In a potentially helpful judgment for investigations lawyers, the High Court in London has recently confirmed, in Property Alliance Group Ltd v. Royal Bank of Scotland Plc, 1 that legal advice privilege applies, under English law, to client-lawyer communications where such communications consist of memoranda summarising the status and coordination of regulatory investigations. This case, like all privilege disputes, turned very much on its particular facts. The decision should, however, provide some assurance to clients and practitioners alike that confidential, lawyerproduced memoranda, containing summaries of meetings on regulatory issues, can properly be considered privileged so long as such documents form part of a broader continuum of communications in which legal advice is being provided.
The privilege issue arose in underlying commercial litigation due for trial in May 2016 related to the LIBOR manipulation issues affecting the banking industry. In this case, the Property Alliance Group (“PAG”), a UK developer, has alleged that Royal Bank of Scotland (“RBS”) induced it, through implied misrepresentations occurring between 2004 and 2008, to enter into four interest rate swap agreements tied to the three-month GBP LIBOR rate. RBS has denied any misconduct in relation to the setting of any GBP LIBOR rates. In order to deal with the ongoing investigations by regulators in a number of jurisdictions, RBS formed an Executive Steering Group (“ESG”) to liaise with a number of specialist legal advisers.
Extensive disclosure was ordered in the course of the underlying litigation. An issue arose as to whether certain memoranda produced by RBS’s external lawyers in the course of the broader LIBOR-related regulatory issues and involving the ESG (the “ESG Documents”) should be made available for inspection by PAG. In practice under English procedure, if documents were to be available for inspection, copies could be obtained by PAG and deployed at the main trial, with the potential for those documents to become a matter of public record.
The ESG Documents fell into two categories: (1) confidential memoranda in table form in which RBS’s main legal advisers “informed and updated” the bank on the progress, status and issues arising in the LIBOR investigations; and (2) confidential notes/summaries also prepared by RBS’s main legal advisers concerning discussions between ESG and its external lawyers. Such was the contention surrounding the status of the ESG Documents that the presiding judge appointed another judge, Mr. Justice Snowden, to determine the issue. One reason for this was that Snowden J. was himself able to view the ESG Documents without fear of undermining the underlying trial proceedings.
Snowden J. considered a number of factors in determining that the ESG Documents were privileged, including:
- The law firm which had authored all of the ESG Documents had specifically been retained to advise RBS on LIBOR-related issues and was present at the ESG meetings.
- The ESG Documents were drafted in order to be presented and discussed at the ESG meetings, or to summarize a previous meeting, and informed and updated the ESG as to the progress, status and issues arising out of the ongoing regulatory investigations into LIBOR.
- The ESG Documents were designed to help the ESG direct RBS’s strategy, including decisions as to areas in which legal advice was required.
Considering and applying the leading English case law on legal advice privilege, Snowden J. cited the principle that “legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context” and referred to the “continuum of communication and meetings between the solicitor and client . . . [w]here information is passed . . . to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given.”2
Snowden J. referred also to the English court’s previous finding that “all communications between a solicitor and his client relating to a transaction in which the solicitor has been instructed for the purpose of obtaining legal advice will be privileged . . . provided that they are directly related to the performance by the solicitor of his professional duty as legal adviser of his client.”3
Applying these general principles to the facts, Snowden J. held that:
- RBS had engaged the lawyers who had authored the ESG Documents in “a relevant legal context” to provide advice and assistance which undoubtedly “related to the rights, liabilities and obligations of RBS, and the remedies that might be granted against it.”4
- The ESG documents “form[ed] part of a continuum of communication and meetings . . . where information is passed . . . so that advice may be . . . given.”5
- The ESG Documents were produced as “an integral part of [RBS’ external lawyers] provision of legal advice and assistance to the ESG” rather than “as a simple matter of administrative convenience.”6
As a matter of broader policy Snowden J. also held that:
“There is a clear public interest in regulatory investigations being conducted efficiently and in accordance with the law … lawyers must be able to give their client candid factual briefings as well as legal advice, secure in the knowledge that any such communications and any record of their discussions and the decisions taken will not subsequently be disclosed without the client’s consent.”7
In an era in which UK regulators and prosecutors have indicated that they may be open to challenging in court privilege claims by subjects of their investigations, it is both timely and helpful to have this confirmation of the position in relation to legal advice privilege.