In The RBS Rights Issue Litigation Re [2016] EWHC 3161 (Ch) (the RBS case), the High Court (the Court) granted the claimants’ application for disclosure of notes of interviews with employees and former employees of RBS, which had been prepared variously by RBS’ external US counsel, in-house counsel and non-lawyer RBS employees, in respect to two internal investigations. The decision is a useful reminder of the principle established in Three Rivers District Council and others v Governor and Co of the Bank of England [2003] EWCA Civ 474 (the Three Rivers case) regarding the extent and operation of legal professional privilege (LPP) in the UK.
LPP can be claimed by a “client” to avoid disclosure of documents and, broadly speaking, there are two main categories of documents to which privilege can attach:
- Confidential communications between a client and lawyer, where the client seeks and the lawyer gives legal advice (legal advice privilegeor LAP); and
- Confidential communications between a client and lawyer in contemplation of litigation (legal litigation privilege or LLP). This extends beyond communications solely between solicitors and clients to cover communications with third parties (e.g. experts and witnesses), but only applies where the overarching, dominant purpose of the communication is for use in actual, pending or reasonably contemplated litigation.
The RBS case concerned the scope of LAP.
Who is a lawyer for the purpose of LAP?
“Lawyer” extends to all members of the legal profession, including solicitors (whether in-house counsel or external), barristers/advocates and foreign lawyers. Legal professional privilege is very unlikely to extend to other professionals beyond these categories. For example, the Supreme Court has already confirmed that LAP cannot be claimed over confidential communications between accountants and their clients.
What qualifies as a communication for the purpose of LAP?
“Communications” is broadly construed to include both the communication itself (e.g. emails, letters, faxes, phone calls and face-to-face discussions), as well as the records of those communications (e.g. file notes of calls, video and audio recordings, electronic data held on hard drives etc.) so long as they are confidential and between lawyer and client for the purpose of seeking and providing legal advice.
The RBS Case
In the RBS case, the key question was whether or not “interview notes” could be considered as “communications” for the purpose of LAP. The interview notes that the claimants sought release of related to two internal investigations, one in response to a US Securities and Exchange Commission subpoena and the other in relation to allegations made by a former employee. LLP did not apply, as litigation had not been commenced and nor was it reasonably in contemplation. However, RBS resisted the application, on the grounds that:
- LAP applied;
- The notes prepared by lawyers were protected by lawyers’ working papers privilege; or
- If the notes were not privileged under English law, then the court should properly apply US law, which (it was argued) would treat the notes as privileged.
The LAP argument
In the Three Rivers case, the Court of Appeal controversially applied a very restrictive definition of “client”, holding that if the client is a corporation, only those communications between the client’s lawyers and a small group of individuals authorised by or on behalf of the client to seek and receive legal advice will attract LAP. LAP does not automatically extend to the whole client organisation.
In the RBS case, the Court applied and confirmed this approach holding that LAP could not be claimed by employees or ex-employees of the client, who had merely been authorised to speak to the client’s lawyers to provide information in regards to an internal investigation.
The lawyers’ working papers argument
Lawyers’ working papers are privileged if their disclosure would give the requesting party an indication of the advice which had been given.
In the RBS Case, the Court noted that the relevant test was that the party asserting privilege must be able to demonstrate that the documents “give a clue as to the trend of advice being given to the client by its lawyer”. LAP would not therefore attach to verbatim transcripts of interviews, as they would give no indication of any advice being offered.
The choice of law argument
The Court held that privilege is a matter of the lex fori (the laws of the jurisdiction in which a legal action is brought) and that English law accordingly applied. However, the Court did concede that it has the discretion to refuse applications for disclosure in certain circumstances and that foreign law considerations may influence such discretion where there was “some exceptional concern”, but that did not apply in this case.
Implications and advice for clients and lawyers
There are important points to note for both client companies seeking legal advice and lawyers providing such legal advice, as follows:
- LAP does not automatically extend to all employees/the entire organisation; it must be shown that the employees are authorised by or on behalf of the client to seek and receive legal advice.
- Lawyers should take care to identify those employees of the client who are authorised to seek and receive legal advice (as only communications with those employees will attach LAP).
- Notes of interviews of employees taken by lawyers are not automatically privileged and they must “give a clue” as to the advice being tendered by the lawyer. Verbatim transcripts of interviews will not invite LAP.
Clients should carefully consider their document creation and retention systems to ensure that potentially privileged documents are created and maintained as such. For example, by ensuring that lawyers carry out internal investigations, conduct the interviews/provide legal advice, and thereafter ensuring that the documents are exchanged only between lawyers and those authorised to instruct and receive legal advice.
The future of LAP?
Although the RBS case is an English decision (which as a first instance decision is not binding on other High Court judges), the common law concept of legal professional privilege is largely the same in Scotland and these decisions are likely to be treated as highly persuasive by the Scottish courts. Leave to appeal to the Supreme Court was granted, but we understand that RBS has decided not the pursue this.