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Privileged communications webinar, March 2019
The document discusses privileged communications, outlining key types of privilege such as legal advice and litigation privilege, along with their applications in internal investigations and case examples like SFO v ENRC and WH Holding v E20. It emphasizes the importance of privilege in protecting sensitive documents during investigations, the obligations to disclose adverse documents, and highlights practical takeaways for in-house lawyers. The document concludes with strategies for managing privileged communications and maintaining proper documentation throughout the investigation process.
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Privileged communications webinar, March 2019
- 1. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Privileged Communications: What you need to know
- 2. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Connect with Mark Daniels mark.daniels@brownejacobson.com +44 (0)121 237 3993 Privileged Communications: What you need to know Connect with Helen Simm helen.simm@brownejacobson.com +44 (0)330 045 2652
- 3. Join the conversation@brownejacobsonJoin the conversation @brownejacobson We’ll cover • The importance of privilege • The key types of privilege • Internal investigations • Key case; SFO v ENRC • In-house settlement discussions • Key case; WH Holding v E20 • Practical take-aways • Questions
- 4. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • an absolute right to withhold documents that could contain your risk analysis, acknowledged case weaknesses and tactics from production to a third party or the court • Obligation to disclose adverse documents • Disclosure outside litigation – eg subject access requests The importance of privilege
- 5. Join the conversation@brownejacobsonJoin the conversation @brownejacobson The key types of privilege
- 6. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Legal advice privilege (narrower) • Only between solicitor and client • Can apply whether or not litigation is reasonably in prospect or in progress Legal advice privilege –v- Litigation privilege
- 7. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Litigation privilege (wider) • Litigation must be in progress or reasonably in contemplation • Can apply outside of the solicitor- client relationship provided document produced for the dominant purpose of litigation Legal advice privilege –v- Litigation privilege (cont’d)
- 8. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • Internal investigations – often necessary • Risks of disclosure – internal investigation can provide a route map for external regulators • Conflicting considerations; accountability and transparency vs proper desire to take confidential legal advice • Self reporting Internal investigations
- 9. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • ENRC – large mining company • Email in December 2010 from whistle-blower containing allegations of fraud, bribery and corruption • Internal investigation: • External lawyers interviewing employees/third parties • Accountants “books and records review” • Reports presented to board SFO v ENRC – the background
- 10. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • SFO investigation formally opened in April 2013 and a disclosure of a range of documents compelled • ENRC withheld four categories of documents on the basis of privilege SFO v ENRC – the background (cont’d)
- 11. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • Lawyers notes of meetings with employees, former employees and third parties etc. • Material generated by forensic accountants during their review • Documents prepared by lawyers to update senior personnel within ENRC • Documents referred to in an external lawyer’s letter to the SFO The four categories
- 12. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Privilege claimed Category Legal advice privilege? Litigation privilege? Judgment Lawyers’ interview notes Yes Yes Not privileged Accountants’ material Yes Not privileged Reports and updates to the board etc. Yes Yes Legal advice privilege only Reports/emails Yes Not privileged
- 13. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • Litigation privilege did not apply as: • Litigation was not in reasonable contemplation • Dominant purpose was not established • Distinction: conduction litigation and avoiding litigation High Court judgment – the rationale
- 14. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • Legal advice privilege attaches to some documents prepared by lawyers but only between lawyers and authorised individuals within the client entity High Court judgment – the rationale (cont’d)
- 15. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • Litigation privilege • Purpose of heading off, avoiding or settling reasonably contemplated proceedings is within scope of privilege • Uncertainty doesn’t equate to no contemplation • Reasonable contemplation can occur before regulator contact • Fact specific Court of Appeal – a different view
- 16. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • Legal advice privilege • No determination • Three Rivers approach criticised Court of Appeal – a different view (cont’d)
- 17. Join the conversation@brownejacobsonJoin the conversation @brownejacobson • WH Holding v E20 Stadium • Scope of litigation privilege • Dominant purpose • Disentangling legal advice from pure commercial discussions • Will the court inspect the relevant documents? West Ham seats and boardroom settlement discussions
- 18. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Practical take-aways • Think carefully before creating unnecessary (and potentially non- privileged) documents • In house lawyers – clear distinction between legal communications and executive/business/administrative communications
- 19. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Practical take-aways (cont’d) • Clear people strategy • Minimum circulation list – senior personnel • Clarity re: client and type of privilege • Small investigation team
- 20. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Practical take-aways (cont’d) • Clear document strategy • Preservation and organisation • Labelling and identification • Scope • Media and communications
- 21. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Questions?
- 22. Join the conversation@brownejacobsonJoin the conversation @brownejacobson Connect with Mark Daniels mark.daniels@brownejacobson.com +44 (0) 0121 237 3993 Privileged Communications: What you need to know Connect with Helen Simm helen.simm@brownejacobson.com +44 (0)330 045 2652
Editor's Notes
- #9 Internal investigations may need to be undertaken for a variety of reasons: Whistle-blower allegations of fraud/bribery/misconduct Suspicious transactions or communications within the business Accident or environmental incident – to identify reasons and make improvements Sometimes – may be mandatory requirement to investigate – either under regulations or under corporate governance rules Obvious problem – documents created in the course of the investigation may later provide a route map for external regulators if investigation is carried out Conflicting considerations: want to investigate fully and take legal advice before taking the next step; but real and proper concern that this may create difficulties at a later stage
- #10 ENRC large mining co operating in high risk bribery areas such as Kazakhstan and Africa. 2009/2010, making acquisitions of a number of organisations, one of which (Camrose) was alleged to have unlawfully acquired a mine. ENRC aware of these allegations but could not completely discount them. Whistleblower email sent to ENRC – brought to the attention of the board, audit committee engaged lawyers (DLA, then Dechert) to investigate. Investigation also involved ENRC’s General Counsel. Accountants instructed in April 2011 to undertake books and records review.
- #11 SFO became directly involved in August 2011, contacting the GC about an article in the Sunday Times that referenced allegations in whistleblower email. Reminded ENRC about the need to self report. A number of meetings held with ENRC during which the progress of the criminal investigation was discussed. SFO were aware of the scope of the investigation and ongoing interviews etc. Criminal investigation formally opened by SFO in April 2013 SFO compelled production of a range of documents relevant to the investigation – s2(3) CJA 1987 - The Director may by notice in writing require the person under investigation or any other person to produce …any specified documents which appear to the Director to relate to any matter relevant to the investigation or any documents of a specified description which appear to him so to relate; and ENRC refused to disclose four categories of documents on the basis that they were protected by privilege – s2(9) CJA 1987 SFO sought declaration from the High Court that disclosure of the documents could be compelled
- #12 Category 1 – third parties inc subsidiaries, suppliers Category 4 included reports generated by the forensic accountants and emails/letters enclosing copies of those reports (including emails from a lawyer within ENRC) Category 4 - 9 were the FRA reports (or appendices thereto) and and a further 6 of these documents are said to be e-mails or letters “enclosing copies of the FRA books and records reports – Lit P claimed as per category 2 Other 2 docs in cat 4 were emails between former GC of ENRC, then head of M and A, and a senior ENRC exec – as per cat 2 Prior to this case – would have been anticipated by most lawyers that privilege would apply to all the above documents, particularly in cats 1-3
- #13 Litigation privilege Lawyers meeting notes Accountants’ material Accountants’ reports/emails enclosing those reports Communication sole or dominant purpose is conducting that anticipated litigation Litigation is adversarial Legal advice privilege Documents prepared by lawyers Confidential communication Lawyer and client Purpose giving or seeking legal advice
- #14 Litigation was not in reasonable contemplation ENRC did not establish that litigation was “a real likelihood rather than a mere possibility” prosecution only 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” SFO investigation only the first stage of assessing whether further steps would be taken and therefore not “adversarial litigation” at that stage “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.” Dominant purpose not met no evidence to show that the purpose of the internal investigation had anything to do with the conduct of future criminal proceedings Distinction: conducting litigation and avoiding litigation Avoiding litigation not sufficient Litigation privilege does not extend to third party documents created in order to obtain legal advice as to how best to avoid contemplated litigation or a future regulatory or criminal investigation
- #15 Legal advice privilege: J quoted Three Rivers 5 – “the judgment of the Court of Appeal supports the proposition that where the party asserting privilege is a corporate entity, legal advice privilege attaches only to communications between the lawyer and those individuals who are authorised to obtain legal advice on that entity’s behalf”
- #16 Court unanimously disagreed with the conclusions of Mrs Justice Andrews. More pragmatic approach 9 issues for consideration - Re LP 1: Was the judge right to determine that, at no stage before all the Documents had been created, criminal legal proceedings against ENRC or its subsidiaries or their employees were reasonably in contemplation? 2: Was the judge right to determine that none of the Documents was brought into existence for the dominant purpose of resisting contemplated criminal proceedings against ENRC or its subsidiaries or their employees? 3: In the circumstances, which if any of the Category 1, 2 or 4 documents are protected by litigation privilege? Found that proceedings WERE reasonably in contemplation: Party anticipating possible prosecution will need to investigate before it can say that proceedings are likely, that uncertainty itself doesn’t mean that proceedings are not in reasonable contemplation Whole background to the relationship between SFO and ENRC was the fact that prosecution likely if no civil settlement could be reached Heading off: Legal advice given to head off, avoid or settle legal proceedings is protected as much as advice on defending or contesting such proceedings Even if document prepared with the intention of being disclosed to the other side, that doesn’t mean that the preparatory legal work loses the benefit of privilege
- #17 Declined to determine on legal advice privilege – no need to do so. However, non-binding view expressed on Three Rivers criticised – Js would have departed from the established position if had the choice (Three Rivers 5 decided that communications between an employee of a corporation and the corporation's lawyers could not attract legal advice privilege unless that employee was tasked with seeking and receiving such advice on behalf of the client. Large corporations at disadvantage if cannot seek advice under privilege as smaller ones. Will there be a change soon?
- #19 As always, the issue will be whether the advice was given in their professional capacity as lawyers and "whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law“ (Three Rivers)