Maintaining privilege in internal investigations

In this segment of our Focus on Investigations series, we consider how to set up an investigation while maintaining privilege, and discuss the scope and limits of privilege in investigations.

What is privilege?

Privilege is one of the central issues in an investigation. From the beginning to the end of an investigation, there must be continuous and ongoing consideration of the application of privilege.

Generally, privilege is a limited exception to the principle that everything relevant should be adduced in a legal proceeding and should be available for consideration and disclosure. The two kinds of privilege that come up most often in Canadian investigations are solicitor client privilege and litigation privilege.

Solicitor-client privilege allows for communications between the lawyer and the client, with full and candid legal advice, without fear that ‎what the client says to their lawyer will be revealed‎. It applies where:

• communications are between client and legal counsel, within a solicitor-client relationship;
• the communications are intended to be confidential; and
• the communications are connected to seeking/giving legal advice.

Litigation privilege allows parties to engage in a fulsome and complete investigation of a matter subject to a potential adversarial ‎proceeding, without the risk that they will have to disclose what they have discovered. It applies where:

• there is a reasonable prospect of litigation. There must be an actual or contemplated legal dispute; ‎the mere suspicion of litigation is not sufficient; and
• the communications are for the dominant purpose of preparing for or obtaining advice/assistance with ‎respect to the actual or contemplated dispute. ‎

Setting up your investigation for privilege

While the scope of solicitor-client privilege and litigation privilege may seem expansive, lawyer involvement in and of itself does not cloak all communications and documents in privilege. Precautions must be taken in internal investigations to ensure that communications or documents that are intended to be privileged meet the necessary criteria.

The following steps are recommended at the start of an investigation for ensuring that communications and documents are privileged:

• Engage legal counsel immediately and ensure that they are directing the investigation. Keeping legal counsel involved in all steps of the investigation helps establish and maintain solicitor-client privilege.
• Start with an engagement letter with the legal counsel that identifies the reason for investigation and the nature of the legal advice sought. This will help lay the foundation for any claim of both solicitor client privilege and litigation privilege. Whereas solicitor-client privilege only usually attaches to communications between a lawyer and client, litigation privilege can attach to communications with third parties.
• Ensure that all third-party experts are engaged by legal counsel, and not directly by the company. Communication with experts should also be done through legal counsel only, whenever possible.
• Ensure the investigation team reports directly to legal counsel and the legal counsel is involved in investigation-related discussions whenever possible. The best practice to promote the application of solicitor-client privilege is to have the lawyer present in the conversation, or, if the communication is through written correspondence, to have the lawyer copied on all correspondence. Even internal communications within a corporation that do not involve a lawyer can possibly be protected by solicitor-client privilege if the communication is being made in order to obtain legal advice or discuss legal advice that has been received.
• Work with legal counsel to prepare an Investigation Plan and ensure that the Investigation Plan specifically speaks to privilege – namely the dominant purpose of the investigation and the nature of the legal advice sought. You can learn more about Investigation Plans in Part 2 of our Focus on Investigations series.

Maintaining privilege through the investigation

Often, an organization will have a group of individuals involved on an investigation. To ensure that privilege is maintained over important correspondence, the number of individuals involved with the investigation should be limited, including the number of individuals copied on any communications. Although not determinative, all correspondence should also be marked “privileged and confidential.”

Organizations should also consider password protection for important correspondence. Alternatively, consider exchanging correspondence or important documents using a separate drive accessible only by the limited group of individuals on the investigation team. Both of these strategies demonstrate a clear intention for correspondence to be confidential.

In order to maintain privilege over an investigation report, it is vital to ensure the report provides legal advice to ensure that solicitor-client privilege applies. It is also recommended to have counsel prepare the report pursuant to a retainer that explicitly details a request for legal advice. If litigation privilege may also apply, ensure that the report comments on any current or anticipated litigation.

Common privilege issues in investigations

In-house counsel

In Canada, in-house counsel can also enjoy solicitor-client privilege. However, it is important that they wear the hat of legal counsel, rather than of a business advisor. It would be prudent to use an engagement letter or memo with in-house counsel, and to conclude the investigation with a report from in-house that provides legal advice.

Lawyer as investigator

In some investigations, legal counsel will also act as investigators. In these circumstances, courts have found that the “legal advice” component is essential for solicitor-client privilege to apply to a lawyer’s investigation report. If the lawyer is merely gathering facts without providing legal advice, his or her report to the client will not be covered by solicitor-client privilege.

Multiple investigations

A problem with litigation privilege can sometimes arise in investigations where there are multiple purposes for the investigation. For example, in a workplace fatality there may be various purposes for the employer to conduct an investigation. One purpose is to fulfill the employer’s statutory obligation to investigate a fatality under the applicable health and safety legislation and to report to the government. Another purpose would be to investigate in preparation for an expected regulatory proceeding against the company or litigation. A third purpose may be the company’s policies or procedures, which require an investigation. In this circumstance, it will be difficult to clearly determine or demonstrate what the dominant purpose of the investigation was. If the dominant purpose for the creation or exchange of documents or communications is to meet statutory obligations or to comply with a company’s policies or procedures, then litigation privilege will likely not apply. However, if the dominant purpose is to prepare for anticipated litigation, then litigation privilege will apply.

One possible solution is to create multiple teams, one for each dominant purpose. In the above scenario, one team would investigate to create a report for the government, and a separate team would investigate to prepare for litigation. Another option is to have one team, but to keep files for each investigation separate.

International investigations

In Canada, in order to establish solicitor-client privilege, the lawyer giving advice must be duly qualified to practice in the jurisdiction where advice is sought. Laws on privilege vary significantly around the world. Therefore, to the extent multiple jurisdictions are involved in the investigation, special care must be taken regarding privilege. It is recommended that parties engage local counsel right away and consider issues associated with privilege from the very beginning of an investigation.

“Upjohn Warnings”

The Upjohn Warning is a U.S. warning, often referred to as the “corporate Miranda warning.” The Upjohn Warning warns employees in internal interviews that:

• the investigators represent the company, and do not personally represent the interviewee;
• the investigation is confidential and privileged, but that the privilege is the organization’s privilege;
• the company is able to waive privilege without the consent of the person interviewed;
• the interviewee does not have that right to waive privilege, but are bound to maintain the confidentiality of the investigation.

While the Upjohn Warning is considered to be part of the ethical duty of counsel in the U.S., it has not been adopted by Canadian courts and they are not required to preserve the company’s privilege. Further, Upjohn warnings can have a chilling effect in interviews, and are not recommended for most interviews in Canada.

Conclusion

Privilege is an important and challenging issue to manage in an investigation into serious corporate misconduct. This is an issue that should be assessed not just at the outset of the investigation, but throughout the course of the investigation as circumstances change.