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When does legal privilege apply in internal investigations?

John Bracken and Paul Harrison discuss when legal advice privelege would apply.

A recent decision in the Scottish courts offers a stark warning of the need to consider issues of legal privilege at an early stage when conducting an internal investigation.

In University of Dundee v Chakraborty [2023] ScotCS CSIH 22, the university sought to argue that a preliminary investigation report into an employee’s grievance should gain retrospective legal privilege, because that report was later sent to, and amended by, the university’s lawyers before the final report was issued.

The university accepted that the original report was not protected by privilege when it had been created but argued that if the original report was disclosed alongside the revised report, it would be possible to ascertain what legal advice had been given to the university.

The court of session rejected this argument, deciding that a comparison between the two reports would only allow the employee to “speculate” as to the legal advice. This was in part because the investigator had also made further amends prior to publication.

In addition, the university had waived its right to claim privilege by disclosing the legal advice it had received, and because the final report confirmed that the original report had been altered as a result of the advice.

Legal advice privilege applies to confidential communications which pass between a client and a client’s lawyer, and which have come into existence for the dominant purpose of giving or receiving legal advice about what should be done in the relevant legal context.

However, it is essential for HR to bear in mind that privilege is something which will only attach to a communication if it is created for the purpose of getting legal advice. As this case shows, it is hard to argue that the initial results of a fact-finding investigation should be privileged later in the process.

HR should therefore consider at an early stage whether legal advice may be required on the investigation. Are the allegations being investigated particularly sensitive or contentious? Does one of the potential outcomes of the investigation give rise to specific legal risks?

There will be a stronger argument that privilege applies if there was an evidenced intention to seek advice on an investigation from the outset and any draft documentation is prepared specifically to get legal advice and sent directly to the lawyer. In those circumstances, it is more likely that you would only need to disclose a final report or outcome without the prospect of advice being adduced from the potential disclosure of earlier drafts.

In addition, the court’s view that the university had inadvertently waived privilege by sharing legal advice with the independent investigator and by disclosing the existence of the original report to the employee, is particularly interesting.

It remains to be seen whether courts in England and Wales would take a similar view. However, it’s likely that others would consider this decision to have persuasive value at the very least.

It is also important to think about who is going to be receiving the advice – in other words, who in the business is the client?

Read more: Legal lowdown: A question of privilege

If the investigator is considered part of the client group receiving the advice, then any advice given by lawyers on the content of a report would likely be covered by privilege. This means more than simply copying lawyers in on correspondence with the investigator on the assumption that this conveys privilege. Instead, it means having a small, defined team who are party to the advice and have authority to instruct the lawyers.

If you don’t want the investigator to be included in that group for any reason, that’s fine, but be wary of passing on unfiltered legal advice, as was the case here. Sharing legal advice on a confidential basis will not necessarily amount to a waiver of privilege but specific advice should be taken.

As a final thought, it also goes without saying that it’s probably not a good idea to admit in a report that it has been amended following legal advice.

John Bracken is senior associate and Paul Harrison counsel at Baker McKenzie.