Enforcement bodies more likely to exclude employee lawyers from witness interviews after recent decision

Out-Law Analysis | 05 Jun 2015 | 12:47 pm | 3 min. read

FOCUS: Companies under regulatory investigation will have to consider whether to instruct additional law firms to represent individual employees asked to attend an interview with a law enforcement agency following a recent High Court decision.

The judgment makes it more likely that law enforcement bodies including the Serious Fraud Office (SFO), Health and Safety Executive (HSE), Competition and Markets Authority (CMA) and Financial Conduct Authority (FCA), will exclude an individual's lawyer or representative from witness and compulsory interviews. This is particularly true where, as in this case, the lawyer acts for the interviewee's employer or for more than one witness.

This is problematic from a practical perspective because companies are increasingly being asked to cooperate with criminal and regulatory enforcement investigations, during which directors and employees may be asked – or compelled – to give witness statements. In these situations, companies have traditionally used their own in-house or external lawyers to support employees through the interview process unless there is a particular conflict of interest.

The case in question related to a renewed application for permission to apply for judicial review, connected to the SFO's investigations into alleged bribery and corruption at GlaxoSmithKline (GSK). As part of its investigation, the SFO had used its power under section 2 of the 1987 Criminal Justice Act to require three senior GSK employees to attend its offices to answer questions.

The three wanted a lawyer present at their interviews "to offer them any necessary legal advice and assistance". In each case, they wished to use the same firm of lawyers retained by GSK. The SFO refused, citing its policy which permitted the presence of lawyers at these interviews "in principle" but allowed it to refuse lawyer attendance where their presence would "delay or in any way prejudice the investigation". The High Court backed the SFO's policy, and refused permission for the judicial review.

In refusing leave, the High Court held that:

  • there was no common law right to have a lawyer present at such a compulsory interview. However, given the SFO's policy to allow the presence of lawyers "in principle", this argument was academic;
  • a "degree of flexibility in terms of excluding a solicitor from an interview" was legally permissible, and an individual did not have an unfettered right to choose which lawyer he will have with him during the interview;
  • an enforcement body did not have to show actual prejudice  before an individual's lawyer of choice could be excluded from interviews. All that was required was that there was "potentially a real risk of prejudice";
  • the decision was not an endorsement of the "blanket application of a blanket policy whereby the SFO would not in any circumstances allow the employer's solicitor to be present at an interview of an employee".

As the judgment made clear, having company lawyers advise the company and support individual witnesses is not in itself improper and regulators should not adopt a blanket policy prohibiting company lawyers from attending interviews of employees. There will be investigations where there is no risk of a conflict of interest or any real risk of prejudice. The judgment also notes that there is no bar to a company's lawyer's advising the interviewee before the interview, and there is no generally applicable bar to interviewees telling the company about the contents of the interview after they have taken place.

In that regard, the judgment is helpful to defence lawyers who can be faced with situations where law enforcement investigators seek to instruct employee witnesses that they must not speak to the company's lawyers. However, overall the case strengthens the hand of the criminal investigators and means that the representation of individual employees should be addressed carefully at an early stage of any investigation by, in most cases, arranging for one or more separate firms to represent individual witnesses. If the increased cost of paying for separate representation is not justified in the circumstances, the lawyers for the company could give the individuals pre-interview advice on their rights and obligations and the company may be able to arrange for another employee or third party to attend the interview to support the interviewee.

In-house and external lawyers who advise on a company's response to a regulatory investigation need to be aware of the judgment and, in particular, will need to consider whether to instruct one or more separate law firms to represent employees who are asked or required to attend an interview with a law enforcement agency. How to proceed will in part depend on the wishes of the employee and on the legal representation that the company or the individual interviewee themselves is prepared to fund, but having in place directors' and officers' insurance to fund the representation of individuals during regulatory and criminal investigations is clearly important.

Tom Stocker is a regulatory and corporate crime law expert at Pinsent Masons, the law firm behind Out-Law.com.