In the recent High Court decision in the long running RBS Rights Issue Litigation, Mr Justice Hilyard has dismissed RBS' claim to privilege on all grounds.
In Re the RBS Rights Issue Litigation  EWHC 3161 (Ch) (8 December 2016), RBS sought privilege over notes of interviews with 124 employees and ex-employees, which RBS had conducted during its own investigation into, amongst other things, the sub-prime crisis. The interviewers included in-house lawyers, external lawyers and non-lawyers within the RBS Group Secretariat.
Mr Justice Hilyard reviewed the principles in the controversial decision of Three Rivers no. 5. He acknowledged the academic dissent but concluded that the case was not confined to its own facts but based on principles of general application which remain binding law (at least at High Court level). It is clear from Three Rivers no. 5 that legal advice privilege does not extend to documents obtained by third parties to be shown to a solicitor for advice. Whether the "third party" is an employee or an independent agent is of no relevance. Furthermore, it could not be said that the interviewees (employees and ex-employees) were the "client" for the purposes of legal advice privilege, because (1) they neither sought nor received legal advice during the process; and (2) whilst they were authorised to be involved in the interview process they were not authorised to give instructions to the lawyers.
RBS also contended in the alternative that the interview notes were privileged "lawyer's working papers". The Judge felt that RBS failed to discharge their evidential burden of proving that the content of the interview notes would have revealed the legal advice/thought process underlying the interviews. Whilst such evidence would have to be couched in careful terms so as to not make disclosure of the very confidentialities the party was seeking to protect, RBS could have described the contents of the notes in broad terms. One could confirm, for example, that the documents contained what the lawyer considered to be the important questions, the substance of the responses to them and the lawyers' beliefs as to how they related to the inquiry.
The Judge also dismissed the contention that US Law (rather than English Law) applied, and thus a broader, more confidence friendly, approach to privilege. Mr Justice Hilyard also recognised that the Court retains a discretion to allow non-disclosure of a document notwithstanding its disclosable nature in exceptional circumstances, but he was not prepared to exercise that discretion here.
It is interesting that RBS did not seek to assert that the interview notes were subject to litigation privilege (which is, of course, broader). Perhaps it felt that it could not satisfy the dominant purpose test or could not sufficiently link the documents to this litigation, notwithstanding that litigation might have been contemplated in general terms.
This narrow definition of "client" obviously creates significant practical problems for large corporations. In-house lawyers should be careful when making initial inquiries and generating linked documentation. There is a clear risk that such documents will not be privileged even if obtained by external counsel - so take care about what is recorded. Also, given the Judge's comments about the evidence here, those making future arguments asserting privilege over "lawyers working papers" would be sensible to ensure that evidence is couched in sufficient detail.
Despite the Judge granting a "leapfrog" certificate to allow an appeal directly to the Supreme Court, unfortunately RBS has confirmed that it will not be appealing the decision, which means that the Supreme Court will not get to re-assess Three Rivers No. 5, as was so eagerly anticipated.