• Legal advice privilege applies to legal advice given from solicitor to client;
  • In the age of large corporates, determining who the “client” is can prove difficult;
  • Increasing regulation means that more bodies than ever have investigatory powers and a determination over what documents these bodies can see, can be pivotal.
  • In determining if the SFO takes on an investigation or not, the Director at the SFO applies his Statement of Principle which includes consideration of if the criminality undermines UK PLC commercial or financial interests in general and the City of London in particular.

At a Glance:

In an environment of increasing regulation from external bodies, the application of privilege over documents at early investigatory stages can be important. The case of SFO -v- Eurasian Natural Resources Corporation [2017] considered the documents disclosed pre-investigation and the powers which the SFO can exercise in searching for documents and evidence.


The Details:

Before bringing criminal proceedings the Serious Fraud Office (SFO) can invite corporations to co-operate with their preliminary investigations under their self-reporting regime. The case of SFO -v- Eurasian Natural Resources Corporation [2017] is the first to consider the application of the various types of privilege in the context of self-reporting investigations that could have criminal consequences.

Late 2010 ENRC started investigating a whistle-blower’s allegations and in 2011 they instructed solicitors and forensic accountants to investigate operations in Kazakhstan and Africa. For more information on the instruction of solicitors by corporates for internal investigations, see our article Privilege over documents – a need to know for corporates.

The media coverage of these investigations sparked the SFO’s interest and in August 2011 it contacted ENRC inviting them to use the self-reporting regime under the Bribery Act 2011 with the assurance that they were not carrying out a criminal investigation ‘at this stage’. There are two stages to the decision making process under the Bribery Act; the first is the assessment of the evidence available to secure a conviction and the second is if prosecution is in the public interest. In considering the latter, if an organisation has used the self-reporting regime it may weigh against the public interest to prosecute but it will not be decisive.

Some 18 months after the SFO’s invitation for ENRC to use the self-reporting regime, in April 2013 the SFO commenced a criminal investigation and required production of certain documents under s 2(3) of the Criminal Justice Act 1987.

Classes of documents over which privilege was sought:

The classes of documents required were:

  1. Notes taken by solicitors during interviews with employees, former employees, subsidiaries and third parties of ENRC;
  2. Materials generated by the forensic accountants that had the purpose of identifying controls, system weaknesses and potential improvements;
  3. A presentation of the findings of the solicitors’ research by the partner with overall conduct of the matter;
  4. A variety of documents that were referred to in a letter sent to the SFO by solicitors.

Grounds for resisting disclosure:

ENRC resisted disclosure of these documents by attempting to claim various types of privilege over them. In summary these are:

  • Litigation Privilege – applies from the point at which adversarial litigation is considered reasonably likely;
  • Legal Advice Privilege – where documents contain legal advice and to disclose them to the opponent would be to unveil the type and nature of legal advice received (see our article on a need to know for corporates in this point), and;
  • Lawyers Working Papers – which are a sub category of Legal Advice Privilege.

The Judge, Mrs Justice Andrews considered the leading authorities of Three Rivers (No.5) and the RBS Rights Issue Litigation before concluding that the only class of document covered in this case was the presentation provided by the solicitors to ENRC presenting the findings of their research and providing legal advice from the back of it.

Privilege in civil and criminal proceedings:

The particularly unappetising part of the decision is the acknowledgement that as criminal proceedings cannot be started until the prosecutor has enough information to start them. Justice Andrews stated that:

“One critical difference between civil proceedings and a criminal prosecution is that there is no inhibition on the commencement of civil proceedings where there is no foundation for them, other than the prospect of sanctions being imposed after the event. A person may well have reasonable grounds to believe they are going to be subjected to a civil suit at the hands of a disgruntled neighbour, or a commercial competitor, even where there is no properly arguable cause of action, or where the evidence that would support the claim has not yet been gathered. Criminal proceedings, on the other hand, cannot be started unless and until the prosecutor is satisfied that there is a sufficient evidential basis for prosecution and the public interest test is also met. Criminal proceedings cannot be reasonably contemplated unless the prospective defendant knows enough about what the investigation is likely to unearth, or has unearthed, to appreciate that it is realistic to expect a prosecutor to be satisfied that it has enough material to stand a good chance of securing a conviction.”

The concept of Privilege to communications between a client and solicitor is to protect the client from having to disclose the legal advice received to another and thereby undermining the legal advice. While this is clearly relevant in either civil or criminal proceedings, the distinction appears to be the point at which adversarial criminal proceedings are envisaged with the comment:

“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.”

 

Key Points

Global organisations encounter trade situations common overseas but fall foul of the Bribery Act 2010, for more information on protecting your business see our article (http://bit.ly/2qmFLBc ).

In this case, Litigation Privilege was considered not to apply because legal proceedings were not contemplated, this will not always be situation and the “client” (see our article link) of an organisation should continually evaluate with their solicitors the point at which litigation is a likelihood and therefore, litigation privilege applies.

In the context of Legal Advice Privilege, verbatim interview notes taken by solicitors during internal investigations will not be covered but the judgement explains that notes indicating the interviewing solicitor’s “qualitative assessment of the evidence” will be covered.

 

Kirsty Wright 

Assistant Solicitor, London

00 44 (0) 207 240 0521

00 44 (0) 207 240 9457

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