High Court Rules That Witness Interview Notes Are Not Covered By Legal Advice Privilege

In December 2016, the English High Court ruled that transcripts, notes and other records of witness interviews prepared by in-house and external counsel in the course of an internal investigation were not covered by either legal advice privilege ("LAP") or lawyers' working papers privilege. The Court's ruling has significant implications for the way in which companies and their legal advisers conduct internal investigations before litigation is commenced or reasonably in contemplation.

Background

The decision[1] arose in connection with The RBS Rights Issue Litigation which was brought by various shareholders of the Royal Bank of Scotland ("RBS") against RBS in respect of a 2008 rights issue of RBS shares ("Rights Issue"). The claimants allege that the information provided by RBS in the Rights Issue prospectus was inaccurate or incomplete. Shareholders who had subscribed for RBS shares pursuant to the Rights Issue subsequently suffered financial loss when RBS's share price collapsed in and after October 2008.

An application was made, by some of the shareholder claimants, for specific disclosure and inspection of two categories of transcripts, notes and other records of interviews of RBS's employees and ex-employees (collectively referred to by the Court as "Interview Notes"), which were prepared by:

RBS's external counsel and non-lawyer RBS employees as part of the internal investigation RBS undertook in response to two US Securities and Exchange Commission ("SEC") subpoenas relating broadly to RBS's sub-prime exposures; and RBS's in-house counsel as part of RBS's internal investigation into allegations made by a former employee. RBS claimed LAP in respect of both categories of Interview Notes; alternatively (except for those Interview Notes prepared by RBS's non-lawyer employees), that the Interview Notes were lawyers' privileged working papers. RBS did not claim that any of the Interview Notes were subject to litigation privilege.

RBS also resisted disclosure and inspection of the Interview Notes on the basis that the applicable law was not English law but US federal law under which (RBS contended) the Interview Notes were privileged and that, even if English law did apply, the Court should exercise its discretion and order that disclosure and inspection be withheld.

Legal Advice Privilege

Under English law, confidential communications between a client and its legal advisers which are created for the purpose of giving or receiving legal...