The RBS Rights Issue Litigation, Re

Legal advice privilege protects confidential communications between a client and a lawyer made for the purpose of giving or obtaining legal advice. In a corporate setting, information gathered from employees or former employees remains preparatory information where those individuals are not authorised to seek or receive legal advice for the company. The fact that lawyers conduct the interviews, or that the notes record direct communications to lawyers, does not alter that conclusion. Lawyers’ working papers are protected only where the document’s legal input, selection or analysis gives a clue to the trend of legal advice. English law, as the lex fori, governs privilege in English proceedings. The court retains an exceptional discretion to control disclosure or inspection, but compelling circumstances are required.

The claimants in the RBS Rights Issue Litigation sought disclosure and inspection of interview transcripts, notes and records created during two investigations conducted by or for RBS. RBS claimed legal advice privilege and, alternatively, lawyers’ working papers privilege. It also argued that US federal law applied because the investigations had substantial US connections and that the court should exercise its discretion to preserve any privilege available under US law.

The proceedings concerned alleged deficiencies in RBS’s rights issue prospectus. The claimants pursued statutory remedies under sections 87A, 87G and 90 of the Financial Services and Markets Act 2000. The central questions were whether the interview materials were privileged under English law, whether US law governed the issue, and whether disclosure or inspection should nevertheless be withheld.

1. Legal advice privilege. The claim failed. The principles in Three Rivers District Council v Governor and Company of the Bank of England (No 5) [2003] QB 1556 were of general application and remained binding. Legal advice privilege was confined to confidential communications between lawyer and client for the purpose of giving or obtaining legal advice. Information supplied by employees or former employees during an information-gathering exercise was in the same position as information supplied by an independent agent. Authority to participate in an interview, and direct communication with the company’s lawyers, did not make the interviewee the client or a qualifying emanation of the corporate client.

2. The conclusion was consistent with Balabel v Air India [1988] 1 Ch 317. That authority concerned material travelling within an established lawyer-client relationship. The prior question here was whether the interviewees were communicating within that relationship at all.

3. Lawyers’ working papers. This alternative claim also failed. Since the interviews were unprivileged, a verbatim transcript would not be privileged. Protection required evidence that the notes contained legal analysis, impressions or selection capable of betraying or giving a clue to the trend of advice. Assertions that the notes were non-verbatim, reflected a train of inquiry, or recorded mental impressions were insufficient. The evidence was conclusory and did not demonstrate the necessary connection with the trend of legal advice.

4. Applicable law. English law applied as the lex fori. The established approach in Lawrence v Campbell [1859] 4 Drew 485, Re Duncan (1968) P 306 and subsequent authority was not displaced merely because US law would provide broader protection. The proposed closest-connection rule was novel, uncertain and unsupported.

5. Discretion. The court had an exceptional discretion to withhold or control inspection despite the absence of privilege. Disclosure would ordinarily be favoured. RBS’s US-law expectations and the assurances given to interviewees did not justify exercising that discretion.

6. RBS’s claims failed on both asserted bases. The court declined to order further evidence or inspection of the notes by the court and directed counsel to seek to agree the form of order.