Limits on Legal Professional Privilege

The High Court has recently restricted the ability to rely on privilege. Although SFO -v- ENRC is an English authority, Jersey generally follows English principles of privilege.

In 2011 ENRC, a mining company, began an internal investigation (prompted by a whistle blower) into potential corruption in its operations in Kazakhstan and Africa. ENRC was subsequently contacted by the SFO and encouraged to co-operate and self-report.

The talks broke down in 2013 and the SFO launched a formal criminal investigation shortly after. The SFO applied for disclosure of ENRC documents from 2011 to 2013. ENRC objected on grounds of litigation and legal advice privilege.  The documents largely comprised notes or summaries prepared by ENRC’s lawyers of interviews with employees and third parties, as part of the investigation into possible corruption.

Legal advice privilege protects communications between a client and its lawyers for the purpose of giving or obtaining legal advice. Litigation privilege protects a wider category of documents – those between client or lawyer and a third party – but only where they are created after proceedings have been commenced or contemplated and for the dominant purpose of seeking or giving advice in such proceedings.

Andrews J held that litigation privilege did not apply here. Whilst ENRC may have anticipated a criminal investigation by the SFO this did not equate to reasonable contemplation of actual prosecution.

Litigation privilege does not apply to documents created to obtain advice about how to avoid anticipated litigation. Further, ENRC had been in dialogue with the SFO about self-reporting.  Accordingly, its investigation papers could have been shared with the SFO – documents produced to show to a potential adversary in litigation are not privileged.

The judge added that, even if a prosecution had been contemplated, the documents were still not privileged because they were not prepared with the sole or dominant purpose of conducting litigation – their primary purpose was to see if there had been any wrong doing.

In relation to legal advice privilege, the judge followed the much criticised, restrictive approach in Three Rivers (No 5) and the RBS Rights Issue Litigation as to who is the client. The effect of these cases is that the “client” is limited to those authorised to seek and receive legal advice on behalf of the client corporation – authority to provide information to, and/or communicate with, lawyers is insufficient.

The judge confirmed that advice privilege did not attach to communications by a lawyer with third parties in evidence gathering. Factual findings are not privileged, only advice given about them. Nor did privilege attach to lawyers’ working papers unless they genuinely betray the trend of legal advice.

Whilst the decision may have been justified on the facts (Andrews J noted that ENRC’s evidence was “not of the highest quality”), the judge appeared concerned to limit the scope of privilege, stating that the court needed “to be vigilant to avoid extending the ambit of…privilege beyond its current recognised confines.”

Impact

  • Companies may be reluctant to co-operate with the SFO as this may be considered the dominant purpose for which any documents are produced. This is unlikely to be the outcome the SFO wanted.
  • Other regulators (such as the JFSC, Environment Agency or Health and Safety Executive) may now seek internal reports produced by entities they are investigating.
  • Internal investigations, whether conducted by lawyers or not, will rarely be protected by litigation privilege.
  • Corporate clients need to continue to take care in determining who can seek and obtain legal advice.

ENRC has confirmed it intends to appeal.


Lynne Gregory
Senior Associate
LynneGregory@bakerandpartners.com

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