When does “litigation” become sufficient to trigger litigation privilege?

Publication February 2018


The point at which an investigation becomes sufficiently adversarial to constitute “litigation” for litigation privilege purposes has long been a grey area under English law. In SFO v ENRC1, the English High Court has handed down an important decision on the scope of litigation privilege in the context of investigations, providing an illustration of what constitutes “litigation” and when it can be said to be reasonably anticipated for the purposes of litigation privilege particularly in the criminal context.2 Going forward, corporates will need to bear in mind that, where legal advice privilege does not apply, documents produced during the course of compliance due diligence, an internal investigation and/or cooperation with the SFO – including interview notes and accountants’ books and records reports – are unlikely to be protected by litigation privilege until the point at which the corporate reasonably anticipates prosecution, which is a high bar. This article sets out the background and rationale for the court’s latest finding on privilege as well as a number of key takeaways. It also considers the subsequent case of Bilta (in liquidation) v RBS [2017] EWHC 3535 (Ch), in which the court considered one aspect of the ENRC decision, the question of dominant purpose in the context of litigation privilege, and took a noticeably different approach.


An internal investigation was launched following whistleblower allegations of fraud, bribery and corruption. Lawyers were engaged in early 2011 to carry out a fact-finding investigation, followed by forensic accountants a few months later.

The SFO initiated discussions with the company some months after the lawyers started work following a press report. In April 2013 the SFO began a criminal investigation. As part of its investigation, the SFO sought disclosure of certain documents generated during the internal investigation, which had continued in the interim period. The company claimed that these documents were privileged, and the SFO sought a declaration from the English court that they were not.  

Requested documents

There were four categories of documents in respect of which privileged was claimed:

  1. notes taken by external lawyers of interviews with employees, former employees and officers of the company and its subsidiaries, suppliers and others third parties in relation to the matters being investigated. It was claimed that these documents were protected by litigation privilege on the basis that the dominant purpose of the interviews was to enable its lawyers to obtain relevant information and instructions and to provide advice in connection with anticipated adversarial criminal litigation. Alternatively it was claimed that the notes were protected by legal advice privilege on the basis that they constituted lawyers’ work product, revealing the trend of the legal advice being provided. Legal advice privilege over the notes was not claimed on any other grounds, presumably recognising the difficulties in doing so given the narrow definition of who is the “client” following Three Rivers No. 53 as confirmed in December 2016 by the RBS Rights Issue Litigation case (the RBS litigation)4;
  2. materials generated by the accountants as part of “books and records” reviews carried out to identify controls and systems weaknesses and potential improvements and in respect of which litigation privilege was claimed;
  3. documents indicating or containing the factual evidence of a partner of the law firm engaged to advise the Nomination and Corporate Governance Committee and/or the Board of the company - both legal advice privilege and litigation privilege were claimed in respect of these documents; and
  4. 17 documents referred to in a letter sent to the SFO by the company’s legal advisors. The majority of these documents were or reflected the accountants’ reports (to be treated in the same way as (b) above). Two of these documents were internal email communications between a senior executive and the then Head of Mergers and Acquisitions (a qualified lawyer who had previously acted as the company’s General Counsel); legal advice privilege was claimed in respect of this category.

Legal advice privilege

Although the question of who is the client was not directly at issue in this case, the judge confirmed that the narrow definition of “client” adopted in the RBS litigation on the basis of Three Rivers No. 5 was “plainly right”, adding that any change would have to be made by the Supreme Court or Parliament.5 Only communications between lawyers and those individuals at the corporate client authorised to seek and receive legal advice on behalf of the corporate would be protected by legal advice privilege.

With regard to lawyers’ working papers, the judge repeated the position taken in the RBS litigation – namely that legal advice privilege protection over lawyers’ working papers will only be justified if the working papers would betray the tenor of the legal advice.  Otherwise, a note by a lawyer of an interview with a witness who does not constitute the “client” for legal advice privilege purposes will not be privileged simply by virtue of the fact that the lawyer (rather than the client or other third party) had carried out the interview instead.

On the above basis, the interview notes were held not to be protected by legal advice privilege. There was no evidence that any of the individuals interviewed fell within the definition of “client”. Nor did the fact that the notes were made by lawyers strengthen the claim for legal advice privilege as these were merely notes of what the lawyers were told by the witnesses, and, on the evidence provided, did not betray the trend of the legal advice to the company.

The documents indicating or containing factual evidence of the legal adviser to the committee/board were found to be protected by legal advice privilege both in terms of the legal advice and the factual findings of the investigation which they provided. Although the SFO had argued that the factual findings were not privileged, the judge held that these findings were part and parcel of the confidential solicitor-client communication and therefore privileged. The judge additionally found that the documents fell within the ambit of the protection of lawyers’ working papers.

The emails with the Head of Mergers and Acquisitions were held not to be privileged even where legal advice was being sought and provided because, on the basis of the contemporaneous documents, the individual was engaged by the company at the time not as a lawyer but as a “man of business”. This confirms the need for a lawyer, acting in the role of lawyer, in the relevant communications for legal advice privilege to attach.

Litigation privilege

This decision is perhaps of greater interest for the discussion on litigation privilege in the context of investigations – something which was not pleaded in the recent RBS litigation (dealing with the scope of legal advice privilege).

It was common ground that communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation attract litigation privilege so long as:

  1. the litigation is adversarial, not investigative or inquisitorial;
  2. litigation is in progress or reasonably in contemplation; and
  3. the communications are made with the sole or dominant purpose of conducting the anticipated litigation.

Adversarial litigation

The company argued that a criminal investigation by the SFO should be treated as adversarial litigation for litigation privilege purposes. The judge, however, rejected this argument as misconceived. The SFO has a dual function as investigator and prosecutor. An SFO investigation is only a preliminary step to uncover relevant facts before any decision to is taken to prosecute. At the investigation stage the process cannot be said to be adversarial. In the judge’s view, “[t]he policy that justifies litigation privilege does not extend to enabling a party to protect itself from having to disclose documents to an investigator”. There was even less reason for the court to hold that documents prepared as part of the internal investigation, before the SFO commenced its own investigation, could be protected by litigation privilege, since there was no evidence of the company expecting to find any incriminating material and it had previously promised to provide these to the SFO in the spirit of cooperation.

Litigation in contemplation

The judge recognised that the test as to when litigation can be said to be anticipated is “notoriously difficult to express in words”, but noted that the person seeking to claim litigation privilege must establish that it was aware of circumstances which rendered litigation between itself and the SFO a real likelihood rather than a mere possibility. The reasonable contemplation or onset of a criminal investigation by the SFO (which the judge held did not constitute adversarial litigation for litigation privilege purposes) did not necessarily equate to the reasonable contemplation of a prosecution: “[t]he investigation and the inception of a prosecution cannot be characterised as part and parcel of one continuous amorphous process … so that the reasonable expectation of the one necessarily involves the reasonable contemplation of the other”. Even where allegations of criminal conduct were being investigated, prosecution only becomes a real possibility once it is discovered that there is some truth in the allegations. Here, there was no evidence that anyone at the company was ever aware – either before or after the SFO’s criminal investigation began - that a criminal offence had been committed. It could not therefore be said that anyone at the company reasonably contemplated litigation as a real likelihood rather than a mere possibility while the fact finding continued. A fear of prosecution on a “worst case scenario” was not enough to trigger litigation privilege.

The reasoning of Andrews J as to when a criminal prosecution can be said to be in reasonable contemplation was specifically endorsed by the Court of Appeal in the subsequent case of R v Jukes [2018] EWCA Crim 176.

Dominant purpose test

The judge went on to find that even if criminal proceedings were in reasonable contemplation, none of the documents in question were created for the dominant purpose of using in, or obtaining legal advice relating to the conduct of, such anticipated criminal proceedings. While the company argued that the dominant purpose of the documents was the obtaining of legal advice pertaining to the conduct of the anticipated criminal litigation, the judge was not persuaded that this was even a subsidiary purpose of the creation of the documents, let alone the dominant purpose. In the judge’s view, the primary purpose of the investigation was to find out if there was any truth in the allegations and then to decide what to do about it if there was. The dominant purpose of the accountants’ reports was to meet compliance requirements or to obtain accountancy advice on remedial steps as part and parcel of a comprehensive books and records review. On the evidence, the accountants’ engagement had little or nothing to do with the preparation of a defence to, or obtaining legal advice in respect of, prospective criminal litigation. 

The judge also noted that any legal advice which was sought based on the outcome of the internal investigation would have been on how to minimise or avoid the risk of prosecution by the SFO, as opposed to on how to conduct a defence to a criminal investigation, and that avoidance of a criminal prosecution cannot be equated with the conduct of a defence to a criminal prosecution for litigation privilege purposes. Although the judge conceded that it may be possible for documents to be generated for the dual purpose of assisting a company to persuade the SFO not to prosecute and also to help the company mount a defence to criminal proceedings if that failed, the judge held that the evidence in this case did not establish such a dual purpose, let alone that the latter purpose was the dominant one. The judge also added that documents created with the specific purpose or intention of showing them to the potential adversary in litigation are not subject to litigation privilege. Given that the company had committed to share the results of its internal investigation with the SFO, it could not, at the same time, claim litigation privilege over these materials.  

For all of these reasons, the judge held that the claim to litigation privilege failed on all counts.

A seemingly broader approach to the question of dominant purpose was taken in the subsequent case of Bilta (in liquidation) v RBS [2017] EWHC 3535 (Ch). In that case, the claimants sought documents relating to an internal investigation carried out by external lawyers. The claimants did not dispute that litigation was in contemplation. (i.e. a threatened assessment by HMRC in respect of over-claimed VAT). However, the issue was whether the internal investigation documents sought were created for the dominant purpose of use in the litigation (i.e. the HMRC assessment).

The claimants argued that the internal investigation documents were not covered by litigation privilege on the basis of a statement in correspondence from the bank’s lawyers that the purpose of the investigation had been to provide a full and detailed account of the relevant facts. The bank successfully argued that the dominant purpose in producing the documents was to defend HMRC’s claim. The court noted that a key point in the chronology was a March 2012 letter from HMRC stating that it had decided (after two years of investigating) to make an assessment but was prepared to wait to consider the bank’s comments before it did so – and it was at this stage that the bank instructed external lawyers. The fact that the bank tried to cooperate with, and met with HMRC on several occasions did not preclude the internal investigation being conducted for the dominant purpose of expected litigation. It was held that the documents were brought into being for the dominant purpose of expected litigation and were therefore privileged.

In addition, the Chancellor considered that dicta in ENRC suggesting that privilege cannot attach to documents created for the purposes of trying to avoid litigation did not give rise to a general legal principle and did not reflect the commercial reality of the present case (although he did not expressly criticise the conclusion that attempts to settle prevented the litigation from being the dominant purpose on the facts of ENRC). Moreover, he stated that it is clear from the authorities that it is necessary “to take a realistic, indeed commercial view of the facts … [the bank] was not spending large sums on legal fees here in the hope that HMRC would be dissuaded from issuing an assessment. If that is properly to be regarded as a purpose of the investigation at all, it was obviously a very subsidiary purpose”.

Key takeaways

This case provides a number of key takeaways for parties when embarking on compliance due diligence, an internal investigation and/or cooperation with the SFO.

  1. Be aware that the bar for litigation privilege to trigger now appears to be higher in the criminal context than in the civil context. Civil proceedings can be commenced based on limited evidence – and therefore anticipated for litigation privilege purposes - albeit challenged later. Criminal proceedings, on the other hand, cannot be commenced unless and until the prosecutor is satisfied that there is a sufficient evidential basis for prosecution and the public interest test has been met. Criminal proceedings cannot, therefore, be reasonably contemplated for litigation privilege purposes unless the prospective defendant knows enough about what the investigation is likely to unearth, or has unearthed, to appreciate that it is realistic to expect a prosecutor to be satisfied that it has enough material to stand a “good chance” of securing a conviction.  It would be prudent to ensure that the grounds for belief going to litigation privilege are clearly and contemporaneously recorded.
  2. Where an internal or external investigation is being carried out for fact-finding purposes to ascertain whether or not any wrongdoing has been committed, the extent to which material generated during the course of the investigation will be privileged will depend not only on whether litigation can be said to be reasonably contemplated but what kind of litigation is contemplated: civil or criminal, applying the appropriate tests in each case. If no civil proceedings are reasonably contemplated, however, and the only risk is of criminal prosecution, it cannot be said that the individual or entity being investigated reasonably contemplates litigation unless, on the facts, it can be shown that they were aware of circumstances that, once discovered, made a prosecution likely. Do not assume, therefore, that litigation privilege will attach just because you are carrying out an internal investigation into alleged criminal activity, or even once the SFO commences a formal criminal investigation.Unless there is an awareness of any criminal conduct having taken place on the part of those investigating, the scope for arguing that litigation was reasonably contemplated will be limited. Ensure that the grounds for such awareness are immediately recorded for the purpose of privilege.
  3. Even where adversarial litigation can be said to be reasonably contemplated, the dominant purpose test for litigation privilege purposes would still need to be met. Whether civil or criminal proceedings are contemplated, the material in question would have to be prepared for the dominant purpose of preparing a defence to, or obtaining legal advice in respect of, the prospective litigation, as opposed to any other purpose.
  4. Do not, therefore, assume that notes of interviews with potential witnesses and/or the advice or reports of non-legal professionals, such as forensic accountants, engaged on compliance engagements or internal and/or external investigations will be protected by litigation privilege. Not only will this depend on the extent to which the client reasonably anticipates litigation and, if so, what type (civil or criminal), but also on whether or not the material satisfies the dominant purpose test (rather than being prepared for any other dominant purpose, such as compliance due diligence and/or remediation). Again, clearly record any conclusions contemporaneously.
  5. Remember that the narrow definition of “client” for the purposes of legal advice privilege still stands. Lawyers’ notes of interviews with witnesses who do not constitute the client will not be privileged unless litigation privilege applies. They may also be protected as lawyers’ working papers but only to the extent that they betray the tenor of the legal advice to the client. Evidence in this regard is crucial - for example, the lawyer’s assessment of the witness evidence, any thoughts about its importance or relevance to the inquiry, or indications of further areas of investigation in consequence of what the witness has said. Lawyers’ factual findings which are part and parcel of the confidential solicitor-client communication will, however, be protected by legal advice privilege.
  6. In assessing whether or not privilege applies, the court will consider the nature, quality and content of the evidence supporting the claim for privilege very carefully. Where possible, therefore, secure evidence from the individual(s) ultimately responsible for the coming into existence of the document(s) in question, supported by any contemporaneous documents, as it is their motivation and state of mind which will be relevant to why legal advice was sought or litigation contemplated. Evidence from anyone else – including lawyers – will be of secondary value.



The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB)


Note that the company was granted permission to appeal in October 2017. The appeal is due to be heard in July 2018.


Three Rivers District Council and others v Governor and Company of the Bank of England (No 5) [2003] QB 1556


The RBS Rights Issue Litigation [2016] EWHC 3161 (Ch)


Somewhat reassuringly, the judge did not express any view on the further observations in the RBS litigation suggesting that only individuals singly or together constituting part of the directing mind and will of the corporation can be treated for the purposes of legal advice privilege as being, or being a qualifying emanation of, the “client”, which could, if adopted, give rise to further complex preliminary issues on who is the client for legal advice privilege purposes.

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