Legal advice privilege where lawyers assist clients with regulatory investigations
The documents in question were prepared by external lawyers for an Executive Steering Group formed by RBS (ESG). RBS noted, and the court accepted that, ESG's role was to "oversee the regulatory investigations and related litigation" in relation to allegations of LIBOR misconduct. Snowden J held that "the ESG meetings all had a very substantial legal content and it was no surprise that […] the lawyers present led the discussions", and that the documents were part of a "continuum of communications and meetings" between the lawyers and RBS, the object of which was to give legal advice, as and when appropriate.
This is an important decision confirming that legal advice privilege can extend to cover certain communications in a regulatory investigation context, and confirming that not all such communications need contain legal advice to attract privilege.
The underlying dispute concerns an allegation by Property Alliance Group Ltd (PAG) that The Royal Bank of Scotland plc (RBS) induced it to enter into four interest rate swap agreements between 2004 and 2008 that employed 3 month GBP LIBOR as a reference rate. PAG claimed that by proposing such swaps, RBS implicitly misrepresented that it was not manipulating the LIBOR rate.
PAG challenged RBS's claim to privilege over certain documents prepared by external lawyers for the ESG in relation to the associated regulatory investigations. In June 2015, Birss J:
(1) decided that without prejudice privilege could, in principle, apply to communications in the context of regulatory investigations (albeit if the outcome of the investigation is itself in issue in civil proceedings the privilege will fall away); and
(2) ordered RBS to produce 81 documents for the court to determine whether they were privileged.
The November 2015 decision is the determination by Snowden J as inspecting Judge.
Snowden J upheld RBS's right to rely on legal advice privilege to withhold inspection of the ESG documents.
On RBS' case the documents fell into two main types:
A. Memoranda in the form of tables, which advised and updated the ESG on the progress status and issues arising in the regulatory investigations. These memoranda formed the basis of discussions at the ESG meetings regarding the Bank's proposed strategy and advice from the lawyers in relation to the regulatory investigations.
B. Notes/summaries concerning the discussions between the ESG and its legal advisors at ESG meetings. The lawyers would circulate these notes after each meeting, thereby also providing summary "minutes" of the discussions between ESG and its legal advisors.
Snowden J reviewed established principles relating to legal advice privilege, including:
"legal advice privilege attach[es] to all communications made in confidence between solicitors and their clients for the purpose of giving or obtaining legal advice even at a stage when litigation is not in contemplation" Three Rivers District Council v Bank of England (no.6)  UKH
"legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context". Balabel v Air India  1 Ch 317; and
in most solicitor and client relationships there will be a "continuum of communication and meetings", and that "where information is passed by the solicitor or client to the other as part of the continuum aimed at keeping both informed so that advice may be sought and given as required, privilege will attach". Balabel v Air India  1 Ch 317
Snowden J was satisfied that the lawyers, as authors of the documents, were engaged by RBS in a "relevant legal context". He also held that the types of documents over which RBS asserted privilege formed part of a "continuum of communication and meetings" between RBS and its lawyers. The lawyers were not providing services to ESG as a matter of "administrative convenience", but as an "integral part of their provision of legal advice and assistance to the ESG". The ESG meetings "all had a very substantial legal content", Snowden J said.
Snowden J held that the first type of document (see A above) "was clearly to provide a comprehensive and up to date summary of developments in the regulatory investigations", and the second (B above) included the suggestions of the lawyers as to RBS's next steps.
Finally, Snowden J considered whether the ESG documents fall within the policy justification for legal advice privilege. He concluded that the justification applied in the context of regulatory investigations: "the public interest will be advanced if the regulators can deal with experienced lawyers who can accurately advise their clients how to respond and co-operate". Lawyers must be able to give their client candid factual briefings as well as legal advice, secure in the knowledge that any record will not be disclosed.
This judgment confirms previous case law which held that legal advice privilege is not confined to advice given by lawyer to client in respect of the client's legal rights and obligations. However, it also confirms that the lawyer must be engaged in a "relevant legal context", and not providing mere administrative support. To attract privilege the documents must form part of a "continuum of communication and meetings", aimed at obtaining legal advice. Snowden J observed that if the ESG had prepared its own record of its meetings, case law concerning internally produced documentation, which held that it should be inspected, subject to redacting legal advice, might have been relevant.
It is important for any entity or individual subject to a regulatory investigation to ensure that documentation generated in the course of overseeing such investigations attracts privilege, to protect it from later disclosure. An analysis of this decision will be helpful in establishing reporting structures which satisfy the relevant legal and public policy tests, as will careful drafting of the claim to privilege when giving disclosure. If a claim to privilege in respect of such documentation is challenged, it may be necessary to supplement it with witness evidence, with a view to avoiding an order that the court inspect the documents in question, but bearing in mind that that may be the court's preferred approach.
Decision of Birss J, June 2015
Property Alliance Group Ltd v The Royal Bank of Scotland Plc  EWHC 1557 (Ch) (08 June 2015)
Decision of Snowden J, November 2015
Property Alliance Group Ltd v The Royal Bank of Scotland Plc  EWHC 3187 (Ch) (05 November 2015)