10 January 2017

Legal advice: privilege - Royal Bank of Scotland (RBS) rights issue litigation

This case was not in substance about employment law, but it highlights a difficulty that any HR professional could encounter. It confirms that when lawyers are providing legal advice to a client on an internal investigation, the range of documents that is 'privileged' that is, immune from disclosure if there is subsequent litigation, is more limited than is often realised.

In long-running litigation concerning a rights issue of shares in RBS in 2008, RBS claimed privilege in relation to records of interviews conducted by or on behalf of RBS with employees and ex-employees as part of the bank's investigations. The High Court held that the records were not covered by legal advice privilege, applying the 2003 decision in Three Rivers District Council and others v The Governor & Company of the Bank of England. It confirmed that legal advice privilege is strictly confined to communications between a lawyer and his client for the purpose of giving or receiving legal advice. The 'client' for these purposes is a limited category of individuals consisting only of those authorised by the organisation to seek and receive legal advice. Hence records of interviews with employees and former employees carried out by RBS's solicitors were not privileged. The interviewees had been authorised to provide information for the purpose of obtaining legal advice, but they could not be treated as the client.

The Court also refused to treat the interview notes as working papers of the lawyers, which could have been another route to obtaining the protection of privilege. 


The Three Rivers case continues to pose difficulties for organisations that are undertaking internal investigations, particularly where there is a background of regulatory intervention, so that it is not clear that any actual litigation will follow (where litigation is in contemplation privilege has a wider scope). In the employment field, grievance or whistleblowing investigations are sometimes undertaken with the assistance of the organisation's lawyers and where this is done care must be taken to identify the 'client' at the outset. This will be limited to senior employees who are authorised to engage and instruct the lawyers. If interviews need to be conducted outside this group, notes and materials should be prepared in light of the possibility that they may need to be disclosed to a court in the future.


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