1 00118601 Emerging themes 2019 A4 AW v31 combined - Page 10



INVESTIGATIONS
Speaking at the American Bar Association’s
White Collar Institute Conference hosted by
BCLP in October, Lisa Osofsky, the new Director
of the SFO, commented that the SFO would not
appeal this decision and that, in general, the
law in the UK appeared to be moving more
towards how the US applies privilege to
internal investigations.
In its judgment in SFO v ENRC, the Court of Appeal
acknowledged that it is in the public interest that
companies should be prepared to investigate
allegations prior to going to a prosecutor, without
losing the benefit of legal professional privilege.
The Court also recognised that legal advice given
to head-off, avoid or even settle reasonably
contemplated proceedings is as much protected
by litigation privilege as advice given for the
purpose of resisting or defending such proceedings.
The rationale applied by the Court to when litigation
is in reasonable contemplation, and how to evaluate
“dual purpose” investigations, is helpful and can be
read across from investigations into alleged criminal
conduct (as in SFO v ENRC) to internal investigations
into alleged regulatory breaches where a firm
reasonably suspects that enforcement proceedings
may be pursued. In every case, it will be a question
of fact but it is likely that the requisite test could be
met in a range of circumstances, which previously
firms thought may not be sufficiently adversarial – for
example, where a self-report of suspected significant
breaches is made to the UK Financial Conduct Authority
or Prudential Regulation Authority.
The litigation privilege in the UK, as applied now to
internal investigations, appears to be closer to how
the US treats its similar work product doctrine in the
internal investigation context. In the US, the fact that
a regulatory authority may eventually become involved
was enough to trigger the “in anticipation of litigation”
requirement to protect the work product of an internal
investigation from third parties.
Legal advice privilege
Unfortunately, the Court declined to determine the
question of legal advice privilege. Under the current state
of law, the definition of “the client” is extremely limited
– only communications between the lawyers and those
at the organisation who are authorised to seek and
obtain legal advice are caught. The Court, however,
was clear that it was in favour of revisiting the boundaries
of the legal advice privilege, as English law is now out
of step with international common law because of the
narrow definition of “the client” for the purposes of
seeking and receiving privileged legal advice.
By contrast, US law recognises that an organisation
speaks not just through its executive management,
and thus lawyers’ communications with all employees
may be brought under the attorney-client privilege
during investigations.
Nonetheless, in the UK, organisations can still rely
to a large extent on the litigation privilege to protect
documents created, and advice given, in an internal
investigation.
MARK SRERE
Co-head of the Investigations,
Financial Regulation & White
Collar Group, Washington DC
10/

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