Two quotes on legal professional privilege caught my eye this week. First this from two lawyers at Herbert Smith Freehills (HSF) about the decision in Property Alliance Group Limited v The Royal Bank of Scotland.
For now, what interests me is the claim made by the HSF folk that:
‘The decision is particularly helpful in recognising that the policy justification for privilege applies equally in the context of regulatory investigations, where the public interest will be advanced if regulators can deal with experienced lawyers who can accurately advise their clients how to respond and co-operate.’
It stood out because of this in the Financial Times which reports Jamie Symington, the Financial Conduct Authority’s head of investigations:
Some companies try to claim legal privilege – the principle under which communication between a client and a lawyer is confidential, even in investigations – over the first interviews of key witnesses; while others have refused to hand over a written report to the FCA, instead demanding to only read aloud the results.
‘The gaming of the process to shroud the outcome in legal professional privilege is unwelcome,’ said Mr Symington at the same conference. ‘It is absurd to suggest we should operate in this way in this jurisdiction,’ he added, of attempts to merely read aloud results.
It comes in a week when the conduct of Freshfields Bruckhaus Deringer and Holman Fenwick Willan were found by the Panel on Takeovers and Mergers to have given rise to a number of breaches of (what the Panel regards as) important provisions in the introduction to the City Code on Takeovers and Merger. The Panel found that, ‘their respective conduct was sufficiently serious to merit the issue by the Panel of a statement of public censure.’
Part of their concern relates to para 9(a) of the introduction which requires this:
‘The Panel expects any person dealing with it to do so in an open and cooperative way. It also expects prompt co-operation and assistance from persons dealing with it and those to whom enquiries and other requests are directed. In dealing with the Panel, a person must disclose to the Panel any information known to them and relevant to the matter being considered by the Panel (and correct or update that information if it changes). A person dealing with the Panel or to whom enquiries or requests are directed must take all reasonable care not to provide incorrect, incomplete or misleading information to the Panel.’
My reading of the Panel’s findings is that in (if I may borrow the phrase above), ‘deal[ing] with experienced lawyers who can accurately advise their clients how to respond and co-operate,’ advocacy for the client and candour with the regulator came into tension and advocacy for the client won. In situations of great complexity, where lawyers have a subconscious tendency to frame problems to the benefit of their client and a significant commercial pressure to advance the client’s interests, we should be wary of thinking that professional ‘objectivity’ serves the public interest. Nor do we have to perceive a cynical conspiracy by malevolent lawyers to take this view. As the Panel concluded:
‘…by failing to disclose to the Panel information known to it and which the Panel considers to have been relevant to the possibility that the Indonesian Parties would be regarded by the Panel as acting in concert, and in not taking all reasonable care not to provide the Panel with incorrect, incomplete or misleading information relating to the Forward-sale Arrangements and their purpose, each of Credit Suisse, Freshfields and HFW did not satisfy the requirements of Section 9(a) of the Introduction. However, the Panel accepts that there was no intention on the part of Credit Suisse, Freshfields or HFW to mislead the Panel.’
They did not intend to mislead (or – I suppose – the Panel did not feel the need to try and prove it) but they did do it. It is one of a series of reminders that more needs to be done by lawyers to think about and properly instantiate the public interest obligations contained in their codes of conduct.
Richard Moorhead is professor of law and professional ethics at UCL Faculty of Laws and director of the Centre for Ethics and Law. He blogs at Lawyer Watch. Follow Richard on Twitter.
