When Will Internal Investigations Be Protected By Legal Advice Privilege?

The recent decision in The RBS Rights Issue Litigation, Re, has affirmed the restrictive view of 'the client' espoused in the Court of Appeal's decision in Three Rivers No. 5, and is important reading in particular for those who deal with corporate investigations.

Three Rivers No 5 and the law on legal advice privilege

In 2003, the Court of Appeal ruled on the extent of legal advice privilege ("LAP") in Three Rivers (No 5). In that case, the Bank of England had created an internal unit to deal with the Bingham Inquiry into the Bank's dealings with the Bank of Credit and Commerce International prior to the latter's collapse. That unit had been established to deal with the inquiry, to gather information from Bank of England employees, and to seek and receive legal advice from external lawyers. The judgment concerned the Bank's claim to LAP in documents created by bank employees and passed to the unit.

The Court of Appeal's decision in Three Rivers No 5 was, to put it very briefly, that in the case of a corporate institution, LAP is afforded only to communications between those authorised by the corporation to seek legal advice (in this case the unit) and its lawyers, and made for the purpose of seeking or receiving legal advice. The Bank was not therefore entitled to LAP in documents passing between employees and the unit, even if they had been created with a view to seeking external legal advice on them.

For the last 13 years, that decision has stood as the leading authority on LAP under English law, although it has been trenchantly criticised by academics and practitioners for its restrictive approach to defining 'the client', and disapproved by judges in other jurisdictions.

There have however been two recent decisions which affirm this restrictive approach to LAP - first in Astex Therapeutics Ltd v Astrazeneca [2016] EWHC 2759 (Ch) and now in The RBS Rights Issue Litigation, Re [2016] EWHC 3161 (Ch).

The RBS Litigation

The RBS Litigation comprises various actions under a Group Litigation Order under which shareholders in RBS seek to recover investment losses arising out of an issue of RBS shares in 2008 and the subsequent collapse of the shares' value.

The claimants sought disclosure of records of interviews which had been conducted by or on behalf of RBS with a total of 124 employees and former employees, for the purposes of two internal investigations undertaken by RBS. The majority of the interview notes had been prepared either by...