Navigating privilege issues across multijurisdictional investigations
April 2017 | LEGAL & REGULATORY| FRAUD & CORRUPTION
Financier Worldwide Magazine
Over the past two decades, the US has traditionally been at the forefront of investigating and prosecuting corporate misconduct, even when that misconduct occurs abroad and only its effects are felt domestically. The US Department of Justice’s (DOJ) expansive enforcement under the Foreign Corrupt Practices Act and Sherman Act are just two such means via which these investigations can occur.
Today, though the US still leads the way in the investigation and prosecution of international business crimes, there are new sheriffs in town. Increasingly, other countries are flexing their own law enforcement muscles and are initiating investigations into extrajurisdictional business conduct. For example, in 2014 the South African Competition Commission began investigating cartel activity among more than 80 automotive component suppliers; the following year, Brazil began investigating cartel activity by those same companies.
These investigations no longer proceed in silos, as countries have become more willing to work together, sharing documents and other information, both via formal agreements and other more informal means. The DOJ has recently trumpeted numerous successful examples of this new cooperation in cases involving Archer Daniels Midland, Vimpelcom, Hewlett-Packard and Alcoa.
The increasing frequency of multijurisdictional investigations, and commensurate cooperation with foreign agencies, presents significant challenges for investigative counsel and their corporate clients. One such challenge is differences in the rules governing attorney-client privilege and attorney work product doctrine. Although the when and why of these privileges are (relatively) straightforward in the US, other jurisdictions may apply different rules, or may not formally recognise privilege at all. These differences pose vexing questions. For example, where attorney-client communications that need not be disclosed to DOJ must nonetheless be turned over in response to a formal demand for information in another jurisdiction, do those communications lose the protection of privilege in the US due to their disclosure to third parties? Conversely, if a company waives privilege during a DOJ investigation, must those same communications be revealed in parallel investigations abroad? These are questions without easy answers, and companies must, consequently, take a coordinated and cautious approach to dealing with concurrent investigations worldwide.
The law of privilege abroad
The attorney-client privilege, work product doctrine and the rules regarding waiver of those protections are (again, relatively) well-settled, and we need not expound upon them here. But protections taken for granted in the US become more complicated when investigations turn global. While some countries, such as Brazil, offer strong protections, other jurisdictions, such as Japan and South Korea, do not formally codify the privilege at all, thus potentially requiring the release of material that would otherwise elude compelled disclosure under US law. A supranational entity such as the EU adds an additional wrinkle because its dawn raids and ensuing investigations operate under yet another set of rules in addition to the rules of the member country in which the target resides.
Privilege waiver abroad
Differences in privilege law also include differences in privilege waiver principles. Generally, waiver occurs when privileged information is released or authorised for release in a manner that eliminates its prior protection. In the US, this can happen when the client intentionally provides privileged information to the government, or even to private litigants (for example, in support of an advice of counsel defence).
Multinational investigations add further complexity. For example, if country A requires the disclosure of communications that country B would consider privileged, would country B consider that privilege waived? What if those communications were voluntarily disclosed to country A? Or if such a disclosure would not affect a waiver under country A’s laws? These questions depend on the web of privilege and waiver rules among the jurisdictions involved. Because international cooperation is often accomplished through informal means, such disclosures may also turn on the degree to which law enforcement agents in one jurisdiction defer to the rules regarding privilege (and privilege waiver) in other jurisdictions.
The DOJ’s approach to cross-border privilege issues
As noted, federal prosecutors seeking cooperation from law enforcement agencies abroad have two primary means at their disposal: formal requests, such as letters rogatory, treaty requests, and requests under executive agreements; and informal requests. When discovery is sought directly from individuals and entities abroad, federal prosecutors typically submit those requests through MLATs and MOUs. MLATs, MOUs or informal requests can be used to obtain documents that foreign law enforcement authorities have already collected as part of an investigation.
Beyond general guidance in the US Attorney’s Manual (USAM) on how federal prosecutors should utilise formal and informal requests to garner the assistance of foreign law enforcement agencies, there is little policy guidance on how federal prosecutors should handle documents collected in foreign investigations that would be privileged under US law. The USAM provides guidance on privilege issues in the execution of search warrants, where it instructs federal prosecutors not to “imping[e] on valid attorney-client relationships”, and to utilise a taint team when the government seizes computers that contain legally privileged material. However, there is no similar taint team provision for evidence requested from abroad, and prosecutors are unlikely to employ a taint team voluntarily, absent such a policy. More critically, whether a federal prosecutor chooses to preserve privilege, as to documents from abroad, begs the question of whether the prosecutor will consider privileged any documents that have already been disclosed to another law enforcement agency abroad. A converse problem exists when an investigating agency from another country seeks assistance from the US, and the cooperating company has voluntarily waived privilege in its production of documents to DOJ.
MLATs or MOUs provide little additional guidance. In the context of MLAT/MOU requests for assistance with obtaining documents directly from an individual or entity (as opposed to evidence already collected by the law enforcement agency itself), many MLATs and MOUs permit the target of the request to assert claims of privilege, which are to be resolved by the country receiving the request. However, these agreements do not address whether the request is aimed at acquiring evidence already obtained by the law enforcement agency itself through investigative means, which may include otherwise privileged documents. Moreover, federal prosecutors may not even utilise an MLAT or MOU when an informal request may suffice.
Finally, government lawyers have an ethical obligation to respect and protect confidentiality of privileged documents from unauthorised disclosure. However, this again begs the question of whether prosecutors believe that attorney-client communications and work product-related documents disclosed during a foreign jurisdiction’s investigation retain their privileged status.
Practical steps to protect privilege
When parties are faced with government investigations both in the US and abroad, company counsel is left in the unenviable position of not only coordinating document review for multiple agencies, but also navigating the laws governing privilege (and privilege waiver) in those jurisdictions. With the prospect of those agencies informally exchanging documents, advance consideration of these issues is crucial. To best protect their privilege in this context, companies have a variety of strategies at their disposal, as outlined below.
First, retain local counsel in all jurisdictions of the investigation, particularly if protections for internal counsel or foreign attorneys are weaker than those of external local counsel. In such jurisdictions, local counsel can retain sensitive written records and findings.
Second, prior to initiating document review, educate the team on the applicable rules of privilege. Reviewers must be sensitive to who is covered and where document protections are strongest. Review protocols could utilise not only a ‘privilege’ tag to identify communications covered by US privilege, but a series of privilege tags for each jurisdiction in which an investigation is pending, and the jurisdiction in which the communication takes place. An effective document review protocol also takes into consideration the data privacy laws of all of the relevant jurisdictions.
Third, in each document production and relevant communications with the court or government, companies must indicate that in no way does the release of documents constitute a waiver of privileges available in other jurisdictions.
Fourth, once discussions with the government begin, company counsel should utilise court or agency orders to the extent available, such as those contemplated under Rule 502(d) in the US, to limit waiver to the agency to which the privileged communications have been produced.
Finally, seek cooperation from prosecutors. To the extent that formal orders are not available, company counsel may be able to persuade the prosecutor to withhold privileged documents from informal international information exchanges. Prosecutors may be more likely to do this when, for example, the company is not the main target of the investigation or the prosecutor does not want to disrupt the cooperative approach the company has taken to date. Similarly, federal prosecutors may, in the spirit of cooperation, agree not to seek communications that are not considered privileged in the jurisdiction in which they occurred but are considered privileged in the US. For example, prosecutors in DOJ’s antitrust division may, in our experience, refrain from requiring disclosure of company communications involving non-bengoshi lawyers (i.e., lawyers that are not members of the bar in Japan) in the company’s ‘law’ department, even though Japanese law does not treat such communications as privileged.
As the number of countries aggressively pursuing global investigations increases, multinational corporations will face an increased risk of parallel investigations with different – and sometimes dramatically so – approaches to privilege. However, careful review of the rules of privilege in concert with internal training, the use of protective orders and other agreements, and transparent discussions with law enforcement authorities will help limit disclosure to those jurisdictions in which disclosures are either required or intended.
Patrick F. Linehan is a partner and Galen Kast is an associate at Steptoe & Johnson LLP. Mr Linehan can be contacted on +1 (202) 429 8154 or by email: email@example.com.
© Financier Worldwide
Patrick F. Linehan and Galen Kast
Steptoe & Johnson LLP