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Investigating Yourself Into Her Majesty’s Doghouse

Last month, the English High Court issued a ruling suggesting that many of the documents generated during a company’s internal investigation of employee misconduct might be discovered and used against the company in criminal prosecutions or civil litigation in England.

Eurasian Natural Resources Corporation (“ENRC”) retained outside legal counsel and launched an internal investigation after receiving a whistleblower complaint. Subsequently, ENRC self-reported the allegations to the UK’s principal corruption enforcer, the Serious Fraud Office (“SFO”), and the SFO attempted to subpoena documents — including notes of witness interviews taken by outside counsel, investigative reports created by outside counsel, and forensic accounting reports — generated during ENRC’s own internal investigation into the alleged wrongdoing.

The English High Court ruled that the SFO could obtain these documents for use in a criminal prosecution against ENRC because:

  1. A company would only have a “litigation privilege” (analogous to the U.S. attorney work-product doctrine) after it knew enough about what the investigation had found, or was likely to find, to realistically expect a prosecutor to be satisfied that it had enough evidence to stand a good chance of securing a conviction; and
  2. Continuing a trend under the English law, it found that the “legal advice privilege” (analogous to the attorney-client privilege) could be invoked only over communications between counsel, and employees authorized to obtain legal advice on the corporation’s behalf — i.e., the corporation’s directors and, possibly due to their position, in-house legal staff — who would be covered.

This ruling makes it clear that any company potentially subject to litigation in England must exercise caution when conducting internal investigations into potential employee misconduct. Regardless of where in the world such an internal investigation took place, the fruits of such labor might be discoverable in a subsequent criminal proceeding or civil litigation against the company in England. As such, great thought must be given to maximize the likelihood that a privilege would apply, including how outside counsel is retained, who they communicate with about the investigation, and what work product is ultimately created.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.