Investigating the investigators – what happens to your seized privileged documents?
14 April 2016
A challenge to the SFO’s use of its seize and sift powers to process privileged documents failed in McKenzie, R (On the Application Of) v Director of the Serious Fraud Office  EWHC 102 (Admin). The High Court permitted the SFO to use its own technical staff to process privileged documents. There was no need for the SFO to show that there was no real risk of disclosure to the investigating team. However, the decision highlights positive obligations for all investigating authorities handling privileged documents, including what to do when privileged documents are inadvertently disclosed to the investigating team.
Privileged material can be seized – but who looks at it?
While generally items that are subject to legal professional privilege (LPP) cannot be seized by the investigating authority, s50 and s51 of the Criminal Justice and Police Act 2001 authorise the seizure of devices suspected to contain LPP material where it is not reasonably practicable to separate the LPP from the non-LPP material contained on the device.
Following such a seizure, the Serious Fraud Office (SFO) will handle the material in accordance with its Operational Handbook. For electronic material, it will:
- process and load the material onto its Digital Review System (at which point it is not yet available to the investigating team);
- apply search terms provided by the owner of the data (or his/her legal representative) to isolate the privileged material;
- confine the results of the search terms to a separate folder for review by an independent, non-SFO lawyer; and
- upon conclusion of the review, return privileged documents to the target, and release non-privileged materials to the investigation team.
These steps (with the exception of the ultimate privilege review) are all undertaken by the SFO’s in-house technical staff. These individuals are independent of the case team, but are still employed by the SFO.
Why the dispute?
The applicant was arrested on suspicion of conspiracy to commit an offence contrary to the Bribery Act 2010. His electronic devices (such as phones, USB stick and computer) were lawfully seized by the SFO. The SFO told the claimant’s solicitors that one of the seized devices might contain LPP material (as he had not alerted them to this fact). It sought a list of search terms to isolate the LPP material for independent review, and the claimant refused.
Instead, in his application for judicial review, the claimant argued that the SFO’s use of in-house IT staff to isolate the potentially privileged material was unlawful, mainly because it gave rise to a real risk that the SFO’s investigative team would gain access to LPP material. On his case, the initial exercise of searching and isolating the data should be contracted out by the SFO to independent third-party IT specialists.
Did the SFO need to use external technical staff to process the data?
The claimant contended that the onus was on the seizing authority to satisfy the court that there was no real risk that LPP material would be disclosed to an investigator, by analogy with the duty imposed by the court on a solicitor who later acted against the interests of a former client.
The court definitively rejected the argument. The SFO, as an investigating body, was “exercising statutory powers for the public good in the investigation of suspected crime”. Given the different context, there was no justification for imposing such a heavy duty on the SFO, and it was therefore not required by law to outsource the preliminary sifting process.
Setting the standards for investigating agencies
Notwithstanding its rejection of the immediate case, the court recognised that it remains important for public investigating authorities which are sifting potentially privileged material to have procedures in place to prevent investigators from accessing LPP material.
It imposed a positive duty on seizing authorities to “devise and operate a system to isolate potential LPP material from bulk material lawfully in its possession”, such that the system could “reasonably be expected to ensure that such material will not be read by members of the investigative team before it has been reviewed by an independent lawyer to establish whether privilege exists”.
In addition, a seizing authority should have clear guidance in place such that, if a member of an investigating team did read material subject to LPP, that fact is recorded, the potential conflict recognised, and steps taken to prevent privileged information from being deployed in the investigation – including, in some cases the removal of the relevant investigator from the case.
What does it mean for investigation targets?
From a practice perspective, the decision provides an insight into the SFO’s handling of privileged material. In circumstances where privileged, or potentially privileged, material is seized, it will be important to ensure that the SFO is proactively put on notice of the existence of that potential material, and diligently to develop comprehensive search terms in order to isolate that privileged material.
Separately, it is helpful to have an authority setting out the positive duty on the part of investigating authorities (not just the SFO) in sifting potentially privileged materials. In the event that privileged material is perused by the authorities, or the standards set by other seizing authorities are not as high as the SFO’s, it may give the target of the investigation the ability to take action, including potentially seeking the removal of the compromised investigator, or restricting the use of matters covered within the privileged material in the investigation.
This case summary is part of the Allen & Overy Litigation and Dispute Resolution Review, a monthly publication. For more information please contact Sarah Garvey firstname.lastname@example.org, or tel +44 20 3088 3710.