Legal Privilege in Regulatory Investigations: best practice tips following ENRC
The decision of SFO v ENRC in May 2017 caused significant consternation among legal advisors and corporate entities by significantly restricting the scope for internal investigations to be legally privileged.
This decision has now been reversed by the Court of Appeal. In the wake of the restored position, we discuss below the implications for regulatory proceedings and the principles of best practice to follow to ensure you maximise the prospect of successfully claiming privilege.
There are two types of privilege under discussion:
- legal advice privilege: where a lawyer gives you advice, this applies to correspondence from and to your lawyer; and
- litigation privilege: this applies to material generated for the dominant purpose of actual or contemplated litigation even if a lawyer is not involved in its creation. There has to be a real likelihood of that litigation, rather than a mere possibility.
For businesses carrying out internal investigations, litigation privilege is the most relevant species of privilege and the steps below set out best practice in this context.
For analysis of the original decision, the decisions which followed it, and the Court of Appeal’s views on each area to help you to understand the challenges to privilege, please see our separate article on 'Legal Privilege in Regulatory Investigations: recent decisions'.
Best practice for Regulatory investigations following ENRC
The decision of the Court of Appeal effectively restores and clarifies the law relating to litigation privilege. When faced with a need to investigate, for example following a safety incident, you should observe principles of best practice, including:-
- Consider privilege from the outset. Do not produce documents and then seek to assert privilege retrospectively as contextual information will usually undermine such a claim.
- Do not follow a standard internal investigation process or template as the documented reasons for such investigations in policy documents are rarely consistent with litigation privilege.
- Ensure that your lawyers are involved and consulted from the outset and that they provide advice at every stage by reference to the prospective litigation. Remember, however, that having a lawyer involved does not guarantee privilege if the contextual evidence does not support it.
- Document the reasons for privilege in clear contemporaneous documents that can be produced to the Court. The burden of proof is on the party claiming privilege to prove that a document is privileged.
- Make sure the document sets out all potentially anticipated types of litigation, both civil and criminal, to maximise the chances of attracting privilege.
- Remember that, in line with Jukes, privilege is that of the client of the lawyer concerned, in ENRC and Bilta that was a corporate body. In English law only senior employees authorised to act on the company's behalf are generally entitled to be considered as the "client", meaning that correspondence with employees, particularly junior employees, has the potential to waive privilege.
- Make clear who in the organisation is entitled to instruct solicitors and to receive copies of their advice and any privileged documents.
- Litigation privilege will generally require some sort of watershed moment at which it becomes clear that litigation is a serious possibility. If you are undertaking a non-privileged investigation at this point then STOP and start a new investigation under privileged terms of reference.
- Make sure legally qualified in-house staff are acting in their capacity as legal advisers and that this is clear in documentation.
- If you are engaged in a voluntary or statutory self-reporting process, make clear from the outset that documents are being prepared for your consideration (as the client) in reference to both that process and prospective litigation. Make clear that any disclosures will not include content that waives privilege or will be made on a limited waiver basis.
- Remember that non-adversarial proceedings and investigations are not a form of litigation – be careful when referencing investigations, inquests or disciplinary proceedings in privileged documents.
- Do not allow privileged documents to fall into third party hands without promptly challenging their possession.
- When sharing documents with third parties with a shared interest, such as insurers, consult lawyers and do so on the basis of common interest privilege making it clear that privilege is not being waived.
- Try to avoid situations where privileged documents are seized by regulators. Keep privileged documents in a secure location and clearly marked as privileged to minimise the risk that they are reviewed without the issue of privilege being considered.
- Remember to limit the creation of documents within your organisation. It is easy to generate documents that represent a “knee jerk” reaction or which speculate about matters that touch on the investigation. The same is doubly true of internal email traffic.
Don’t forget basic precautions. Encryption and passwords are simple ways to minimise the risk of improper access or inadvertent disclosure.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.