Legal privilege and investigations | SFO criticised for not challenging privilege over interview notes

Published on 30th Apr 2018

The decision in R (AL) v SFO, handed down on 19 April 2018, provided the latest judicial consideration on the extent of legal privilege in internal investigations, with the High Court again adopting a restrictive view of privilege consistent with the position previously taken in ENRC and the RBS Rights Litigation.

The case was novel, however, in that it involved the SFO, not a defendant, seeking to rely on an assertion of privilege. Whilst the application was ultimately dismissed on a question of forum, the SFO was strongly criticised for its failure to challenge a claim to privilege.

In a particularly robust section of the judgment, Green J, giving the judgment of the Court, found that:

"We conclude that in several respects the SFO has: failed to address relevant considerations; taken into account irrelevant matters; provided inconsistent and inadequate reasons for its decisions; and applied an incorrect approach to the law."

As we discuss below, in our view this ruling, and the criticism it delivered, is likely to inform the approach of the SFO going forwards in relation to companies seeking to secure a Deferred Prosecution Agreement ( DPA). As such, it will be relevant to legal, risk and compliance teams, as well as legal advisors seeking to guide clients through the often complex waters of self-reporting issues to the SFO and the co-operation that the SFO will expect thereafter.


The case relates to the second of the four DPAs to date entered into by the SFO: R v XYZ Ltd. Of note, it is also the only DPA yet which has led to the prosecution of individual defendants, in a trial that is due to commence in 2019 (Jeremy Summers successfully represented a further director of the company, who the SFO decided not to prosecute).

The case, brought by way of a Judicial Review by one of the defendants now charged, concerned access to the full first-account material provided by senior company employees. The material was provided in the course of lengthy interviews by external lawyers instructed to conduct an internal investigation of the potential bribery of agents acting for overseas customers.

When self-reporting to the SFO, the company agreed to provide “oral proffers” of the first-account material. In effect, the proffers were brief summaries of what had been said during many hours of detailed questioning. The company, however, refused either to waive Legal Professional Privilege (LPP) in respect of the records of the full interviews, or to accept that LPP could not, in any event, apply in the light of the established line of decisions in Three Rivers, ENRC and RBS Rights.

One of the employees interviewed, who was subsequently charged, sought disclosure of the full interview notes through the SFO. The SFO again requested disclosure of the full interview records from the company, which again refused to disclose them. The SFO took no action against the company.

The Judicial Review

Faced with the refusal by the company to disclose the full notes of interview, the claimant took the extraordinary step of seeking a Judicial Review of the SFO's decision not to pursue the company for a breach of its duty, under the DPA, to co-operate with the SFO.

Whilst the Court ultimately refused the relief sought, on the limited basis that the claimant had not first exhausted all the rights available to him in the Crown Court, in so doing it noted that it had "real reservations as to the position adopted by the SFO in this case". Reflecting that unease, the Court also refused an application for costs made against the claimant by the SFO, notwithstanding that the substantive application had failed.

In defending the claim, the SFO argued three principal points:

  1. There were adequate remedies available to the claimant in the Crown Court (a bar to the Court granting relief in Judicial Review proceedings);
  2. The SFO's decision could not be challenged (by way of satellite litigation) because it represented a legitimate exercise of prosecutorial discretion; and
  3. In any event, the claim should fail because: (i) there was no further relevant material in the interview notes and no reason to doubt the assurances given by the company's lawyers as to the “completeness and accuracy of the oral proffers”; and/or (ii) the company had asserted LPP over the material and that claim was "not obviously invalid"; and/or (iii) it was impracticable for the SFO to review disclosure obligations under the DPA.

As noted, the Court was with the SFO on the first of these grounds but, in rejecting core arguments advanced in grounds two and three, it made a number of trenchant findings, including that:

  • The SFO had been wrong to assert that it had a broad discretion not to proceed against the company for a failure to co-operate as required by the DPA;
  • The SFO had simply accepted the assertion of LPP made by the company’s lawyers, even though SFO’s own position was that LPP did not apply;
  • The SFO had failed to address the potential waiver of privilege that might have arisen through the oral proffers;
  • The SFO had adopted a test of “not obviously invalid” in relation to the company’s assertion of LPP. It had been wrong to do so and the reasoning given for that decision had the "strong flavour of ex post facto justification"; and
  • The SFO had failed to properly assess its continuing disclosure obligations and in particular the need to ensure a fair trial pursuant to Article 6 of the European Convention on Human Rights.

Osborne Clarke comment

Whilst some of the facts in this case may be unlikely to occur again, the SFO has suffered what can only be considered a judicial mauling.

As such, we believe that it would be prudent to anticipate that in the future, the SFO will take a much more aggressive position in relation to companies that seek to claim privilege over initial interview notes. It may similarly be likely to regard such an assertion in itself as not being indicative of the level of cooperation that would ordinarily be required to secure a DPA.

Companies will therefore need to reflect carefully before embarking on internal investigations, given the risk that sensitive materials may need to be disclosed to the SFO, and third parties, and where necessary take advice from skilled and experienced legal advisors when doing so.

In particular it will be necessary to give proper consideration to issues such as what is the ambit and purpose of the investigation, how is it proposed to conduct that investigation, whether the investigation, or elements of it, could be protected by LPP and, if so, whether the company in fact would be well served by claiming privilege. A full and early analysis of questions such as these will be vital in framing an investigation to ensure that the company is best able to avoid, or at least limit, its potential exposure to criminal sanction.

None of this will however be of great comfort to individuals who face subsequent prosecution. The need for such individuals to be provided with early independent representation may well increase, but this in itself may lead to tension with investigators, who may well want first account material to be given without it being subject to legal finesse.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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