On the 27th of January 2016, the High Court ruled in favour of the SFO over the way it handles the identification of digital material which is potentially subject to Legal Professional Privilege (LPP). Significantly, the High Court ruled that:
“The procedure set out in the SFO’s Handbook for isolating material potentially subject to LPP, for the purpose of making it available to an independent lawyer for review, is lawful.”
Mr. McKenzie was arrested at Heathrow Airport on suspicion on conspiracy to commit an offence contrary to s.1 of the Bribery Act 2010 in connection with a $54,000,000 contract for a company called MIB Facades Ltd, of which he is a director and major shareholder. Various electronic devices were seized from him and, subsequently, the SFO notified the claimant’s solicitors that it believed one of the items, an iPhone, may contain some LPP material with the consequence that its content was being quarantined within the SFO’s computer systems.
His solicitors were asked to provide a list of search terms to enable potential LPP material to be identified so that it could be “…isolated for review by independent counsel”. However, they refused to do so on the basis that the SFO procedure was unlawful.
The procedure in question involves the use of SFO in-house IT staff in order to isolate material that is potentially subject to LPP. It involves the application of search terms across the data seized, after which the SFO provides any documents hit by those searches to an independent barrister, who is not employed by the SFO (“independent counsel”).
The solicitors also claimed that the SFO’s guidelines were inconsistent with guidelines set down by the Attorney General for dealing with electronic data. The Attorney General’s guidelines provide, in respect of data that might contain LPP material, that no member of the investigative or prosecution team should “…have sight or access to the material” and it was suggested, in this case, that the procedure used by the SFO meant that there would be a risk of such a contamination taking place.
The question before the Court was whether, as a matter of law, the process for isolating and transferring files that may contain LPP material into an electronic folder for review by an independent lawyer must, itself, be conducted by individuals who are independent of the seizing body.
In allowing leave, but dismissing the application for Judicial Review, Burnett LJ found that there was no inconsistency between the SFO Handbook and the AG’s guidelines. Further, the submissions made on behalf of Mr. McKenzie, to the effect that there was a risk in the process of inadvertent disclosure of LPP material to the investigation team were “fanciful”. Ultimately, he found that:
“There is a world of difference between determining whether something is protected by LPP, which involves close consideration of the content and context of a document or communication, and identifying a document, file or communication as potentially attracting LPP, which does not.”
This is likely to be the first in a line of cases in which the SFO stands its ground on its approach to LPP material. The Director of the SFO, and other senior members of his team, have made a number of public statements to the effect that they believe that companies “hide behind” LPP, and that, for example, the SFO does not accept that interview memoranda produced in internal investigations are privileged.
A hearing will shortly be held in order to determine differences of opinion between the SFO and Barclays over certain categories of LPP documents. This promises to be followed by further cases in which the SFO seek to challenge the approach taken to LPP by those defending companies. 2016 certainly promises to be an important year for LPP in the context of corporate crime.
2 February 2016