Neuberger points out weakness of in-house legal privilege

Topics: Civil liberties,In-house,Courts business

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Businesses may be unable to claim legal professional privilege over documents arising from internal investigations that regulators ask to see, the president of the Supreme Court has warned.

Discussing the scope and role of legal professional privilege (LPP) in the context of corporate internal investigations last week, Lord Neuberger (pictured) said many aspects of modern commercial and legal practices give rise to potential difficulties.


Highlighting problems that can arise from competition law investigations, Lord Neuberger said companies need to decide who the 'client' is to establish what documents in an internal investigation are privileged should a regulator, prosecutor or 'other entity' ask for them.

The Competition Appeal Tribunal (CAT), for instance, can order disclosure of relevant documents as a matter of discretion, unless they are subject to LPP.

In 2012, the tribunal dismissed an application by the Office of Fair Trading for disclosure of documents and information relating to Tesco's contacts with potential witnesses during an administrative procedure.

Had the evidence obtained by solicitors not been the 'dominant' purpose of contemplated adversarial proceedings, or not been classified as adversarial, Neuberger said the tribunal 'might well have had to decide that the documents were disclosable (subject to its discretion to refuse disclosure), at least insofar as the witness statements were taken from employees and others who were not the "client"'.

He said documents not protected by privilege may be sought by co-defendants in any proceedings and by 'adversaries in other contexts', such as in ordinary commercial litigation, 'where the court may well not have the same discretion as the CAT to refuse disclosure of relevant documentation which is not the subject of LPP'.

Unless companies are confident they have litigation privilege protection, Neuberger advised them to 'decide from the start which group of individuals in the company constitute "the client" for the purpose of seeking and receiving advice from lawyers, whether internal or external'.

He said: ‘The bigger the group, the more unwieldy and the greater the risk of loss of confidentiality, and I suppose that if the court thought the group was artificially big, it might hold that not all its members were genuinely the “client”.

Increased cross-border cooperation in the criminal and investigatory field had also led to potential privilege problems, Neuberger said.

‘In this jurisdiction, discussions frequently take place between lawyers for co-suspects or for co-defendants under the protection of common interest privilege… By contrast US criminal defence lawyers adopt a more formal approach, which involves entering into a written joint-defence agreement, signed by all the parties and setting out what each party agrees to and the consequences of resiling from the JDA.’

Joint operations between the Serious Fraud Office and US Department of Justice had led to US lawyers asking their English colleagues to enter into joint-defence agreements, which ‘many have done’, Neuberger said.

‘The effectiveness of a JDA to accord privilege is an open question and has never been tested,’ he added.

Readers' comments (1)

  • It is useful and right of Lord Neuberger to seek to publicise the limits of LPP. The mantra remains: instruct independent external lawyers.

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