snowden J came to the right result. As he highlights, there is an important public policy consideration here. Regulatory investigations are more likely to be conducted efficiently and effectively if regulators are able to communicate with clients who have the benefit of confidential legal advice as to their position. Likewise, clients are more likely to respond appropriately in regulatory investigations if they are able to have open conversations with their lawyers as to what has happened and their consequent legal rights, liabilities and obligations.