Regulatory Investigations and Client Legal Privilege: ASIC v Macleod

In the high risk world of regulatory investigations and professionals services, few protections are as critical, complex and vulnerable as legal professional privilege.

The recent decision in ASIC v Macleod in finding that disclosure under a limited waiver arrangement can still uphold client legal privilege is a reminder of the complexities in both claiming and protecting privilege in the face of investigations.

In ASIC v Macleod, on appeal to the Full Court of the Federal Court it was found that legal professional privilege still attached to a PWC report produced to the ASIC in circumstances where it was provided under a voluntary disclosure agreement (VDA).

A VDA in this circumstance is an agreement entered between a producing party and a regulator which asserts that whilst documents are produced that a claim to client legal privilege still attaches to same.

This case highlights just how critical the production of documents is and that the protection of privilege can still remain where a VDA properly drafted and compliance with same occurs.

Why this matters for professionals

The production of documents in regulatory investigations is a critical issue. Regulatory bodies like ASIC have broad investigative powers and the legal landscape around privilege is increasingly complex and scrutinised.

Professionals and directors cannot assume that a blanket claim of privilege will stand unchallenged nor any disclosure necessarily waives privilege.

Sharing information with regulators requires careful legal consideration.

One of the reminders from ASIC v Macleod is the importance of obtaining and documenting legal advice early in any potentially contentious matter. This can establish privilege for example in respect of a report.

Legal advisors should be engaged from the moment a regulatory issue arises and not as an afterthought.

Good legal counsel looks like more than just advice on the law or preparing written responses. It is trusted consideration of all the issues at play, the specific regulator and its nuances and anticipating issues early to obtain best protection.

After all, in regulatory enquiries the stakes are high.

In addition to early engagement of legal advice to safeguard privilege, individuals and organisations should:

• Label privileged documents appropriately;
• Train staff on the importance and boundaries of legal privilege to avoid inadvertent disclosure and waiver of privilege.

Download a copy of the Voluntary Confidential Legal Professional Privilege Disclosure Agreement from ASIC.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• corporate law
• litigation