Professional Legal Privilege can extend to documents created by forensic accountants

Updated: Sep 12, 2018

The Court of Appeal has held that documents in three categories, including interview notes, and material associated with a review by forensic accountants had the benefit of litigation privilege.


Mrs Justice Andrews' ruling in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation was concerning for the in-house legal community.


She had held that documents including working papers and notes made by lawyers could not enjoy privilege because they had been created before a point before criminal legal proceedings were contemplated. The company, which strongly denies any wrongdoing, says it was investigating unsubstantiated allegations against businesses it was seeking to acquire. The ruling rejected claims of litigation privilege and allowed legal advice privilege only for one category of documents, presentations to the company's board.


On appeal, the Court of Appeal found that documents in three categories, including interview notes, and material associated with a review by forensic accountants had the benefit of litigation privilege. It also said that advice whose dominant purpose is to avoid legal proceedings, or which is given with a view to settlement, is as much protected by litigation privilege as advice given for the purpose of defending such proceedings.


The Serious Fraud Office claimed declarations that the documents were not the subject of legal professional privilege. Mrs Justice Andrews essentially granted the declarations sought.


ENRC submitted that Andrews J was wrong because she misinterpreted the Court of Appeal’s decision in Three Rivers (No. 5) as to the kind of documents that could be the subject of legal advice privilege. She ought not to have held that communications with a client for these purposes were only those with an employee who was specifically tasked to seek and obtain legal advice. Instead, the judge ought to have held that, to attract legal advice privilege, all that was necessary was that the employee in question was authorised by the client to provide the information to the company’s lawyer.


The ratio decidendi of Three Rivers (No. 5) was that only communications between client and lawyer were privileged. It was not necessary for the Court of Appeal there to decide which representatives of the client could claim privilege, because the client was the Bingham Inquiry Unit, not the Bank of England itself.


The dicta concerning employees in Three Rivers (No. 5) were, therefore, obiter . In any event, ENRC submitted that the judge ought to have regarded certain of the Documents as privileged as lawyers’ working papers. The SFO submitted in response that, even if Three Rivers (No. 5) were to be interpreted as ENRC claimed, it was now well-established that legal advice privilege could only be established where the dominant purpose of the communication was to obtain legal advice, which was not the case here, since the solicitors’ primary engagement was to undertake an investigation into the facts.


In relation to litigation privilege, ENRC argued that the judge wrongly held that (i) no criminal prosecution was reasonably in contemplation and (ii) none of the Documents was created with the sole or dominant purpose of defending anticipated criminal proceedings.


On the facts, the judge was also wrong to hold that the Documents had been created on the understanding that they would be provided to the SFO. The SFO, on the other hand, contended that the judge’s conclusions were amply justified on the facts.


The judges felt bound to follow the Court of Appeal ruling in Three Rivers, which applied a narrow definition of ‘client’ to in-house legal advice. However it saw force in the arguments for departing from Three Rivers reasoning and would have done so had it not felt bound by precedent. 'It would be highly undesirable for us to enter into an unseemly disagreement which can be overturned only by the Supreme Court,' the judges stated.