The Privilege of Fools
Parties to litigation in England and Wales have an obligation to disclose to the other side all documents which are in their control and which are relevant to the litigation. This obligation extends to documents that assist the disclosing party’s case but also include any documents that do not assist, and which may damage, that party’s case.
One exception to this is those documents that are subject to what is known as ‘privilege’. If a document is privileged, it can be withheld.
Privilege is subject to very strict rules. There are two main categories of privilege: Legal Professional Privilege, which covers any document containing correspondence between a lawyer and the client; and Litigation Privilege, which extends to any document referring to litigation strategy.
The concept of privilege has recently been under the spotlight, with some judges adopting a much more restrictive approach to the question of which documents can be withheld. Companies can no longer assume that documents used for what they consider to be their own confidential investigations can be kept out of court.
In the recent case of The Director of The Serious Fraud Office v Eurasian Natural Resources Corporation Limited, the claimant successfully challenged the defendant’s claim to privilege in respect of various documents created in the context of anticipated proceedings. This claim brought up issues of litigation privilege and legal professional privilege concerning interview notes with employees of the defendant. The defendant argued, unsuccessfully, that these notes were privileged.
The judgment made in relation to legal professional privilege explored the idea of who can be treated as ‘the client’ and stated that not all employees of a corporation will be treated as ‘a client’ and therefore protected under the rules of legal professional privilege.
The court further ruled that litigation privilege can only apply if the company in question anticipates actual prosecution, and that it only protects documents prepared for the sole or dominant purpose of conducting litigation. Those documents that are produced to enable advice to be taken in anticipated litigation are not protected and will potentially have to be disclosed in court.
This decision means that companies are now unable to conduct internal investigations or instruct experts without the risk of sensitive, and potentially damaging, documents becoming disclosable in court. The risk of such documents being created and therefore becoming disclosable needs to be given very careful thought.
This is likely to have profound consequences in relation to the practice of internal investigations in both a civil and criminal context.