The Serious Fraud Office has won a long battle over unjustified claims of legal privilege following a ruling in London’s High Court which will have profound implications on the practice of corporate internal investigations.
Companies can no longer afford to assume that interview records with its officers and employees can lawfully be withheld from the SFO and other prosecuting agencies. A ruling by Mrs Justice Andrews in a landmark legal professional privilege (LPP) case brought by the SFO found that litigation privilege did not apply to any of the documents prepared by an international corporation as part of its internal investigation into alleged misconduct.
White collar crime lawyer Andrew Smith of Corker Binning said of the judgement: “This a notable victory for the SFO, which will have profound implications on the practice of corporate internal investigations. Companies can no longer afford to assume that interview records with its officers and employees can lawfully be withheld from the SFO and other prosecuting agencies.” Mr Smith added that the SFO director David Green QC had “waged a long war against what he sees as unjustified claims of legal privilege. Today’s judgment is a vindication of his approach.”
He added that there were some surprising features of today’s judgment – “not least that the opening of a criminal investigation does not automatically mean that adversarial litigation is in reasonable contemplation. But even if this aspect of the judgment is successfully appealed, the more intractable challenge facing companies will be to show that documents created during an internal investigation – such as interview records – were created for the ‘dominant purpose’ of future litigation.”
Mr Smith said that in many investigations that would be impossible to achieve. “Companies will be unable to assess the prospects of future litigation without conducting interviews or instructing experts, which means that this work is necessarily conducted for a purpose other than its use in potential future litigation. The court can easily characterise this work – as many investigations lawyers do – as ‘fact-finding’, which means it will fall outside the scope of litigation privilege.”
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