A recent judgment on legal privilege has excited a lot of lawyers. But what does it mean for product manufacturers who need to carry out internal investigations?

Legal privilege is the principle that enables clients to speak candidly to their lawyers. It ensures that confidential communications produced as part of legal advice or in contemplation of litigation do not need to be disclosed to a third party.  The court decision primarily concerned litigation privilege, which has four rules:

  1. There must be communications between a lawyer and client or either and a third party;
  2. Litigation must be in progress of reasonably in contemplation;
  3. The communication must have been made for the sole or dominant purpose of conducting the litigation; and
  4. Litigation must be adversarial, not investigative or inquisitional

Last year, an English Judge applied these principles and found that litigation privilege did not apply to criminal investigations. The result was that documents created as part of an investigation were liable to be disclosed to the authorities unless they were produced in connection with legal advice. The Court of Appeal overturned this decision. They found that where legal advisors have begun an internal investigation and the criminal investigators have made clear that there is a prospect of criminal prosecution, litigation can be said to be reasonably in contemplation. As for whether specific documents are covered, they recognised that the dominant purpose of a document is not always obvious on its face and requires a realistic and commercial view of the facts. One test that has been applied is whether, but for the potential proceedings, would the document have been produced?

As a result, product manufacturers embarking on internal investigations can take some comfort that the documents created will be safe from disclosure provided they meet the criteria above. However, there are some practical steps that product manufacturers can take to shore up that position:

  • Record the perceived likelihood of litigation at a board (or other appropriate management) level;
  • Ensure investigations are led by lawyers;
  • Instructions to any third parties such as experts to come from lawyers; and
  • Ensure documents created during the investigation are marked as privileged.

While each case will turn on its own facts, these steps will help to satisfy any doubts over reasons for the investigation and status of any document.

The decision in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation [2017] 1 WLR 4205 is available here.

Posted by Jamie Humphreys

Jamie Humphreys is a litigation and regulatory lawyer. He is a strategic advisor to clients who face critical threats to their business at all stages of the product life-cycle, working with them to ensure the most favourable outcome and manage any reputational impact. He also provides policy advice to clients on proposed legislation and regulations that may introduce profound changes to their business. He has acted on high profile litigation across a range of different industries, internal investigations into allegations of fraud by global products manufacturers, major corruption investigations for Governments, and B2B product liability disputes, international recalls and consumer claims for well-known global brands. He is passionate about the impact that new technologies such as 3D printing, AI and Internet of Things will have in the products space and works with clients to ensure they prosper within a dynamic regulatory environment.