Following Eurasian, a combination of fact finding with legal advice may enable a client to claim privilege, suggest Gavin Foggo and Veronique Bergau.
Documents and evidence gathered in anticipation of, or pursuant to, investigations into criminal conduct are not protected by litigation privilege, and rarely attract legal advice privilege.
This is the position following Mrs Justice Andrews’ noteworthy judgment in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Limited  EWHC 1017 (QB), handed down on 8 May 2017.
ENRC, a company operating in the mining and natural resources sector, became subject to allegations of fraud, bribery, and corruption. ENRC instructed its legal advisers to undertake internal investigations to ascertain whether there was any truth in the allegations, and to advise.
The company sought to claim litigation privilege and legal advice privilege over records and communications which arose from its own investigations, undertaken both before and during the involvement of the Serious Fraud Office. However, it failed on nearly all counts.
The judge took a very restrictive view as to when litigation can be said to be in reasonable contemplation. For litigation privilege to arise, an adversarial process must either be in progress or reasonably in contemplation. Andrews J held that neither the anticipation of a criminal investigation, nor an actual investigation by the SFO, amounts to litigation being in reasonable contemplation. This is despite the fact that one of the obvious possible outcomes of an SFO investigation is the commencement of criminal proceedings.
The judge distinguished between criminal proceedings (which require the existence of substantial evidence, obtained from an SFO/police investigation, before proceedings can be issued) and civil proceedings, for which the evidential burden is less great. It was held that an SFO investigation is ‘a preliminary step taken… before any decision to prosecute’ and that ‘the reasonable contemplation of a criminal investigation does not necessarily equate to the reasonable contemplation of a prosecution’. This poses a real problem for corporate entities and their legal advisers proposing to undertake internal investigations, prior to prosecution.
Even if litigation had been in reasonable contemplation, Andrews J found that the documents were not created for the dominant purpose of conducting the litigation. The documents were produced as part of a fact-finding exercise and were investigative in nature, rather than adversarial. There was no evidence that information was being gathered to mount a defence.
Andrews J did, however, recognise that it is theoretically possible for investigations to have a dual purpose: (i) to persuade the SFO not to prosecute; and (ii) to mount a defence if there is a prosecution.
Legal advice privilege
The court took a restrictive approach to the definition of lawyer and client in determining whether legal advice privilege attached to documents created pursuant to the company’s investigation.
The solicitors’ notes of interviews with ENRC’s employees did not attract privilege. The employees were not deemed to be authorised to seek or obtain legal advice and were not therefore classified as the client. The judgment serves as a stark reminder that, just because a document is prepared by a solicitor, does not mean it automatically attracts privilege. Solicitors and their clients should be careful to narrowly define the client (the individuals authorised to seek and obtain legal advice) and its lawyer or in-house counsel, and to ensure that all confidential communications (over which the client intends to claim legal advice privilege) are conducted between those persons.
The only documents found to be protected by legal advice privilege were presentations prepared by ENRC’s lawyers to advise the client about matters which were consequential to their findings.
One of the key difficulties faced by ENRC regarding litigation privilege was that it could not adduce sufficient evidence that it did (at the time the investigation was threatened) contemplate that criminal proceedings would be brought. It also could not show that there was a reasonable basis at the time for concluding that the facts were such as to justify a criminal prosecution. Practitioners conducting investigations into potentially criminal conduct will need to consider whether it is possible to frame the investigation so that some of the fact finding is subject to litigation privilege, by actively contemplating and documenting with the client the likelihood of a criminal prosecution. Combining the fact finding with the provision of legal advice to the client will enable the client to claim legal advice privilege. This is essential following the Andrews J judgment, which is likely to be appealed.