In this case, the High Court ruled that lawyers' notes of interviews with employees and ex-employees were not protected by legal advice privilege.

The Facts

Documents which are privileged do not have to be disclosed during litigation. This decision by the High Court concerned the availability of legal advice privilege in relation to the conduct of interviews in the course of an internal investigation.

Legal advice privilege applies to confidential communications which:

  • Pass between a client and the client's lawyer; and

  • Have come into the existence for the purpose of giving or receiving legal advice about what should prudently and sensibly be done in the relevant legal context.

Lawyers' working papers, which are documents which would betray, or give a clue as to, the trend of legal advice being given, are also privileged.

Shareholders of RBS issued proceedings to recover investment losses incurred after the collapse of RBS shares in 2008. During the course of the litigation, the shareholders sought disclosure of transcripts, notes or other records of 124 interviews conducted by or on behalf of RBS with employees and ex-employees as part of two internal investigations undertaken by RBS. These notes were prepared by RBS's in-house and external lawyers. Each was said to summarise those interviews (and were not verbatim). There was no dispute that each interviewee had been authorised by RBS to participate in the interviews, were told that the interviews were confidential and that the notes would be subject to "attorney-client privilege".

RBS asserted legal advice privilege over the interview notes. RBS's claim did not rely on the interview notes being part of a communication between RBS and its lawyers in which advice was sought or given, nor that that interviewees were themselves being given legal advice. Instead, it claimed that each of the interview notes recorded a communication between a lawyer and a person authorised by RBS to give instructions or information to its lawyers. RBS contended that any communication – including factual information not consisting of legal instructions - by an employee who is authorised to communicate with a legal adviser for the purpose of his employer seeking legal advice, is privileged.

RBS claimed that, alternatively, the interview notes were privileged because they were lawyers' working papers.

RBS also resisted disclosure on the basis that the court should apply US law, if the documents were not privileged under UK law, because of the connections with the US. Under US law, RBS considered that the interview notes would be privileged, because US law provides wider protection.

The court rejected RBS's claim to legal advice privilege.

Applying the restrictive definition of "client" in the Three Rivers (No 5) decision, the court noted that the client, for the purposes of privilege, consists only of those employees authorised to seek and receive legal advice from the lawyer and that did not extend to information provided by employees and ex-employees to or for the purpose of being placed before a lawyer. Here, the interviewees had provided information as employees, and not as clients.

The court also rejected RBS's argument that the notes were privileged as lawyers' working papers. As the court had already found that the interview notes themselves were not privileged, the starting point was that the interviews themselves were not privileged communications. It followed that verbatim transcripts of unprivileged interviews would also not be privileged. To be privileged, RBS would have had to show some attribute of, or addition to, the relevant interview notes which distinguished them from verbatim transcripts, or revealed the trend of legal advice being given. On the evidence, the court did not consider that RBS had demonstrated this. This was in spite of the fact that the interview notes reflected a degree of selection because they were not transcripts, and that they were annotated as being the lawyer's "mental impressions". The court found that the evidence had not shown anything substantial in relation to its legal team's analysis of the documents.

The court also held that English law of privilege applies to litigation in English courts, and that adopting a new choice of law rule would be too drastic and an unsupported departure from the current approach.

What does this mean for employers? 

Recent years have seen a marked increase in the number of internal investigations, in particular in the financial services sector. This is an unhelpful decision for employers who seek to undertake internal investigations under legal privilege. We understand that permission has been granted to RBS to appeal directly to the Supreme Court, rather than having to go through the Court of Appeal. If the appeal goes ahead, this presents a real opportunity for broader issues of legal privilege to be reviewed as part of that, including the much criticised Three Rivers (No 5) decision.

However, unless and until the definition of "client" for privilege purposes is revisited by the appellate courts, legal advice privilege will not protect the notes of interviews conducted with employees or ex-employees on the basis that the communications are not with the "client" for the purpose of giving or receiving legal advice. The decision may result in employers modifying their approach to internal investigations to ensure that witness evidence is effectively incorporated into the ultimate legal advice or that the notes pass the "lawyer's working papers" exception. This may prove challenging in large-scale investigations.

RBS Rights Issue Litigation, Re [2016- EWHC 3161 (Ch)