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Internal investigations and audits: is your business creating a risk it can’t control?

If your business is exposed to allegations of wrongdoing or threats of litigation, often internal investigations will be necessary to establish the facts and to determine what, if any, exposure there is to prosecution or claims for damages. Unless you are able to establish a form of legal privilege over such investigations, the documents produced are likely to be disclosable to regulators.

The controversial case of SFO v ENRC Ltd put the ability of businesses to assert privilege over internal investigations in jeopardy but this has been overturned in recent days by the Court of Appeal. The case demonstrates that businesses cannot expect privilege to be available automatically: steps have to be taken in advance to establish the correct evidential basis for it.

If correctly established, privilege allows businesses to conduct internal investigations in such a way that they can understand their exposure, take legal advice and engage with regulators in a measured, responsible way.

If your business does need to assess legal compliance in contemplation of possible criminal or civil litigation, there are some key questions you should ask:

  • Has the basis of that contemplation been soundly expressed and recorded for evidential purposes?
  • Have external lawyers been appointed to oversee the most sensitive issues under investigation?
  • Are the individuals to be interviewed as part of the investigation authorised to seek legal advice?
  • Have the key elements necessary to establish legal privilege been integrated into procedures for investigations and incident response?

If the answer is ‘no’, then the ENRC case may be a helpful reminder to put protective procedures in place, before incidents do occur.

In the aftermath of an incident or allegation, events can move very quickly and opportunities to establish privilege can be missed with long-term consequences. Lyons Davidson’s Regulatory Crime team can help you take quick, effective steps to establish the necessary safeguards in advance. For further information on this or other aspects of internal investigations, please contact Ben Derrington by emailing bderrington@lyonsdavidson.co.uk. or calling 0117 904 6319.

Posted on Sep 12th, 2018 by Lyons Davidson

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