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Privilege The RBS Rights Issue Litigation [2016] EWHC 3161 (Ch)

Published on 20 March 2017

Does legal advice privilege extend to communications between a lawyer and their client’s employees other than those employees who are authorised to seek and receive legal advice?

The facts

This case concerned the scope of legal advice privilege, as opposed to litigation privilege in the context of a dispute. The issue was the status of interviews of current and former bank employees carried out in the context of two internal investigations by RBS.

The documents in question were transcripts, notes and other records of 124 interviews conducted by or on behalf of RBS and prepared by RBS’s in-house lawyers and a US law firm. The documents were said to summarise the content of the interviews and did not contain any legal analysis.

RBS’s claim to privilege did not rely on the documents being part of the communications in which legal advice was sought or given, nor did RBS suggest that the interviewees were themselves being provided with legal advice. RBS accepted that the documents comprised information gathered from employees and former employees at the request of RBS’s in-house lawyers for the purpose of enabling RBS to seek legal advice from its external counsel.

RBS argued that any communication by an employee who is authorised to communicate with a legal adviser for the purpose of their employer seeking legal advice is privileged. It submitted that the communication of factual information gathered for the purpose of being provided to its lawyers was privileged, provided that the person communicating the information was authorised to do so by RBS.

The decision

Hildyard J followed the Court of Appeal decision in Three Rivers (No 5) [2003] QB 1556 and ruled against RBS. The key points concerning the scope of legal advice privilege are:

• legal advice privilege is confined to communications between a lawyer and their
client for the purposes of giving or receiving legal advice. It will not protect
communications between a lawyer and employees or former employees for the
purpose of gathering information

• the RBS employees and former employees were not the “client” for the purposes of legal advice privilege – they were merely providers of information. The “client” is those individuals capable in law of seeking and receiving legal advice as a duly authorised organ of the company

• the judge rejected RBS’s argument that the documents were the lawyers’ working papers and, as such, were privileged. RBS would have to show that the documents went beyond a mere record of the interviews and showed some legal advice or analysis. Demonstrating that the documents were not a verbatim record and that therefore some selection or line of enquiry had been applied was not enough

• the judge also rejected the argument that the test for US privilege ought to be applied since the interviews were carried out by RBS’s US lawyers and (at least in part) in the context of US Securities and Exchange Commission investigations.

Why is this important?

The “client” for the purposes of legal advice privilege continues to be construed narrowly. It is important to adopt a prudent approach to the production of documents in the context of internal investigations.

Any practical tips?

  • Determine who the “client” group of employees are and limit all unnecessary production of documents outside of that group.

  • Consider how interviews should be managed and conducted, including whether and how notes and records could best be drafted.

  • Advise the interviewee that factual notes and recordings arising from the interview are not privileged and may become disclosable. Ask them to consider their answers carefully.

• Consider whether litigation will be in prospect at the time you initiate an internal investigation in case litigation privilege could apply (but be aware of the different requirements that are necessary to establish this)