Why it matters: On May 8, 2017, a London High Court made a landmark ruling in favor of the Serious Fraud Office—England’s equivalent of the Fraud Section of the U.S. Department of Justice (DOJ)—in its quest to obtain documents prepared in an internal investigation that were claimed to be protected by the U.K.’s legal professional privilege. The SFO was seeking the documents in connection with its own criminal corruption investigation into the activities of London-based mining conglomerate Eurasian National Resources Corp. in Kazakhstan and Africa. The court found that the vast majority of the documents sought by the SFO, which had been prepared by the company’s then-outside counsel and forensic accountants during an internal investigation, were not protected by the legal professional privilege and must be turned over to the SFO. The broad ruling, which was seen as one of the first tests of the SFO’s enforcement reach into documents prepared in connection with such internal investigations, understandably caused consternation among the U.K. white collar bar and has raised concerns across the pond among the U.S. white collar bar as well.
Detailed discussion: In what is being hailed as a landmark ruling in England, on May 8, 2017, a London High Court found in favor of the SFO—England’s equivalent of the DOJ’s Fraud Section—in its quest to obtain documents from an internal investigation that were claimed to be privileged. The SFO was seeking the documents in connection with an investigation under the U.K. Bribery Act commenced in 2013 into the activities of London-based mining conglomerate Eurasian National Resources Corp. in Kazakhstan and Africa.
The civil ruling concerned documents (Disputed Documents) the SFO was seeking that had been prepared by ENRC’s then-outside counsel and forensic accountants during an internal investigation conducted between 2011 and 2013. ENRC claimed the Disputed Documents were protected by the legal professional privilege, specifically the “litigation privilege,” and the “legal advice privilege” that fell under the LPP umbrella. The corollaries to the LPP under U.S. law are the “attorney-client” and “work product” privileges; although, as is apparent from the court’s ruling, the contours of the doctrines may differ.
As the court put it, “[t]he issue that the Court has been asked to determine is whether ENRC is entitled to resist production of the Disputed Documents (or any of them) to the SFO on grounds of LPP.” The court said that the issue was one of first impression as “this is the first case in which the Court has had to consider a claim for litigation privilege against a background in which the adversarial litigation said to have been reasonably in contemplation by the party claiming privilege was criminal, rather than civil, in nature.”
The court said that the Disputed Documents fell into four broad categories:
- Category 1: 184 documents created between August 2011 and March 2013 comprising “notes taken by [attorneys at the outside law firm] of the evidence given to them by  individuals (including employees and former employees or officers of ENRC and of its subsidiary companies…; their suppliers; and other third parties with whom they had dealings) when asked about the events being investigated.” The court noted that “[n]one of these individuals has been identified by name or even by job description.” ENRC claimed that these documents were covered by the litigation privilege because the “dominant purpose” of the interviews was for the outside law firm “to obtain relevant information and instructions, and to provide ENRC with advice in connection with anticipated adversarial (criminal) litigation.” ENRC also claimed the “legal advice privilege” because the documents could “be characterised as lawyers’ work product” that would reveal “the trend of the legal advice [the outside lawyers] were providing to ENRC.”
- Category 2: Materials generated by the forensic accountants between May 2011 and January 2013 as part of “books and records” reviews they carried out in London, Zurich, Kazakhstan and Africa, with a focus on identifying controls and systems weaknesses and potential improvements. ENRC maintained that these documents were protected by the litigation privilege because their “dominant purpose” was to “identify issues which could likely give rise to intervention and prosecution by law enforcement agencies (specifically the SFO), with a particular focus on books and records offences, and to enable ENRC to obtain advice and assistance in connection with such anticipated litigation.”
- Category 3: Documents (including PowerPoint slides) presented by the outside counsel’s lead partner to the ENRC Corporate Governance Committee and Board of Directors in March 2013 relating to the results of the internal investigation. ENRC primarily claimed the legal advice privilege with respect to these documents, but also claimed the litigation privilege in the alternative.
- Category 4: 17 documents referred to in a 2014 letter to the SFO sent by ENRC’s successor outside counsel, which included (i) forensic accountants’ reports, cover letters and correspondence, as to which ENRC claimed litigation privilege on the same basis as the Category 2 documents and (ii) email correspondence from 2010 between a senior ENRC officer and ENRC’s head of mergers and acquisitions (who had formerly served as general counsel and would do so again in 2011), as to which ENRC claimed the legal advice privilege because the emails “record requests for, and the giving of, legal advice by a qualified lawyer acting in the role of a lawyer.”
After reviewing in detail the various components of the LPP and the historical and legal precedent leading to its current iteration under U.K. law, as well as the underlying facts supporting ENRC’s claims of LPP in each instance, the court found:
- NO legal advice privilege for the Category 1 and Category 3 documents to the extent they related to the witness interviews because “the protection afforded to lawyers’ working papers is justified if, and only if, they would betray the tenor of the legal advice. A verbatim note of what the solicitor was told by a prospective witness is not, without more, a privileged document just because the solicitor has interviewed the witness with a view to using the information that the witness provides as a basis for advising his client. In other words, the client cannot obtain the protection of legal advice privilege over interview notes that would not be privileged if he interviewed the witness himself, or got a third party to do so, simply because he procured his lawyer to interview the witness instead.” Moreover, the court found that “there is no evidence that any of the persons interviewed (whoever they were) were authorised to seek and receive legal advice on behalf of ENRC.” The court concluded that “[t]he evidence gathered by [the outside counsel] during its investigations was intended by ENRC to be used to compile presentations to the SFO as part of what it viewed as its engagement in the self-reporting process. If and to the extent that it was also intended by ENRC to take legal advice on the fruits of [the outside counsel’s] investigations, and that was one purpose of making the interview notes, the documents formed part of the preparatory work of compiling information for the purpose of enabling the corporate client to seek and receive legal advice, and are not privileged.”
- NO litigation privilege for any of the Category 1 or Category 3 documents to the extent they related to the witness interviews because, “[w]hilst I accept that ENRC anticipated that an SFO investigation was imminent, and that such an investigation was reasonably in contemplation by no later than 11 August 2011 when the SFO’s letter arrived, that is not enough to make out a claim for litigation privilege. Such an investigation is not adversarial litigation. The policy that justifies litigation privilege does not extend to enabling a party to protect itself from having to disclose documents to an investigator. Documents that are generated at a time when there is no more than a general apprehension of future litigation cannot be protected by litigation privilege just because an investigation is, or is believed to be imminent.” Moreover, the court said that “[t]he reasonable contemplation of a criminal investigation does not necessarily equate to the reasonable contemplation of a prosecution.” In support of this, the court drew a distinction between criminal and civil proceedings, and noted that in criminal proceedings (as opposed to civil proceedings), the prosecution must find sufficient evidence before a prosecution can be commenced. The court thus found that “[k]nowledge that someone has accused someone within a company’s or its subsidiary’s organisation of corrupt practices, or of turning a blind eye to corrupt practices, may raise a legitimate fear of prosecution if the allegations turn out to have any substance in them; but prosecution only becomes a real prospect once it is discovered that there is some truth in the accusations, or at the very least that there is some material to support the allegations of corrupt practices. In this case, there is no evidence that there was anything beyond the unverified allegations themselves.”
- NO litigation privilege for the Category 2 documents or the Category 4 documents to the extent they related to the forensic accountants’ reports because “the dominant purpose of the documents generated by [the forensic accountants] was plainly to meet compliance requirements or to obtain accountancy advice on remedial steps as part and parcel of the comprehensive books and records review…[and] had little or nothing to do with the preparation of a defence to, or obtaining legal advice in respect of, prospective criminal litigation.”
- NO legal advice privilege with respect to the Category 4 emails between the ENRC senior officer and ENRC head of mergers and acquisitions (and former and future general counsel) because when the emails were sent in 2010, the court found that the head of mergers and acquisitions was operating in his capacity as “a man of business” and not in any legal capacity for ENRC.
The only documents that the court found to be protected by the LPP were the Category 3 slides prepared by the outside counsel and presented to the ENRC Corporate Governance Committee and Board of Directors in 2013. The court found these slides to have been created for “the specific purpose of giving legal advice to ENRC” and to be “plainly privileged, even if reference is made in them to factual information, or findings from the African investigation that would not otherwise be privileged; they are part and parcel of the confidential solicitor-client communication, and also fall within the ambit of the protection of solicitors’ work product.” The court cautioned, however, that “[t]he results of [the outside counsel’s] investigations, any reports, any fact-findings made by them, and the underlying data upon which they are based, would not be subject to LPP outside this specific context…[and] the privilege extends only to what he said to his client at the meeting(s) in March 2013 at which that slide presentation was made and any record of what he said on that occasion.”