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Practice Alert: No privilege for internal investigation interview notes, UK court says

In a landmark ruling, the High Court in London has said that interview notes made by a company’s external law firm as part of internal investigations into allegations of corruption in Kazakhstan and Africa — are not protected by legal professional privilege.

Mrs. Justice Andrews’ 8 May decision, which Eurasian Natural Resources Corporation (ENRC) is appealing, vindicates the Serious Fraud Office (SFO) in its years’ long dispute with business lawyers over privilege and internal investigations. Companies have long claimed that documents created during internal investigations into allegations of wrongdoing, including interviews with key witnesses, are protected by privilege.

While the SFO respects the rights of companies to claim privilege, it believes some lawyers are making spurious privilege assertions over internal investigations to obstruct its inquiries. In a well-known interview in February 2015 with The Times, SFO director David Green said: “These companies call in outside lawyers, who make a lot of money by doing an investigation and are the first to interview key witnesses at the coal face, then claim privilege — it is absolutely ludicrous.”

Green’s position on privilege has been repeated by senior SFO staff at numerous conferences. The reaction from business lawyers in London has been hostile with some arguing that the SFO has mounted a measured “attack” on the rights of companies.

However, the ENRC ruling, if allowed to stand, supports the SFO’s strategy of fighting spurious privilege claims, and will hopefully result in clearer rules for when privilege can be asserted. This is particularly important in relation to the UK’s quick-developing deferred prosecution agreement (DPA) regime.

The recent £671 million (about $860 million) Rolls-Royce settlement in January was the first time a company failed to inform authorities of wrongdoing and still secured a DPA. It suggests that factors other than self-reporting, particularly whether a company has waived privilege, as Rolls-Royce did, will be more important in determining whether they secure a DPA. The ENRC decision by clearly setting out where privilege can be asserted, also establishes more clearly what counts as a waiver.

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The root of ENRC’s dispute with the SFO is the company’s claim that notes from internal investigation interviews carried out by its law firm, Dechert were covered by two types of legal protection: litigation privilege and legal advice privilege. The latter protects communications made in confidence between a lawyer and their client for the purpose of providing legal counsel. The former protects documents prepared for litigation, such as a civil dispute or criminal prosecution.

Litigation privilege only applies where a dispute is in progress, or at least reasonably in contemplation. Mrs Justice Andrews ruled that the disputed documents in ENRC’s claim failed to meet this standard. The notes from Dechert’s internal investigation interviews were created between August 2011 and March 2013 when ENRC was not under investigation by the SFO. Nor was prosecution a real prospect at this time, said Mrs. Justice Andrews.

The SFO first contacted ENRC on 10 August 2011, the day after Times published allegations of corruption against the company. The two organisations subsequently entered into a period of dialogue for over one-and-a-half years, which resulted in over 30 meetings. The often strained cooperation between ENRC and the SFO ended in spring 2013, when the prosecutor formally opened a criminal investigation.

ENRC claimed that litigation privilege applied to documents created during this period of cooperation, because an SFO investigation, and a resulting criminal prosecution, was reasonably in contemplation.

Mrs. Justice Andrews countered that: “Prosecution only becomes a real prospect once it is discovered that… at the very least that there is some material [evidence] to support the allegations.” She added that no such evidence had been presented to her.

ENRC further claimed that Dechert’s internal investigation interviews of company employees, suppliers and third-parties were covered by legal advice privilege.

Legal advice privilege is designed to encourage frank and open communications between a lawyer and their client. However, English courts have interpreted the term “client” narrowly, as only applying to individuals who are expressly authorised to obtain legal advice on a company’s behalf. Communications between lawyers and employees outside of this tightly defined client group, however senior, are not protected by legal advice privilege.

The narrow definition of client in relation to legal advice privilege has for many years been a controversial topic in UK legal circles. Business lawyers have widely criticised the narrow definition, arguing that it makes life exceedingly difficult for companies carrying out internal investigations.

ENRC argued that any individual, including third-parties, if authorised by the company to participate in an internal investigation interview with Dechert, count as part of the client group. Their interviews are therefore protected by legal advice privilege, ENRC said. 

However, Mrs. Justice Andrews rejected ENRC’s argument, saying employees and third-parties taking part in an internal investigation interview with a lawyer do not automatically become part of the client group.

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The ENRC decision has created alarm in some parts of the English legal community with some making exaggerated predictions of an impending crisis. One law firm has said that the ruling may lead to the “ultimate demise” of cooperation between companies and the SFO.  

However, reactions such as this disguise the plain fact that the ENRC decision has made clear: the SFO, rather than attacking legal rights as some have suggested, has been following a reasonable interpretation of English privilege law. 

If the ENRC decision stands, it will spur the SFO to continue on its path of challenging spurious claims of privilege that cloak the crime scene in secrecy. It could also reduce long, protracted negotiations between companies and the SFO over privilege, potentially resulting in the quicker delivery of justice.


Rahul Rose is a senior researcher for Corruption Watch, a London-based NGO that undertakes cross-border investigations into grand corruption and pushes for effective enforcement of UK anti-corruption legislation. He can be contacted here.

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1 Comment

  1. Is the government being short-sighted in its approach? Sure, in the short run they harvest some useful materials by doing this. But are they considering the message they are sending? Companies and their lawyers are not stupid. There is a saying, “Fool me once, shame on you. Fool me twice, shame on me.” Lawyers will learn from this experience.

    I can see the impact of this type of hostile approach to privilege. Legal counsel will be extremely circumspect in what they write down and what they retain. They will feel it necessary to do this to protect their client. But reducing writing will also decrease the effectiveness of investigations, and reduce the willingness of the investigators to share what is learned from such investigations.

    If the government is concerned about legal counsel doing something improper in the investigations, there is a better tool to use – the crime/fraud exception. If counsel is involved in criminal or fraudulent activity then there is no privilege.

    Also, I think it is fair to expect the government to do its own work and its own investigation, and not forcibly hi-jack the work of a company’s own legal counsel. Litigators should be expected to make their own cases, not exploit the difficult work of the other side’s counsel.

    Undercutting privilege in internal investigations will only help government litigators in cases, most likely in the short term, but have a long term effect in undermining the value of (and even the willingness to do) internal investigations. This strikes me as not only being unfair, but also being poor policy in the long run. Companies should be encouraged to do internal investigations, not have it thrown back in their faces by having it used against them. Cheers, Joe

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