Legal representation & Legal privilege
Legal representation for an employee under investigation
Employers may consider whether the individual under investigation should be offered separate legal representation and, if so, whether this should be funded by the employer. As the interests of the individual(s) under investigation may have diverged from the interests of the firm, the firm’s legal advisers may be unable to represent the interests of the individuals.
Legal advice on a client’s liabilities under FSMA is privileged, as is legal advice on the presentation of facts to the Financial Conduct Authority (FCA) (section 413 of FSMA sets out the statutory scheme which prevents disclosure of “protected items”).Whether or not legal privilege attaches to particular documents created in the course of an internal investigation is complicated. Consideration should be given to legal privilege issues at the beginning of an investigation, so that appropriate decisions can be made as to what documents should be created and, whether legal privilege will attach to those documents.
Two main types of legal privilege exist:
- Legal advice privilege – attaches to a broad range of communications between a lawyer and his client, where they are created in a relevant legal context (conducting an investigation is included)
- But, who is the lawyer’s “client” for these purposes? The judgment of the Court of Appeal in Three Rivers District Council v Governor and Company of the Bank of England (No. 5) indicates that, in conducting an investigation, the lawyer’s “client” may be limited to the individual(s) by whom the lawyer is instructed. Where the investigation is being carried out by lawyers, but an individual under investigation is receiving separate legal representation, it will almost certainly be the case that communications with that individual will not be covered by legal advice privilege as the individual cannot be said to be the investigation team’s “client”.
- Litigation privilege – attaches to a wider category of communications (including communications with third parties) but to apply, the “dominant purpose” of bringing the relevant document into existence must be for use in the litigation and the litigation to which the firm would be a party must be in “reasonable contemplation”. Internal investigations and FCA investigations themselves do not amount to litigation, as they are investigatory rather than judicial or quasi-judicial in nature.