Has Legal Advice Privilege been eroded in corporate investigations?

interview under investigation legal advice

Has Legal Advice Privilege been eroded in corporate investigations?

Harry Travers and Alex Swan consider the impact of the High Court’s decision in Re RBS Rights Issue Litigation [2016] EWHC 3161 (Ch).


As reported in our September 2016 edition of LondonCalling, battle lines between investigatory authorities, principally the SFO, and corporates have for some time been drawn over the issue of legal professional privilege (LPP). The SFO has threatened to challenge “false and exaggerated claims” while professional guidance for lawyers has re-stated the importance of LPP in forthright terms. A recent High Court decision on the scope of LPP in the civil dispute between Royal Bank of Scotland (RBS) and shareholders has highlighted some of the issues in the ongoing debate.

Dealing first with the claim to legal advice privilege, RBS submitted that the communication of factual information (i.e. notes) gathered by or for the purpose of being provided to its lawyers, where the submitting party was authorised to do so by RBS, was privileged as it was done so for the purpose of enabling RBS to seek legal advice. However, the claimants argued that the communication of factual information by a company employee to the company’s lawyers was not privileged, and legal advice privilege covered only communications between a client and his lawyer for the purpose of the lawyer giving, and that client seeking or receiving, legal advice.

The High Court was bound to follow a previous (often criticised) decision of the Court of Appeal in Three Rivers (No 5), in which it ruled that in a corporate context information gathered from an employee is no different to information obtained from third parties, even where the information was obtained in order to be shown to a lawyer to enable fully informed advice to be given to the lawyer’s client. RBS sought to distinguish Three Rivers on the basis that direct communication by an authorised employee to the corporate’s legal adviser in a corporate context had not been addressed in that case.

Despite recognising the cogency of RBS’ submissions, the judge rejected RBS’ argument, finding that

“the individuals interviewed were providers of information as employees and not clients…and [the notes] were not communications between client and legal adviser.”

RBS alternatively sought to argue that the notes were privileged on the basis that they constituted lawyers’ working papers, as the non-verbatim notes had been prepared by lawyers, reviewed by lawyers as being subject to privilege, contained notes recording that they reflected lawyers’ “mental impressions”, and revealed the lawyers’ train of inquiry. Again, though, the judge ruled against RBS, and found that the evidence did not support RBS’ contentions – the evidence had to be more than “conclusory in nature” – the judge remarked that it was rather telling what the evidence did not show, and found that there was a real distinction

“…between reflecting ‘a train of inquiry’ and reflecting or giving a clue as to the trend of legal advice.”

Finally, in dealing with RBS’ arguments that under US law the notes would have been privileged, the judge was prepared to assume that was so but held that there was no sound basis for disturbing the usual practice of applying the law of forum, i.e. English law.

It is of note that the judge was not unsympathetic to some of RBS’ arguments. The Three Rivers decision has often been criticised, and, given the current preponderance of multi-jurisdictional corporate investigations, it was initially hoped that the time may have arrived for this decision to be reviewed. However, RBS have now confirmed that they will not be appealing this judgment as the claimants are no longer seeking the documents which were the subject of the High Court decision.

This means that, for now, the Three Rivers decision will stand and corporates will continue to face a difficult task when deciding whether the products of their investigations are covered by legal advice privilege. In circumstances where many cases can now involve simultaneous cross-border investigations, more care than ever needs to be taken in determining the different approaches to privilege in different jurisdictions and developing an appropriate global strategy accordingly.

Additionally, corporates and lawyers will need to give careful thought to who the “client” is in order safely to claim privilege. In asserting a claim, clear and cogent evidence as to the type of legal input involved will need to be provided, rather than simple ‘conclusory’ assertions.

It should be noted that in Re RBS Rights Litigation, litigation privilege was not invoked but rather legal advice privilege (which can be wider) was claimed. It may be that a claim to litigation privilege, where litigation is clearly in contemplation, has a better chance of success, but in corporate investigations it may not always be possible to demonstrate, especially at an early stage of the internal investigation, that the dominant purpose of a communication or document was for litigation.

If you’d like to discuss any of the issues raised in this article with one of our solicitors then please get in touch in the strictest confidence.


Harry Travers & Alex Swan