- Key principles
In most internal investigations, a company will interview its employees to help establish the facts, identify the extent of any misconduct and consider its reporting obligations and options. Interviews may take place before or after any document review process (or both). Preliminary fact finding interviews may be necessary to gain a better understanding of the alleged misconduct and to inform any subsequent data review.
It is important to consider carefully which individuals should be interviewed, and the order of interview, by reference to whistleblower information, documents, job responsibilities and/or reporting lines. It is likely that additional people will be identified as relevant as the interviews are carried out. Generally, it is appropriate to interview suspected wrongdoers last, and to sequence other interviews so as to reduce the likelihood of needing to re-interview earlier witnesses for clarification.
At the start of any interview, an “Upjohn” warning should usually be read to the employee. Originally a US practice, these cautions are now common in England: they involve the interviewing lawyer informing the employee that (i) they represent the company and not the employee; and (if privilege applies) that (ii) the interview is protected from disclosure by legal privilege which belongs to the company and (iii) the company may choose to waive this protection and disclose the note to a third party (such as a regulator) without consulting with the employee. The aspects of the Upjohn warning relating to privilege should not be given in situations where there is no good claim to privilege, as it may mislead the employee as to other parties’ ability to access any notes of the interview.
Depending on the circumstances of the investigation, especially the level of potential culpability (and criminal liability) of the interviewee, it may be appropriate to advise the employee that he may wish to consult an independent legal adviser (ILA). Certainly, the engagement of an ILA may impact on the willingness of an employee to reveal important information. Nonetheless, a company should be mindful of fairly treating any employees who are at risk of incriminating themselves.
- Recent developments
- Key to any investigation is the conduct of interviews with employees - but the decisions in SFO v ENRC and RBS Rights Issue Litigation have highlighted the difficulty of asserting privilege over records of interviews, unless litigation privilege applies.
- Verbatim notes of interviews are not privileged simply because a lawyer took the interview note.
- For legal advice privilege to apply, there must be evidence that the notes include legal advice. While this may be achieved by including comments on the effect of what the witness says upon the legal position, in reality this is difficult and any such comments could always be redacted, as the court noted in the XYZ case.
- Litigation privilege will apply to interview notes if the dominant purpose of creating them was to prepare for contemplated or existing adversarial legal proceedings. Following the ENRC appeal decision, it is likely that where the SFO has indicated an interest in the matter under investigation, litigation privilege will apply. It will depend upon the nature of any contact with the SFO, though the fact that the company has indicated an intention to cooperate with the prosecutor does not prevent litigation privilege applying. There is more analysis of the ENRC appeal decision here.
- Other cases provide some guidance on what circumstances may attract litigation privilege In Bilta v RBS, RBS claimed that interview transcripts generated during an investigation into allegations of tax fraud were subject to legal professional privilege. The High Court held that a letter received by RBS from the HMRC marked a “watershed moment” from which time litigation was reasonably in contemplation and litigation privilege therefore applied. That there may have been a subsidiary purpose of discovering what happened was, in this case, subsumed within a dominant purpose of preparing for litigation. For our analysis of the case, please click here.
- In R (on the application of AL) v SFO, XYZ and ors the court described it as “settled law” that no legal advice or litigation privilege attaches to notes of interviews conducted where a company was still ascertaining what had occurred, in order to consider whether to make a self-report. Had there been any privilege in such notes, the court stated that it would have been waived by the “highly artificial” process of oral proffers being read out to the SFO summarising the interview notes. For our analysis of the case, please click here, but note that the Court of Appeal in ENRC made clear that the fact a company is still ascertaining what has occurred does not prevent litigation privilege from applying and so this part of the XYZ decision is effectively now overruled.
- The SFO and Financial Conduct Authority (FCA) have been vocal in discussing their expectations of and concerns about companies conducting interviews of employees in internal investigations. The SFO’s director, Lisa Osofsky, has stated that, where a company conducts internal interviews, it should not be “distressed and offended if we seek those interviews because a court wants us, as a matter of fairness, to provide this material to a defendant in the dock”, whether the company believes those interviews to be privileged or not. In certain circumstances, consideration should be given to discussing proposed interviews in advance with these authorities. This is particularly relevant if the company is considering self-reporting (or has already self-reported) and wishes to obtain maximum cooperation credit.
- The SFO demonstrated, when entering into Deferred Prosecution Agreements (DPAs) with both ICBC Standard Bank plc and XYZ Limited, that it was prepared to accept oral summaries of first accounts of employee interviews from cooperating companies, rather than push for production of interview notes regarded as privileged by the company. The ENRC judgment referred to above may lead to a hardening of this position, however. More recently, Rolls-Royce’s “extraordinary” cooperation with the SFO included audio recording of interviews, disclosure of all interview memoranda, and deferring interviews where necessary until the SFO had first completed its interview. Similarly, Tesco’s “exemplary” cooperation with the FCA and SFO, which led to a public statement by the FCA that Tesco had committed Market Abuse and a DPA with the SFO, involved refraining from interviewing witnesses or taking statements at all.
- Practical tips in an investigation
- Carefully consider whether to record, what to record and how to record any interview; for example, by taping or note taking (whether a summary or verbatim note). Taping is accurate but may create the wrong atmosphere. A verbatim note may also be accurate but miss the nuance that a summary highlights. Issues of privilege are highly relevant to this decision. Absent litigation privilege, there is a real risk that any record will be disclosable to the authorities. For further discussion, see our accompanying note on “Privilege” and see "international perspective" below.
- Find out whether the interviewee has spoken to anyone in advance of the interview about the investigation, and what information they already have.
- Prepare, in advance, an outline of interview questions but do not be afraid to depart from it. Generally, any line of questioning should be introduced with open questions that allow the interviewee to offer their version of events, unaffected by the interviewers’ assumptions and biases.
- Generally, interviewees are not provided with documents in advance of internal interviews. However, the interviewer should be prepared with a bundle of relevant documents to put to the employee during interview.
- An employee may be more likely to provide focused and relevant answers if they are shown a document, particularly if the matter under investigation is historic. However, in certain circumstances - for instance where an employee is suspected to have behaved inappropriately - consider initially questioning the employee without disclosing the substantiating document(s). Potentially false evidence may be exposed if the documents contradict the initial account given in interview.
- Remind the interviewee to keep the content of the interview confidential, in order to preserve any legal privilege where this may apply. Finally, check that the interviewee is not recording the interview on a device.
- International perspective
- A common issue that arises in interviews overseas is whether and on what basis interviews can be recorded. Recording meetings in which an interview is taking place has a cultural dimension too - in some countries, no particular offence would be taken if a meeting is recorded; in others, the suggestion that the meeting is recorded will cause great offence and derail the interview process. Leaving aside the cultural aspects of recording interviews, local legal advice should be taken to determine whether the interview can be recorded without breaching local laws and whether written consent should be obtained from the interviewee before the recording begins.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.