Investigating privilege: asserting and maintaining legal privilege over corporate internal investigations. Wednesday, February 1, 2017

Transcription

1 Investigating privilege: asserting and maintaining legal privilege over corporate internal investigations Wednesday, February 1, 2017

2 Join the conversation Tweet using #NLawMotion and connect Connect with us on LinkedIn linkedin.com/company/nortonrosefulbright 2

3 Speakers Lindsay Mullen Partner Calgary Lindsay Mullen practices occupational health and safety, regulatory compliance and employment law. Ms. Mullen represents federally and provincially regulated companies in the energy, transportation, financial and services sectors. Neil Tichkowsky Associate Calgary Neil Tichkowsky practices litigation and has a particular interest in administrative and employment law. He joined our Calgary office in 2011 as a summer student and prior to rejoining Norton Rose Fulbright in 2013 clerked with the Federal Court of Appeal in Ottawa. 3

4 Overview Why is this topic important? What type of legal privilege should be asserted? Overview of the current state of the law regarding legal privilege Practical guidance on initiating and conducting an internal investigation, which may or may not have been prompted by regulatory concerns Cross-border considerations How and when to selectively waive privilege 4

5 Why is this topic important? The ability to protect an internal investigation is desirable because it minimizes the risk that the investigation information and findings will be used against the company. With a protected investigation, there is more likely to be full and frank disclosure of relevant facts and, hence, an accurate understanding of what happened so that corrective or remedial actions can be taken. Efforts to ensure that privilege is maintained in the context of internal investigations is becoming increasingly important as companies face stricter regulatory oversight and broad allegations of corporate misconduct. 5

6 What type of legal privilege should be asserted? Legal privilege is an evidentiary concept; in essence, an exception to disclosure of information in proceedings. There are two distinct forms of legal privilege: 1. Solicitor-client (or legal advice) privilege 2. Litigation privilege Although legal advice privilege and litigation privilege are distinct categories, they are both a highly important class of privilege which gives rise to a presumption of inadmissibility and will be protected by an immunity from disclosure, unless an exception to that privilege applies. It is important to understand the distinction between legal advice privilege and litigation privilege. 6

7 Types of privilege Legal advice privilege Litigation privilege 7

8 Legal advice privilege Solicitor-client/legal advice privilege applies only to confidential communications between the client and his or her lawyer (which may include in-house legal counsel so long as such individual was clearly involved in their capacity as legal counsel and not for other business reasons). Legal advice privilege exists any time a client seeks legal advice from his or her legal counsel regardless of whether litigation exists or is contemplated. The interest which underlies the protection from disclosure of communications between a client and a lawyer is the interest of all individuals (including corporations) to have full and ready access to legal advice. If an individual cannot confide in a lawyer knowing that what is said will not be revealed, it will be problematic for that individual to obtain proper candid legal advice. 8

9 Legal advice privilege (cont d) Test: 1. Communication within solicitor-client relationship 2. Made for purposes of obtaining/providing legal advice 3. Made with expectation of confidentiality 9

10 Communications in solicitor-client relationship 10

11 Communications made for purposes of obtaining legal advice 11

12 Made with expectation of confidentiality 12

13 Litigation privilege Litigation privilege applies to communications between the lawyer and their client and/or third parties and gives rise to an immunity from disclosure for documents and communications whose dominant purpose is preparation for litigation. This includes: the lawyer s file and oral or written communications between a lawyer and third parties, such as witnesses or experts and may include material of a non-communicative nature (i.e., photographs). Litigation privilege applies only in the context of existing or contemplated litigation. Litigation privilege is based upon the need for a protected area to facilitate investigation and preparation of a case for proceedings where there is an adversarial party (whether it be an individual, another corporation, or a government regulator). 13

14 Litigation privilege (cont d) Test: 1. Actual or contemplated litigation 2. Communications between lawyer and third parties, a client and third parties 3. Communications arise from dominant purpose of litigation 14

15 Reasonable prospect of litigation 15

16 Dominant purpose test Potential prosecution under regulatory statute Civil claim What is the dominant purpose? Following company policy mandating investigation Statutory investigation 16

17 Current state of the law 1. Talisman Energy Inc v Flo- Dynamics Systems Inc, 2015 ABQB R v Bruce Power Inc, 2009 ONCA Alberta v Suncor Energy Inc, 2016 ABQB Lizotte v Aviva Insurance Company of Canada, 2016 SCC Alberta (Information and Privacy Commissioner) v University of Calgary, 2016 SCC 53 Wide protection afforded to legal privilege Internal investigation materials can be immune from disclosure on the basis of legal privilege Express, clear legislative language is required to compel production of legal advice or litigation privileged documents 17

18 Practical guidance The following are some suggestions to assist in support of an assertion of legal privilege: 1. Identify circumstances where internal/external counsel should be involved. 2. Consider whether the circumstances necessitate protection from disclosure of investigation materials. 3. Ensure that the investigation takes place at the direction of legal counsel. 4. Insofar as possible, it is ideal to be able to assert both legal advice privilege and litigation privilege. 18

19 Practical guidance (cont d) 5. Document and communicate the legal purpose of the investigation Document or otherwise confirm the intent to conduct an investigation (at the direction of legal counsel) or initiate other activities in preparation for litigation (at the direction of legal counsel); this way both legal advice privilege and litigation privilege may apply. 6. Mark written materials as Privileged and Confidential Labeling documents privileged and confidential, solicitor-client communication and legal counsel work product (where applicable) is important, but must not be overused such that it no longer meaningful. 19

20 Practical guidance (cont d) 7. Ensure attorney direction and oversight If possible, communications should be directed from or to a lawyer (i.e., communications between nonlawyer parties make the assertion of privilege difficult to maintain). Deliver Upjohn warnings in connection with witness interviews. It is preferable for a lawyer to directly retain an expert and it should be confirmed with the expert that they are being retained under litigation and legal advice privilege and that the purpose for the report is for legal counsel s use in providing legal advice and for use in anticipated litigation. Any advice or direction from in-house legal counsel should be done solely in their capacity as legal counsel (as opposed to being provided in a business capacity). 20

21 Practical guidance (cont.) 8. Appropriately restrict the distribution of investigation materials, both outside and within the company Ensure that any use or disclosure of documents both internally and externally is carefully considered and limited to avoid a finding that something is either not subject to privilege or that privilege was waived. Take steps to avoid the possibility of inadvertent disclosure. 9. Update written corporate policies and procedures Any company documents mandating investigations upon the occurrence of an event should include language that legal counsel be involved at first instance to determine whether the investigation needs to be privileged and therefore is directed at the request of legal counsel. 21

22 Cross-border considerations In global investigations, there is the added complexity that material that is granted privilege protection in one jurisdiction may not be granted privilege protection in another. The extent to which materials prepared during the course of an internal investigation will be privileged will depend on the privilege rules that apply, as well as the conflict of law rules on privilege of the jurisdiction examining the question. 22

23 Cross-border consideration examples 23

24 Cross-border consideration examples (cont d) English Law Where proceedings are brought in England, the English courts will apply the English law on privilege to determine the extent to which documents can be withheld. So long as a document satisfies the test for legal advice privilege or litigation privilege under English law, the document will be treated as privileged. It does not matter that the document would not have been privileged under any other law. However, English courts will not treat a document as privileged simply because it is privileged under another law: it must be privileged under English law. 24

25 Cross-border consideration examples (cont d) US Law In the United States, courts will often apply the privilege laws of the country in which the privileged communication took place. US courts are divided about whether US privilege law also applies to foreign communications. Some courts hold that if a document is protected under either the foreign privilege law or US privilege law, then it can be protected from disclosure. Other courts are strict in their adherence to foreign law and hold that if a communication occurs in a foreign country and is not protected by that country s privilege law, then the communication is not protected from disclosure in the US - even if the communication would be protected by US privilege law 25

26 Cross-border considerations Takeaways When conducting an internal investigation it is important to be mindful of relevant jurisdictions and the requirements of the potentially applicable privilege laws. Understand the privilege laws of the location(s) of where the investigation is being conducted. Understand the privilege law of the other locations where proceedings could arise which are relevant to the circumstances/matter under investigation. 26

27 Waiving privilege Waiver of privilege is ordinarily established where it is shown that the possessor of the privilege (1) knows of the existence of the privilege, and (2) voluntarily evinces an intention to waive that privilege. However, waiver may also occur in the absence of an intention to waive, where fairness and consistency so require. : S&K Processors Ltd v Campbell Avenue Herring Producers Ltd, 1983 CanLII 407 at para. 6 (BCSC), per McLachlin J. as she then was. 27

28 Waiving privilege (cont d) Waiver more readily found in relation to litigation privilege Distribution of privileged information within an organization is not readily considered to be disclosure to a third party, and so generally waiver does not occur Consider who gets the information and for what purpose There is no waiver where the privilege holder discloses the document to a third party particularly where it is not voluntary disclosure and pursuant to an understanding that the document will be held in confidence and not disclosed to others (i.e., to an auditor) It is important to document the privilege holder s intention to protect their legal privilege while complying with the demands of their auditor 28

29 Waiving privilege (cont d) Common interest privilege arises in relation to a document or communication that is already protected by legal advice or litigation privilege and allows legal counsel representing different clients with similar legal interests to share information without having to disclose it to others such that the document or communication does not lose its protection. Recent case law suggests that this applies to litigation privilege only and not to legal advice privilege (i.e., a legal memo shared between, and jointly prepared by, lawyers representing different parties to a merger transaction): Iggillis Holdings Inc. v. Canada (National Revenue), 2016 FC

30 Waiving privilege (cont d) Takeaways See #8 under Practical guidance Appropriately restrict the distribution of investigation materials, both outside and within the company Ensure that any use or disclosure of documents both internally and externally is carefully considered and limited to avoid a finding that something is either not subject to privilege or that privilege was waived Because of the limited scope as to the extent of the waiver, consider creating a separate, less sensitive document when there is a desire to circulate certain information Take steps to avoid the possibility of inadvertent disclosure For internal sharing, if possible, communications should be directed from a lawyer Document the intention to protect legal privilege despite the disclosure 30

31 Appendix A witness interviews: Upjohn warnings We are conducting an investigation for the Company into certain events related to [INSERT RELEVANT ISSUE IN GENERAL TERMS]. We believe that you may have facts and/or documents that may be relevant to our investigation and we appreciate you meeting with us. To be clear, we serve as counsel to the Company. We are not your personal counsel and cannot give you legal advice. If you wish to obtain separate counsel, we will re-schedule this interview so that you may do so. In addition, your communications with us, as part of this investigation, are confidential and protected by, among other things, the attorney-client privilege. As the Company is our client, the attorney-client privilege belongs solely to the Company. Accordingly, the Company, in its sole discretion, may elect to waive the privilege and reveal your communications with us to third parties, including the government. As part of this investigation, we are interviewing a number of employees to gain a better understanding of the relevant issues. The fact that we are conducting this investigation does not mean the Company believes that any current or former employee has engaged in improper or illegal conduct. It simply is the process through which the Company ensures that it maintains the highest standards of corporate integrity. Your candor and honesty are critical to our ability to conduct effectively our investigation. To maintain the integrity of this investigation, we request that you keep our conversations today confidential. We appreciate your cooperation. May we continue? Sample Upjohn warning composed by Drinker Biddle LLP and hosted on the Association of Corporate Counsel website ( 31

32 Contact Lindsay Mullen Partner, Norton Rose Fulbright Neil Tichkowsky Associate, Norton Rose Fulbright

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